breach-of-contract bankruptcy adhesion-contracts
if all customers always violate a contract, is enforcement legally impossible?
<p>Hypothetical case for U.S. law (close to reality but simplified here):</p>

<p>A company offers advertising. Customers may get paid by publishing the advertising. The customers presumably want to do this in order to make profits. Some customers may be organized as nonprofit and they're not allowed to make profits, but individuals are not nonprofit and nonprofit organizations presumably want to do this in order to make surpluses. The company does not appear to serve primarily nonprofits.</p>

<p>The company requires a contract, which is a contract of adhesion. Ignore that the contract may have been sloppily drafted. Assume the company will defend it as written now. The contract forbids customers from doing anything "commercial". The contract does not explicitly define "commercial" but implicitly relies on one or more legal definitions inferrable from outside of the contract. While it is possible for a customer to enter into the contract and then do nothing so as not to do anything "commercial", the customer would then earn no revenue and therefore no profit or surplus, and such a possibility is therefore a trivial case not considered here. Therefore, while the company is not in violation of the contract, all customers, except nonprofits, are always in violation. The only cure is to cease doing anything with the company.</p>

<p>If I, an individual, enter into the contract and I then do something "commercial" in relation to the company, is the company barred from treating me as violating the contract because what I do under the contract is "commercial" when what everyone is doing under the contract is "commercial"? For example, might the bar be due to estoppel?</p>

<p>Companies are usually presumed to legally exist in perpetuity, so assume perpetuity for this company. Does it add fuel to the legal fire if enforcing the bar to commercialism against all customers would put the company out of business? In this case, customers would not publish the advertising supplied by the company, no one in the world would act on the advertisements, advertisers would stop advertising through this company, the company would stop receiving any revenue, and the company therefore would have no more profit. Indeed, the company could not pay any obligations still outstanding, and that would force it into bankruptcy. Does that mean the company cannot enforce contractual violations grounded solely on commercialism?</p>

<p>If such a case came to court, the court would presumably rule that merely publishing the advertising could not be considered to be doing something "commercial". (Otherwise the contract would be absurd, as the question points out.) The court would therefore define "commercial" as some act beyond merely displaying the advertising -- perhaps charging for the website on which it is displayed, or using it to sell goods. </p>

<p>Moreover, since the company apparently wrote the contract, any ambiguity in it would be construed against the company, if there is another reasonable interpretation. </p>

<p>Thus the contract would not be void, and could be sued on, but the company would win only if it established some conduct that the court was prepared to consider as "commercial" in light of the circumstances and the purpose of the contract.</p>

<p>By the way it is not really on point, but it is a common misunderstanding that:</p>

<blockquote>
  <p>some customers may be organized as nonprofit and they're not allowed to make profits</p>
</blockquote>

<p>Nonprofit entities may do business and make income that would be considered "profit" for an ordinary corporation. What they cannot do is <strong>distribute</strong> that income as "profit" to owners, shareholders, members, or other individuals.</p>
