LAW 505-002 – Contracts I

Public Policy


Restatement Second of Contracts § 178

When a Term Is Unenforceable on Grounds of Public Policy

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  1. A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms.
  2. In weighing the interest in the enforcement of a term, account is taken of
    1. the parties' justified expectations,
    2. any forfeiture that would result if enforcement were denied, and
    3. any special public interest in the enforcement of the particular term.
  3. In weighing a public policy against enforcement of a term, account is taken of
    1. the strength of that policy as manifested by legislation or judicial decisions,
    2. the likelihood that a refusal to enforce the term will further that policy,
    3. the seriousness of any misconduct involved and the extent to which it was deliberate, and
    4. the directness of the connection between that misconduct and the term.
Restatement Second of Contracts § 198

Restitution in Favor of Party Who Is Excusably Ignorant or Is Not Equally in the Wrong

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A party has a claim in restitution for performance that he has rendered under or in return for a promise that is unenforceable on grounds of public policy if

  1. he was excusably ignorant of the facts or of legislation of a minor character, in the absence of which the promise would be enforceable, or
  2. he was not equally in the wrong with the promisor.
Restatement Second of Contracts § 199

Restitution Where Party Withdraws or Situation Is Contrary to Public Interest

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A party has a claim in restitution for performance that he has rendered under or in return for a promise that is unenforceable on grounds of public policy if he did not engage in serious misconduct and

  1. he withdraws from the transaction before the improper purpose has been achieved, or
  2. allowance of the claim would put an end to a continuing situation that is contrary to the public interest.