For today’s post we will take a look at the 6th element which is Legality of Object.
Legality of Object
The sixth element of a contract is the legality of object, which means that the subject matter of the contract must be legal and not against public policy. In other words, the purpose of the contract cannot be illegal, and the contract cannot be used to engage in illegal activities. If a contract violates this element, it will be deemed unenforceable.
The legality of object can be a complex and nuanced concept, and it is essential to understand the difference between an illegal object and an object that is legal but is used in an illegal manner. An illegal object refers to a subject matter that is inherently illegal, such as a contract to commit a crime or to engage in illegal activity. For example, a contract to sell illegal drugs or to engage in insider trading would be illegal objects.
On the other hand, an object that is legal but is used in an illegal manner refers to a contract where the subject matter is legal, but the way it is being used is illegal or against public policy. For example, a contract to provide goods or services that are legal may be unenforceable if the purpose of the contract is to further a fraudulent scheme or to engage in illegal activity.
It is important to note that even if the object of the contract is legal, the contract may still be unenforceable if it violates public policy. Public policy refers to the values and principles that underpin the legal system and society as a whole. Contracts that violate public policy are generally unenforceable, even if the object of the contract is legal.
The legality of object also dovetails with the concept of fraud, which is an intentional misrepresentation or omission of a material fact that induces another party to enter into a contract. In cases of fraud, the legality of object becomes particularly important, as the object of the contract may appear legal on its face, but the fraudulent conduct underlying the contract may render it unenforceable.
For example, consider a contract for the sale of a used car. If the seller intentionally misrepresents the condition of the car, such as by failing to disclose a major defect, the contract may be voidable for fraud. In this case, even though the object of the contract is legal (the sale of a car), the fraudulent conduct underlying the contract may render it unenforceable.
Lewis v. Rula, 293 So. 3d 317 (Miss. Ct. App. 2020). In this case, the Lewises purchased a house in Madison County, Mississippi. During the time they owned the house, the Lewises made numerous repairs to a parapet wall and the connection of the wall to the roof of the property because of leaks. After four years, the Lewises put the house on the market. The Lewises entered into a contract to sell the property to the Rulas. In the disclosure statement required by Miss. Code Ann. Sections 89-1-501 to -523 in the sale of residential property, the Lewises left blank the portions of the disclosure statement that addressed problems with wall, leaks and the roof. The contract was an “as is” contract which stated that the Rulas must accept the existing condition of the home without an inspection. After the closing, the Rulas discovered the defects in the parapet wall and roof and paid a contractor to replace the wall. The Rulas filed an action against the Lewises in the County Court of Madison County alleging intentional and negligent misrepresentation. At trial the jury awarded the Rulas damages of $235,000. On appeal, the Court of Appeals, in a decision by Justice Westbrooks, affirmed. The Lewises argued that the acceptance by the Rulas of the house “as is” relieved them from any statutory disclosure requirements and any liabilities to the buyers. Justice Westbrook wrote, “Not answering questions on the disclosure form does not equate to a lack of misrepresentation,” especially since the Lewises had actual knowledge of the defects in the parapet wall and roof.
In conclusion, the legality of object is a critical element of a legally binding contract. A contract that has an illegal object or purpose is void from the outset, while a contract that has a legal object or purpose but is used in an illegal manner may be unenforceable. Additionally, contracts that violate public policy are generally unenforceable, even if the object of the contract is legal. Finally, the legality of object is closely intertwined with the concept of fraud, as fraudulent conduct underlying a contract may render it unenforceable. As such, it is crucial to have a clear understanding of the legality of object when drafting and negotiating contracts.