Today, we continue our discussion of when contracts are unenforceable because they violate public policy. We will look at the 1987 Wisconsin case called 'Watts versus Watts' where the court considered whether an unmarried couple's cohabitation agreement is enforceable. In Watt v. Watt, the plaintiff, Sue-Ann, lived for 12 years with defendant, James. The couple held themselves out to the public as husband and wife and had two children together but never actually married. When the couple split up, plaintiff sued under several theories for a share of their property including the theory that she and the defendant, had a contract to equally share all of the property accumulated during their relationship. The trial court dismissed the complaint and the instant court reversed and remanded. The central issue is a contract between the parties to share property accumulated during their relationship void as against public policy. The Supreme Court of Wisconsin held that enforcing such a contract would not be void as against public policy. The court began by observing that non-marital cohabitation does not render every agreement between the cohabiting parties illegal, but the court also acknowledged that a contract will not be enforced if it violates public policy. Thus, the defendant argued, among other things, that the party's relationship was immoral and illegal and that any recognition of a contract between the parties or plaintiff's claim for a share of the property accumulated during the cohabitation, contravenes public policy. Contracts "for which the sole consideration is sexual relations" are unenforceable. But according to the court, a bargain between two people is not illegal merely because there is an illicit relationship between the two, so long as the bargain is independent of the illicit relationship, and the illicit relationship does not constitute any part of the consideration bargained for, and is not a condition of the bargain. Further, the court recognized that a refusal to enforce a contract between the parties, because their relationship involved immoral or illegal sexual activity, would be inequitable and arbitrary, and that it would leave one party no less guilty than the other with a greater share of accumulated wealth, merely because he or she held it prior to trial. Hence the court concluded that the plaintiff pleaded sufficient facts necessary to state a claim. Even though the parties being in Pari Delicto with regard to an tempted bribe, was sufficient to make a court refuse to give any order of relief in the Synar case. Here, the parties being in Pari Delicto with regard to illicit sexual relationship was not, at least by 1987, sufficient to categorically keep a court from giving relief. So, what are the elements of an unjust enrichment claim? The plaintiff also asserted an unjust enrichment claim. We talked about unjust enrichment in an earlier module, when we looked at a case called Bailey versus West. What are the elements of an unjust enrichment claim? Well, in Bailey v. West, we saw that three conditions must be satisfied for unjust enrichment. One, there must be a benefit conferred upon the defendant. Two, the defendant must appreciate the benefit. And three, it would be inequitable for the defendant to retain the benefit without making a payment to the plaintiff. The court in Watts vs. Watts considered those same three conditions and held that unmarried cohabitants may raise claims based upon unjust enrichment following the termination of their relationship, where one of the parties attempts to retain an unreasonable amount of the property acquired through the efforts of both. In other words, even if the plaintiff's contract claim failed on remand, if she was able to satisfy the elements of unjust enrichment, she could still win the case. Section 178 subparagraph one of the restatement of contracts provides that, "A promise or other terms of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in it's enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms." Thus, if a constitution statute, administrative regulation or local ordinance pre-empts the enforceability question by clear language, the court's job is to implement that legislative decision. But if there is no clear legislative mandate, the promise or term is not unenforceable if the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms. This mirrors the approach the court followed in Watts vs. Watts. The court first considered whether the Wisconsin Family Code restricted the court's resolution of property disputes between cohabiting couples. And it found that it did not. The court then enunciated a bouncing standard when it said, " A declaration that the contract is against public policy should be made only after careful balancing in the light of all the circumstances of the interest in enforcing a particular promise against the policy against enforcement." In its opinion, the Wisconsin court is highly critical of the Illinois Supreme Court's 1979 opinion in Hewitt vs. Hewitt. There, the court held that "Allowing such a contract claim would weaken the sanctity of marriage, " and violate the policy of the Illinois Marriage and Dissolution Act. The court also emphasized legal process stating that there are, "major public policy questions involved in determining whether under what circumstances and to what extent it's desirable to accord some type of legal status to claims arising from cohabitation or relationships." The plaintiff argued that because of changing social norms and attitude, the court should abandon the traditional rule that cohabitation agreements are illegal. But the Hewitt court responded, "The question whether change is needed in the law governing the rights of parties in this delicate area of marriage-like relationships, involves evaluations of sociological data and alternatives we believe best suited to the superior investigative and fact finding facilities of the legislative branch." In other words, the court was reluctant to change the law because of alleged changes in social attitudes. The court felt that legislators are better positioned to verify broad social changes and adjust the law accordingly. So, besides thinking about whether a cohabitation promise or some other rights should be enforced, the legal system also has to decide which part of government gets to decide the question. Similar questions arose during the same sex-marriage debates, where the right to marry was sometimes extended by courts, and sometimes by state legislatures, before the U.S. Supreme Court mandated that all states extend the right. Changed social attitudes toward marriage can be seen in how the treatment of premarital agreements has changed. Until the mid 1970's, most American courts held that premarital agreements and other contracts made "in contemplation of divorce " were unenforceable as against public policy. Section 190 subparagraph two of the second restatement of contracts, continues to declare that a promise that tends unreasonably to encourage divorce or separation is unenforceable on grounds of public policy. The vast majority of courts however now treat premarital agreements as enforceable at least in some circumstances. Let's recap. Today, we talked about how a contract may be unenforceable on grounds of public policy, if the interest in enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms. We looked at a case that held that cohabitation agreements whereby an unmarried couple allegedly agreed to share their accumulated assets, was not unenforceable as against public policy.
