Opinion ID: 456302
Heading Depth: 2
Heading Rank: 3

Heading: The Public Policy Defense

Text: 23 A state may refuse to enforce a contract, valid in the state where made, if the contract conflicts with the public policy of that state. See Richland Development Co. v. Staples, 295 F.2d 122 (5th Cir.1961). As the Alabama courts have stated, [t]he true test to determine whether a contract is unenforceable because of public policy is 'whether the public interest is injuriously affected in such substantial manner that private rights and interests should yield to those of the public.'  Colston v. Gulf States Paper Corp., 291 Ala. 423, 282 So.2d 251, 255 (1973) (citations omitted); 5 see also Lowery v. Zorn, 243 Ala. 285, 9 So.2d 872 (1942). 24 However, the principle that contracts contravening public policy are unenforceable should be applied cautiously and only in cases plainly within the reason for it. Lowery v. Zorn, supra, 9 So.2d at 874. It is repeated often in the cases that there must be a dominating public interest. Ex parte Rice, 258 Ala. 132, 61 So.2d 7 (1952). 6 As one of the leading commentators has stated, [i]t is a rare case in which a claim validly existing under the law of one American state can be said to be so far outside the pale of social economic and moral standards currently imposed by our civilization as to be violative of the strong public policy of any sister state. Leaflar, American Conflicts Law Sec. 48, p. 91-92 (Bobbs Merril 1977). 25 The mere fact that the forum court has no statute on the subject, or that the law of the forum differs from that of the other jurisdiction does not mean that the foreign law is contrary to the public policy of the forum. Invocation of the public policy of the forum as a bar to the enforcement of foregin rights of actions should be very narrowly limited. 26 The meaning of the phrase public policy is vague and variable. Lowery v. Zorn, supra, 9 So.2d at 874. However, [g]enerally speaking, the public policy of a state is to be found in its constitution, its statutes, the decision of, or settled rules laid down by, it courts, and the prevailing social and moral attitudes of the community. 16 Am.Jur.2d, Conflict of Laws Sec. 16, p. 38 (footnotes omitted). See also Intercontinental Hotels Corp. v. Golden, 15 N.Y.2d 9, 254 N.Y.S.2d 527, 203 N.E.2d 210 (1964). If the asserted public policy is nothing more than the fact that the forum state has prescribed a different law to govern a particular transaction, the foreign law will usually be enforced. Richland Development Company, Inc., supra, 295 F.2d at 127. See also Hartford Accident & Indemnity Co. v. Delta Pine Land Co., 292 U.S. 143, 54 S.Ct. 634, 18 L.Ed. 1178 (1934).