Problem 23.3. Illegal Contracts

Problem 23.3

Ruth made an oral agreement to sell her used racing bicycle to Mike for $400. A few days later, she got an offer of $600 from Paul and orally accepted this higher offer. Prior to delivering the bicycle, Ruth decided she did not want to sell it anymore. Both Mike and Paul sued her for breach of contract.

a.What will the court do?

b.Is this decision fair? Explain your answer.

c.How would the case be different if the agreement with Paul were in

writing?

Illegal Contracts

Some contracts are unenforceable in court because they are illegal or against public policy. For example, an agreement between two persons for the sale of illegal drugs could never be enforced in court. Courts sometimes find that a contract is so unfair, harsh, and oppressive that it should not be enforced. Such a contract is considered to be unconscionable.The law usually allows freedom of contract, and consumers are allowed to make bad deals as well as good ones.

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