The defendants moved to dismiss on the ground of illegality in that Waterfun was an unlicensed contractor and cannot sue for work for which it required a contract. It would be against public policy as expressed in the statute to allow Waterfun to recover based on a special contract between the parties and private parties cannot contract to break the law and have it enforced in court. Waterfun's argument that it was fraudulently induced by Water Thrills fraudulent representation that it would not raise the defense of illegality and that such a defense is waivable by the party. This argument will fail because CA enacted its law to make sure contractors who work in the state are licensed and it is not just to protect against this situation but for the public in general to make sure contractors are competent as evidenced by the license. Waterfun should not have taken the design work and if it did, it should have insisted on payment in full in advance for that work. Waterfun will recover the $25,000 portion of the price that does not relate to the design and construction.
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That makes sense. Can you elaborate a little more at all?
I could not see your response in chat so I had to switch to this mode. Waterfun could also argue that Waterthrill should be equitably estopped from asserting the non license defense because to do so would be to reward Waterthrill for its fraudulent conduct, allowing it to be unjustly enriched and rewarded for inducing Waterfun to break the law. I don't think the court will allow this argument and will treat the arrangement as an illegal contract and leave the parties wherever they stand. Waterfun may have a solution which is to take the steps necessary to get licensed, renew its suit for fraud and unjust enrichment and recover that way.
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