Public Policy

1
Public Policy Limitations on Enforcement of
Contracts. Rest (2d) 178

• Where does the relevant public policy come from?
  Constitution? Legislation? Precedent?
  Moral/ethical considerations? Other?
• Should the public policy be enforced by refusing
  to enforce the contract? Or, restitution of value
  given may be appropriate (see pp. 618-619)

• Valley Medical Specialists v. Farber (AZ 1999)
• Principle restraints on competition (such as
  restrictive covenants) are invalid unless they
  are ancillary to an otherwise valid transaction
  such as a sale of a business or all of its
  assets, or an existing employment contract. Rest
  (2d) 187, 188. Its OK for a firm to protect an
  investment of some kind, but not to engage in a
  naked restraint of trade
• Even a valid restrictive covenant must be
  reasonable in scope (time, geography, nature of
  activities covered, affect on public interest) to
  balance employees interest in working and
  employers interest in protecting its investment.
  Blue pencil rule may apply, but courts cant
  rewrite the contract.
• Court in VMS Pltf is entitled to protect
  referral sources, but not patient base (see p.
  605).
• Is this right, or is it backwards? Shouldnt
  referral sources have the discretion to choose
  physicians to refer to? Isnt the patient base
  the core asset of VMS?
• California holds that all restrictive covenants
  are per se invalid unless they are ancillary to
  the sale of a business. Like most states,
  California is also enthusiastic about enforcing
  agreements to protect trade secrets. Which is
  the better rule allowing reasonable
  restrictive covenants, or allowing no restrictive
  covenants?

2
Public Policy Limitations on Enforcement of
Contracts. Rest (2d) 178

• Where does the relevant public policy come from?
  Constitution? Legislation? Precedent?
  Moral/ethical considerations? Other?
• Should the public policy be enforced by refusing
  to enforce the contract? Or, restitution of value
  given may be appropriate (see pp. 618-619)

• Borelli v. Brusseau (Cal. App. 1993)
• Surviving wife sued for specific performance of
  late husbands promise to deliver certain real
  and personal property to her, given in exchange
  for her promise to care for him personally rather
  than have him go to a medical facility for care.
  Husband left the property to his daughter,
  instead.
• Did the wife have a preexisting duty to support
  and care for her husband, so that she gave no
  consideration for his promise?
• Is enforcement of the agreement barred by public
  policy?
• Note that California statutes provide that
  spouses are legally obligated to support each
  other. Older cases apply this public policy to
  contracts between spouses. Do the older cases
  represent an outdated view of marriage? Should
  they be followed?
• Should spouses be entitled to the same freedom
  of contract as unmarried individuals? Or should
  they be entitled only to the default provisions
  of community property rules? Should married
  couples be able to bargain over the terms and
  conditions of their marriage? Should there be a
  difference between pre-nuptial agreements and
  bargains during marriage?

3
Basebal Bin Bery, Bery Good to Me. -- Chico
Escuela
This field, this game, it's a part of our past,
Ray. It reminds us of all that once was good and
could be again. -- Terrence Mann, in Field of
Dreams