Shanghai Electronics

The court must determine whether the written agreement between Inventor and Shanghai Electronics (SE) is void as against public policy and necessitates non-enforcement. To resolve this issue, the court must balance SE’s concerns for upholding the contract, with the countervailing public policy interest of preventing the use of inmate and child labor. Under the Restatement (Second) of Contracts Ð'§178, promises or other terms of an agreement can be found unenforceable, even when legislation does not provide it as such, if public policy clearly outweighs the factors favoring enforcement. Restatement (Second) of Contracts Ð'§ 174 (1981). In deciding whether an agreement should be enforced, courts will take into account several factors: (1) the parties’ justified expectations, (2) any forfeiture that would result if enforcement were denied, and (3) any special public interest in the enforcement of a particular term. When deciding against the enforcement of a term the court will consider: (1) the strength of the policy which has manifest itself in legislation or judicial decisions, (2) if refusal of enforcement will further public policy, (3) the seriousness of misconduct involved and the amount that it was deliberated, and (4) the directness of the connection between the questionable conduct and the term being reviewed. Id. If it is determined that the harm to the public interest outweighs the benefit of enforcement to the parties, the courts will generally deny enforcement. Danzig v. Danzig, 79 Wash. App. 612 (1995).

Although the agreement is not illegal, Inventor argues that the court should void the contract with SE, because the use of inmate and child labor offends public policy. Not allowing companies that use inmate and child labor to manufacture products traded within Washington may lack legislative and judicial support; however, it has the support of the people. This is shown by the outrage and scrutiny towards companies that employ manufacturers that use inmate and child labor. If the court were to uphold this contract, Inventor argues that it would fly in the face of what the public has manifested their expectations to be.

In addition, Inventor argues that when they contracted with SE they did not realize the extent, if any, SE violated these rights. Inventor argues that it believed the allegations found in the newspaper reports to be accusatory and not solid enough to lose the potential financial benefits that could be afforded by a contract with SE. It was only after the article in the Wall Street Journal, that Inventor found what had been accused to actually be well documented. In accordance with the unanimous condemnation of the American public, Inventor now immediately wants to void the contract with SE. Inventor believes that taking into account the strength of the policy, the detriment enforcement will have on public policy, the seriousness of misconduct involved compared to deliberation that took place, and how close the connection is between the questionable conduct and the term being reviewed, enforcement must be refused.

SE will argue that the contract should be enforced