Opinion ID: 1704082
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Heading: Public PolicyDefinition and Limitations.

Text: A contract which contravenes public policy will not be enforced by our courts. See, e.g., Wunschel Law Firm, P.C. v. Clabaugh, 291 N.W.2d 331, 335 (Iowa 1980); Rowen v. LeMars Mutual Insurance Co. of Iowa, 282 N.W.2d 639, 650 (Iowa 1979). While the term public policy is not susceptible of exact definition, the thrust of the legal principle that term represents is quite clear: a court ought not enforce a contract which tends to be injurious to the public or contrary to the public good. In re Estate of Barnes, 256 Iowa 1043, 1051-52, 128 N.W.2d 188, 192 (1964); Disbrow v. Board of Supervisors of Cass County, 119 Iowa 538, 541, 93 N.W. 585, 586 (1903). Thus, a contract may be invalidated if it would violate any established interest of society. Wunschel Law Firm, P.C. v. Clabaugh, 291 N.W.2d at 335 (quoting Liggett v. Shriver, 181 Iowa 260, 265, 164 N.W. 611, 612 (1917)). Whenever a court considers invalidating a contract on public policy grounds, it must also weigh in the balance the parties' freedom to contract. In Tschrigi v. Merchants National Bank of Cedar Rapids, 253 Iowa 682, 690, 113 N.W.2d 226, 231, (Iowa 1962), we quoted with approval the following statement of that competing policy: It is not the court's function to curtail the liberty to contract by enabling parties to escape their valid contractual obligation on the ground of public policy unless the preservation of the general public welfare imperatively so demands. Twin City Pipe Line Co. v. Harding Glass Co., 283 U.S. 353, 51 S.Ct. 476, 75 L.Ed. 1112, 83 A.L.R. 1168; 5 Williston, Contracts, Rev. Ed., § 1630A; 12 Am.Jur., Contracts, § 172. Consequently, the power to invalidate a contract on public policy grounds must be used cautiously and exercised only in cases free from doubt. Wunchel Law Firm, P.C. v. Clabaugh, 291 N.W.2d at 335; In re Estate of Barnes, 256 Iowa at 1052, 128 N.W.2d at 192. This same attempt to harmonize public policy and the freedom of individuals to contract is involved when provisions of insurance contracts are placed in issue. See Skyline Harvestore Systems, Inc. v. Centennial Insurance Co., 331 N.W.2d 106, 109 (Iowa 1983); Harrell v. Travelers Indemnity Co., 279 Or. 199, 207, 567 P.2d 1013, 1016 (1977).