American Builders & Contractors Supply Co., Inc. (Hendricks) v. Steed
Hendricks v. Steed involved a dispute over a verbal contract for Hendricks’ purchase of a roof-tile manufacturing company. Hendricks sued Steed and Steed’s non-profit, charitable foundation, Heritage Institute, in an Arizona court, alleging among other things, that the contract was illegal because Heritage was violating federal tax laws. The trial court entered summary judgment against Steed finding that “if there was a contract, it was illegal because it contravened federal law.”
Berk & Moskowitz appealed the judgment on behalf of Steed. The Arizona Court of Appeals reversed the trial court’s judgment against Steed, holding that obligations to comply with federal statutes were not within the scope of the contract, thus, the alleged violations, in and of themselves, could not render the contract itself illegal. Rather, a contract is illegal only “if the acts performed under the contract themselves are illegal.”
Read the Steed Memorandum Decision
