Also known as: illegal purposes · unlawful purpose · illicit purpose
Written by attorneys — see sources below.
An objective that violates criminal law or established public policy.
Igor Ito proposed to Iain Irons that they smuggle contraband across the border for profit. Iain outwardly nodded and discussed logistics but had already alerted authorities and never intended to participate. Because Iain lacked genuine intent to pursue the illegal objective, no conspiracy formed under the bilateral requirement.
Iris Energy required employees to sign an arbitration agreement containing an illegal waiver of statutory rights. The central purpose of the contract was not permeated by the illegality, so the court severed the unlawful provision while enforcing the remainder of the agreement.
Mary Armendariz and Dolores Olague-Rodgers were hired by Foundation Health Psychcare Services, Inc. in July and August of 1995 for positions in the Provider Relations Group and were later promoted to supervisory roles with annual salaries of $38,000. As a condition of their employment, the employees signed application forms and separate arbitration agreements that required binding arbitration of any dispute arising from termination of employment. The arbitration clause provided that the employees' exclusive remedies would be limited to back wages from the date of discharge until the arbitration award and expressly excluded other remedies such as reinstatement and injunctive relief. On June 20, 1996, the employees were informed that their positions were being eliminated and that they were terminated. During their employment, they alleged that supervisors and coworkers engaged in sexually based harassment and discrimination, and they claimed the termination occurred because of their perceived or actual sexual orientation. The employees filed a complaint against the employer and its parent company alleging a cause of action for violation of the FEHA as well as tort and contract claims for wrongful termination, seeking general damages, punitive damages, injunctive relief, and attorney fees and costs. The employer filed a motion to compel arbitration under Code of Civil Procedure section 1281.2, supported by declarations. The trial court denied the motion, concluding that the arbitration agreement was an adhesion contract containing provisions so one-sided as to shock the conscience, including the requirement that only employees arbitrate claims and the limitation of damages to backpay. The Court of Appeal reversed the trial court's order, holding that the damages provision was unconscionable but that the remainder of the agreement should be enforced after severance. The Supreme Court granted review of the case.
View caseInertia Dynamics hired Isaiah Ishikawa under a contract that required him to falsify safety reports. Because the agreement was formed for an illegal purpose, the court refused to enforce it against either party when the employer later sought to avoid paying wages.
Interactive Data Corporation hired John Foley in June 1976 as an assistant product manager at a starting salary of $18,500. As a condition of employment Foley signed a confidential and proprietary information agreement. The company's president told Foley that if he performed his job well he would have a long and rewarding employment with the firm. Over the next six years and nine months Foley received steady salary increases, promotions, bonuses, awards, and superior performance evaluations, rising to branch manager of the Los Angeles office with an annual salary of $56,164 plus a merit bonus. In January 1983 Foley learned that his new supervisor, Robert Kuhne, was under investigation by the FBI for embezzlement from his former employer, Bank of America. Foley reported the information to Vice President Richard Earnest because he was worried about working for Kuhne in a supervisory position. Earnest told Foley not to discuss rumors and to forget what he had heard. In early March 1983 Kuhne informed Foley that the company had decided to replace him for performance reasons and offered a transfer to another division. Foley was later told he could continue as branch manager if he agreed to a performance plan, but when Kuhne met with him the next day Kuhne instead gave Foley the choice of resigning or being fired. Foley was discharged on March 13, 1983. Foley filed suit against Interactive Data Corporation alleging three causes of action: tortious discharge in violation of public policy, breach of an implied-in-fact contract to terminate only for good cause, and tortious breach of the implied covenant of good faith and fair dealing. The superior court sustained the company's demurrer without leave to amend and dismissed the action. The Court of Appeal affirmed the judgment. The Supreme Court granted review.
View caseThe City of New London condemned private homes to transfer the land to a private developer for an economic redevelopment project. The property owners challenged the action, arguing that the government's purpose was not a valid public use and therefore constituted an illegal objective under the Takings Clause.
In the late 1990s the city of New London, Connecticut, confronted severe economic decline after the 1996 closure of the Naval Undersea Warfare Center, which had employed more than 1,500 people. The city's unemployment rate stood nearly double the state average and its population had dropped below 24,000 residents from a 1970 high of 30,000. State and local officials therefore designated the Fort Trumbull peninsula for targeted economic revitalization. In 1998 the New London Development Corporation, a private nonprofit entity, was reactivated to prepare a redevelopment plan covering roughly 90 acres. The plan divided the area into seven parcels designated for a waterfront conference hotel and marinas, retail and entertainment space, research and office facilities, parking and park support, residential units, a Coast Guard museum, and additional office and retail uses. The city council formally approved the plan in January 2000 and authorized the NLDC to acquire needed parcels by purchase or, if necessary, by eminent domain. Petitioners Susette Kelo, Wilhelmina Dery, and seven other owners held fifteen properties within parcels 3 and 4A; ten of those parcels were occupied by the owners or their family members and none was alleged to be blighted. After negotiations with the NLDC failed, the corporation initiated condemnation proceedings against the remaining properties in November 2000. In December 2000 the petitioners filed suit in New London Superior Court asserting that the proposed takings violated the public-use limitation of the Fifth Amendment. Following a seven-day bench trial the Superior Court entered a permanent restraining order barring condemnation of the parcel 4A properties but denied relief as to the parcel 3 properties. Both sides appealed to the Connecticut Supreme Court, which upheld the validity of all challenged takings. The United States Supreme Court granted certiorari to review the federal constitutional question.
View caseA contract formed for an illegal purpose is void and unenforceable if both parties knew of and facilitated the purpose and it involves serious moral turpitude. It is voidable only by a party who did not know of the purpose or who knew but did not further it.
Supporting sources
No. Evidence of illegality is always admissible to challenge the validity of a contract even when a merger clause is present and even if the evidence contradicts the written terms.
The prosecution must prove that at least two participants genuinely shared a criminal objective. An agreement to pursue an objective contrary to public welfare satisfies the element even if the objective is not itself a defined crime.
No. Under the traditional bilateral theory, both parties must actually intend to carry out the unlawful agreement. Feigned agreement by one participant prevents formation of a conspiracy for either party.
Supporting sources
…are to conduct that complicated inquiry. Ante , at 477-478. For his part, Justice Kennedy suggests that courts may divine illicit purpose by a careful review of the record and the process by which a legislature arrived at the decision to take—without specifying what courts should look for in a case with different facts, how…