ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Tuesday, March 12, 2019

At the intersection of illegal contracts, immigration policy, and fast food restaurants

When I teach about illegal contracts, I often find myself talking about paid assassins, because for some reason it's the only example I can come up with on the fly (let's not psychoanalyze that too much). A recent case out of California, Lin v. Chiu, B285053, has a different illegality analysis. The case involved a contract concerning an investment of money into the opening of a fast food restaurant franchise. Chiu alleged that Lin used the contract to apply for permanent residency in the United States, even though the contract did not fulfill the requirements for such an application, and therefore the contract was illegal and unenforceable. 

The court disagreed. Even if Lin's attempt to use the contract as the basis for residency might be questionable, the central purpose of the contract itself was a straightforward investment, not anything illegal. Nothing about the alleged illegal use of the contract had anything to do with Lin's contractual rights to repayment of his investment, and there were no allegations that the contract was merely a sham to defraud the U.S. government. It was a bona fide contract in and of itself, with the objective of receiving a return on investment, and not the objective of winning Lin permanent residency. Maybe Lin had an illegal motive underlying his actions, but that did not change the fact that his actions were a legitimate business transaction. Enforcing the investment contract, the court found, would not encourage others to use such contracts as an illegal basis for permanent residency.

Food and Drink, Recent Cases, Teaching, True Contracts | Permalink


Thanks for this - I'm teaching illegal contracts right now, so timing is perfect. And, strangely enough, paid assassinations are also my go-to example for illegal contracts! I was just pondering what that said about me when I read your post. I'm glad I'm not the only one who goes there (although now I think we both need to be psychoanalyzed).

Posted by: Andrea Boyack | Mar 12, 2019 8:58:09 PM

Haha, maybe we could get a group discount on therapy!

Posted by: Stacey | Mar 13, 2019 9:43:24 AM

One of the best current examples is contracts touching marijuana. Those are illegal under federal law but legal under some states' laws, which means that we get different results depending on the forum. A contract under which a Texan agreed to invest in a Colorado recreational dispensary would be void as illegal in Texas and probably in Federal court in Colorado, but legal in Colorado state court.

Posted by: Frank Snyder | Mar 14, 2019 10:26:53 AM

Really great point!

Posted by: Stacey | Mar 23, 2019 8:49:27 AM

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