PEMS Co. International, Inc., agreed to find a buyer for Rupp Industries, Inc.,
ID: 432524 • Letter: P
Question
PEMS Co. International, Inc., agreed to find a buyer for Rupp Industries, Inc., for a commission of 2 percent of the purchase price, which was to be paid by the buyer. Using PEMS’s services, an investment group bought Rupp for $20 million and changed its name to Temp-Air, Inc. PEMS asked Temp-Air to pay a commission on the sale. Temp- Air refused, arguing that PEMS had acted as a broker in the deal without a license. The applicable statute defines a broker as any person who deals with the sale of a business. If this statute was intended to protect the public, can PEMS collect its commission?
1. Some types of contracts are illegal if they are in violation of a statute. Name four types of contracts that may be illegal under a statute.(choose 4: contracts to commit a crime/ contracts to commit a tort/ contracts in restraint of trade/ exculpatory/ usury/ gambling/ licensing/ contracts with minors)
2. If a contract is illegal it is (void and enforceable/ void and unenforceable)
3. What type of statute is in issue here? (Criminal/ usury/ gambling/ licensing)
4. Is it likely a federal or state statute? (federal or state)
5. What does the statute require? (brokers be licensed/ brokers be over 21/ brokers protect the public)
6. Did PEMS comply with the licensing statute? (Yes/ No)
7. How did PEMS fail to comply with the statute? ( PEMS acted as a broker in the deal without a license/ PEMS did not notify the state of the deal beforehand/ PEMS failed to post its license)
8. States require licenses to perform certain occupations. What are the two purposes for the licenses?
a. ( to demonstrate that a special skill has been acquired by a person and to protect the public from unauthorized practitioners/ to regulate the number of practitioners in a field/ to regulate competition/ to attract practitioners to the state/ to raise government revenue)
b. ( to demonstrate that a special skill has been acquired by a person and to protect the public from unauthorized practitioners/ to regulate the number of practitioners in a field/ to regulate competition/ to attract practitioners to the state/ to raise government revenue)
9. These two types of licensing statutes are: 1. regulatory, which (regulates practitioners to protect the public/ raises money for the government)and 2. revenue raising, which primarily (regulates practitioners to protect the public/ raises money for the government)
10. States will not enforce contracts entered into by persons who fail to maintain ( regulatory/ revenue-raising)licenses. These contracts are deemed illegal and therefore (void and enforceable/ void and unenforceable)
Explanation / Answer
No, PEMS can't collect the commission.
According to the contract, Temp-Air was supposed to pay 2% commission to the PEMS by buying Rupp Industries Inc. But as PEMS didn't have any license so it will not get any commission. According to the real estate agent act, if a broker act without a license, he will not get any commission as a broker's license is necessary for a real estate contract.
1) Illegal contract :-
An illegal contract is which intentionally violates a law. Four types of illegal contracts are -
2) If a contract is illegal it is - void and unenforceable.
3) Statuory illegality.
Violating a statute means illegality of the statute act. Criminal, usury, gambling, licensing etc.
4) It is a State statute.
According to the state law, statute are made to reduce crimes. If anything is illegal or void in some state, it may not be illegal in other state.
5) Brokers be licensed.
According to the Federal court, a statute requires brokers to be licensed.
6) No.
PEMS didn't complied with the license statute as it was brokering without a license.
7) PEMS acted as a broker in the deal without a license.
Hope this helps :)
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