MacDonald v. Roderick
In MacDonald v. Roderick, 158 Vt. 1, 603 A.2d 369 (1992), the Court reasoned that regulatory requirements represent "a public policy that may be used as a defense" in an appropriate case. 158 Vt. at 7, 603 A.2d at 372.
In determining what is an appropriate case, the Court adopted the Restatement approach, id., which requires weighing the public policy against enforcement - the strength of the policy, the likelihood that a refusal to enforce will further that policy, the seriousness of any misconduct involved, and the directness of the connection between that misconduct and the term of the contract to be enforced - against the interests in favor of enforcement of the promise - the parties' justified expectations, any forfeiture that would result, and any public interest in enforcement. See Restatement (Second) of Contracts 178 (1981).
MacDonald involved a suit for a real estate sales commission in which the defendant alleged that the listing agreement used by the broker violated certain rules of the Vermont Real Estate Commission.
The Court held that the violation of a rule requiring a written listing agreement would always create a defense under the standards set forth above, but that the violation of a requirement to use specific language or to include a specific term will not provide a defense unless there is a nexus between the violation and the dispute between the parties such that "the violation makes recovery unfair in the particular case before the court." MacDonald, 158 Vt. at 7, 603 A.2d at 373.