When an agreement is divisible and the illegal promises and acts are completely segregated from other sections that are not tainted by illegality, courts may enforce those parts that are legal and rescind those parts ruled illegal and invalid. Enforcement of parts determined to be valid and enforceable, of course, is tempered by the extent of illegality of the other divisible parts.
When both parties to an illegal agreement are equally wrong in the knowledge of the operation and effect of their contract, they are said to be in pari delicto (in equal fault). In such cases, the court will not give aid to either party in an action against the other and will not award damages to either.
When the parties are not in pari delicto, relief will often be allowed if sought by the more innocent of the two. Although this rule is not applicable when one party may be less guilty of premeditation (plotting or planning an illegal act) and intent to achieve a gain through known illegal acts, it may be applied when one party is unaware that a law is being broken and has no intent to do a wrong.
Exercise 1. Comprehension questions:
1. What is the most obvious type of illegal contract?
2. Explain the term usury.
3. What has been done to protect borrowers from excessive interest charges?
4. What are the objectives of licensing?
5. What does the term in pari delicto mean?
6. What does the exculpatory clause state?
7. What may be the consequences of illegal contracting?
Exercise 2. Find in the text English equivalents to the following:
Сговор; оправдывающее положение; равная вина; публичный порядок; ограничение свободы торговли; ростовщичество.
Exercise 3. Consult recommended dictionaries and give words or phrases to the following definitions:
Оспоримая сделка; притворная сделка; мнимая сделка; последствия недействительных сделок; двусторонняя реституция; сделка совершенная под влиянием заблуждения; сделка совершенная под влиянием обмана; сделка совершенная под влиянием угрозы; ограничение полномочий на совершение сделки; выход за пределы ограничений; пределы правоспособности; цель деятельности юридического лица; лицензия организации; недействительность по иску.
Exercise 4. Be ready to talk on one of the following topics:
1. Distinguish between licenses designed to raise revenue and those designed to provide supervision and regulation of a business or profession.
2. Determine the legal effect of a contract made by parties who are not licensed in a particular business or profession.
