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When two parties commit the same wrongdoing and are equally at fault, the court generally will not get involved in their transaction.  That rule is known as the doctrine of “in pari delicto.”  The doctrine of in pari delicto generally will apply to various forms of unlawful contracts.  For example, if two parties enter into an illegal contract to split the profits of a robbery, neither party can seek to have the court enforce the contract when one party refuses to share the profits.  Both parties were equally at fault—or in pari delicto—and the court will leave the parties as they are.  Until recently, some Florida courts applied the doctrine of in pari delicto to construction contracts entered into by unlicensed contractors.

In Earth Trades, Inc. v. T&G Corp., 108 So. 3d 580 (Fla. 2013), an unlicensed subcontractor (“Earth Trades”) entered into a construction contract with a general contractor (“T&G”).  T&G knew that Earth Trades was unlicensed when it entered into the contract.  After a dispute between the parties arose, Earth Trade sued T&G for breach of the contract.  T&G countersued for breach of contract against Earth Trade.  At that point Earth Trade argued that neither T&G nor Earth Trade could enforce the contract because the contract was unlawful.  Earth Trade further argued that because both parties knew that the contract was unlawful, the parties were in pari delicto.  The Florida Supreme Court disagreed.

The Florida legislature amended the statute regarding unlicensed construction contractors in 2003.  As amended, the statute reads as follows: “contracts entered into on or after October 1, 1990, by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor.”  Fla. Stat. § 489.128(1) (emphasis added).  The statute therefore explicitly makes the contract unenforceable only by the unlicensed contractor and not the party contracting with the unlicensed contractor.  Because the legislature placed the liability on the unlicensed contractor, “the fault of the person or entity engaging in unlicensed contracting is not substantially equal to that of the party who merely hires a contractor with knowledge of the contractor’s unlicensed status.”  Earth Trades, Inc., 108 So. 3d at 587.  Earth Trades was therefore not in pari delicto with T&G even though T&G knew that Earth Trades was unlicensed.

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Franchise agreements can serve to establish a mutually beneficial relationship for the franchisor and the franchisee.  Under a franchise agreement, the franchisor’s brand is allowed to grow through an independent business, i.e., the franchisee, and the franchisee is able to start a business without having to create a new product or brand.  Because franchisees are generally independent businesses, the franchisor will normally not be liable for the franchisee’s actionable conduct.  However, the franchise agreement and other factual circumstances could render a franchisor vicariously liable for its franchisees’ actions.

In Parker v. Domino’s Pizza, 629 So. 2d 1026 (Fla. 4th DCA 1993), two plaintiffs were harmed as a result of an accident caused by a delivery driver employed by J&B Enterprises, a Domino’s Pizza (“Domino’s”) franchisee.  Under Florida law, an employer can be vicariously liable for his or her employees’ actions.  J&B Enterprises, as the employer of the delivery driver, could therefore be liable for the plaintiffs’ injuries.  The plaintiffs argued, however, that Domino’s also was vicariously liable for the injuries caused by the delivery driver.  The trial court held that Domino’s was not liable to the plaintiffs because the delivery driver was not a Domino’s employee.  On appeal, the appellate court disagreed.

The appellate court held that the operating manual that Domino’s provided to J&B Enterprises was “a veritable bible for overseeing a Domino’s operation,” which contained “prescriptions for every conceivable facet of the business.”  Parker v. Domino’s Pizza, 629 So. 2d 1026, 1029 (Fla. 4th DCA 1993).  Because the manual indicated that Domino’s retained a high degree of control over J&B Enterprises, J&B Enterprises could be considered an agent of Domino’s.  Consequently, the appellate court held that Domino’s could be found liable for the delivery driver’s actions.

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