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Lawful Object

DEFINITION

Contractual obligations that are within the legal authority of the law.

EXPLANATION

Lawful object is a contractual obligation that is within the legal authority of the law.

The contract should have easy to understand, clear provisions. Although contracts may be specific in nature, leading to clauses that may be difficult for many to understand, a contract should must contain definitive terms that are precise. Contract clauses should specify conditions, including price, date, and other details. In California a mentally incompetent party does not have the legal bearing to enter into a contract.
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Even if the lease is lawful in nature, certain portions of the lease may be deemed unlawful. An example of this is a specific provision that waives a tenant’s or landlord’s right to something, including security deposits, or waiving one’s right to a course of action, such as lawsuit against the other party.

Valid and Enforceable Provisions

Lawful objective is one of the main conditions required for a contract to be valid and legally enforceable.  Lawful objective is when a contracts objective is legal and does not violate any of the party’s rights who are involved in the contract. Without lawful objective, a contract cannot be valid. If a contract has illegal components to it and the illegal portion has not been fulfilled, none of the parties to the contract can sue one another. Furthermore, if the unlawful portion of the contract has been performed by both parties, neither of the parties can sue each other.

Example

Sherwin has experience in real estate, however does not have a valid real estate license. Dr. Edwin approaches Sherwin and asks him to locate a suitable medical building for his medical practice. Dr. Edwin promises to pay Sherwin a 3% commission for locating the property for Edwin. Sherwin agrees and finds Edwin a suitable property.

Dr. Edwin decides to only pay Sherwin 1.5% of the commission he promised, which is only half of the commission he promises Sherwin because he finds out Sherwin is not licensed. Unlicensed agents are not entitled to commissions per state law. Dr. Edwin tells Sherwin he is lucky he even got paid anything because legally he is not required to. After Sherwin realizes he will not be paid the remaining commission, Sherwin initiates a lawsuit against Dr. Edwin. Dr. Edwin counters with his own lawsuit contending that Sherwin return the 1.5% commission because he was not even entitled to any of it. Does Sherwin have to return any portion of the commission and is Edwin required to pay the remaining commission?

Dr. Edwin is not required to pay Sherwin the rest of the commission because legally Sherwin is not entitled to any commission.  Sherwin however is not required to pay Edwin any portion of the commission back because the act already took place. The court will not require any party to fulfill an unlawful objective, which in this case was Sherwin getting his promised commission. Even if it was promised, the objective was unlawful and therefore not valid. Neither party can enforce their claim because both party’s lawsuit centers around something that has an unlawful objective.

How to Interpret the Correct Meaning of a Contract When There Are Conflicting Items

Most contracts have multiple promises contained within them. Oftentimes some portions of the contract are legal, while others may be illegal. When this occurs, only the lawful portions are enforceable, assuming the lawful components are not in any ways intertwined with the unlawful portions. If the unlawful portions of the contract alter the whole of the contract, even the legal portions of the contract will not be enforceable.

Any agreement that centers on illegal practices such as agreeing to perform a crime is not valid. Even if both parties agree to it, the court will not enforce it and may even potentially bring about a reason for the state to initiate a lawsuit against the parties of the contract because of the party’s intent to commit a crime.

When determining whether a contract is valid or not, the court mainly looks at the law and not how it affects one of the party’s. If however the contract is so one sided, the court may make a clause that is unfair or unconscionable void. This typically occurs if one of the clauses in a contract place an unfair burden on one of the party’s.

For example, it is an unfair burden for a lender to have a clause within a mortgage agreement that states a borrower will forfeit their rights to a property the day after they miss a scheduled mortgage payment. While the lender has the right to assert their claim on a property after a borrower misses a payment, it is unconscionable for the borrower to lose their property simply because they fell behind one day on their payments.

Welfare of Society

Any agreement that affects the wellbeing of the public is not enforceable. Even if a contract does not violate the law, however the effect of the law harms the public, courts will oftentimes rule against the implementation of the rule. While it is difficult to define what is and is not acceptable by society, the main criteria that a court will investigate is whether the agreement injures the public in some way. If any provision prohibits one from carrying on a valid act such as getting married, initiating a lawsuit, or performing an otherwise legal action, the act would not be enforceable.

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