Am Jur 2d - Contracts § 216

III. Legality of Contracts, A. In General, § 216 - Legality of contracts, generally

In general, parties are free to contract as they see fit,[1] on any terms regarding a subject matter in which they have an interest,[2] provided that the contract does not impose obligations that are contrary to statute,[3] public policy,[4] or an established rule of the common law.[5] Thus, the law recognizes and protects a broad freedom of contract[6] and competent persons ordinarily have the utmost liberty of contracting,[7] and may incorporate in their agreements any provisions that are not illegal or violative of public policy.[8]

The law looks with favor upon the making of contracts between competent parties upon valid consideration and for lawful purposes,[9] and courts generally enforce private agreements between parties.[10] In fact, out of respect for the freedom to contract, courts are hesitant to interfere with purely private agreements.[11] Courts may not declare illegal a type of contract specifically authorized by the legislature.[12] Indeed, given the strong commitment to the principle of contractual freedom, courts should hesitate to infer from a statutory clause granting specific permission to contract under certain circumstances a general prohibition against contracting under other circumstances.[13]

Observation:

A lawful cause[14] or object[15] is necessary to the existence of a contract.

All case links go to Westlaw and require login.

1   Mendez, Jr. v. Hampton Court Nursing Center, LLC, 140 So. 3d 671 (Fla. 3d DCA 2014) , review granted, 168 So. 3d 227 (Fla. 2014) ; Corwin v. DaimlerChrysler Ins. Co., 296 Mich. App. 242, 819 N.W.2d 68 (2012) ; Zachry Const. Corp. v. Port of Houston Authority of Harris County, 449 S.W.3d 98 (Tex. 2014) .

2   Grand Master Contracting, L.L.C. v. Lincoln Apartment Management Ltd. Partnership, 314 Ga. App. 449, 724 S.E.2d 456 (2012) .

3   Pest Management, Inc. v. Langer, 369 Ark. 52, 250 S.W.3d 550 (2007) ; Sylva Shops Ltd. Partnership v. Hibbard, 175 N.C. App. 423, 623 S.E.2d 785 (2006) ; Teodecki v. Litchfield Twp., 2015-Ohio-2309, 38 N.E.3d 355 (Ohio Ct. App. 9th Dist. Medina County 2015).

4   City of New Albany v. Cotner, 919 N.E.2d 125 (Ind. Ct. App. 2009) ; In re Marriage of Traster, 301 Kan. 88, 339 P.3d 778 (2014) ; CAS Severn, Inc. v. Awalt, 213 Md. App. 683, 75 A.3d 382 (2013) .

5   Wm. Lindeke Land Co. v. Kalman, 190 Minn. 601, 252 N.W. 650, 93 A.L.R. 1393 (1934) .
 As to contracts in violation of constitutions, statutes, regulations, or ordinances, generally, see §§ 223 to 230 .

6   Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011) .

7   Rodriguez v. Builders Firstsource-Florida, LLC, 26 So. 3d 679 (Fla. 4th DCA 2010) ; Guideone Ins. Co. v. U.S. Water Systems Inc., 950 N.E.2d 1236, 74 U.C.C. Rep. Serv. 2d 806 (Ind. Ct. App. 2011) ; In re Marriage of Matar and Harake, 353 Or. 446, 300 P.3d 144 (2013) .

8   Ard Dr. Pepper Bottling Co. v. Dr. Pepper Co., 202 F.2d 372 (5th Cir. 1953) .

9   Shuttleworth, Ruloff and Giordano, P.C. v. Nutter, 254 Va. 494, 493 S.E.2d 364 (1997) .

10   Rollyson v. Jordan, 205 W. Va. 368, 518 S.E.2d 372 (1999) .

11   Stelluti v. Casapenn Enterprises, LLC, 203 N.J. 286, 1 A.3d 678, 61 A.L.R.6th 659 (2010) .

12   Rishel v. Pacific Mut. Life Ins. Co. of Cal., 78 F.2d 881, 131 A.L.R. 414 (C.C.A. 10th Cir. 1935) .

13   Churchill Forge, Inc. v. Brown, 61 S.W.3d 368 (Tex. 2001) .

14   State v. Louis, 645 So. 2d 1144 (La. 1994) .

15   City of Cut Bank v. Glacier County, 270 Mont. 355, 891 P.2d 1174 (1995) .

Read this complete Am Jur 2d section on Westlaw

FindLaw’s hosted excerpts from American Jurisprudence 2d are provided courtesy of the publisher of American Jurisprudence 2d, the industry-leading legal encyclopedia offering unparalleled breadth of coverage of all fields of American law. For full access to American Jurisprudence 2d, including annotations and citations, please visit your local law library or visit Am Jur 2d on Thomson Reuters Westlaw.

FindLaw’s hosted version of American Jurisprudence 2d may not reflect the most recent law. Please verify the status of the section you are researching at your local law library or via Westlaw before relying on it for your legal needs.

Copied to clipboard