Question 1

The UCC deals with unconscionability in a contract by providing that a court may:

Accepted Answer

A) refuse to enforce the contract. 
B) enforce the remainder of the contract without the unconscionable clause. 
C) limit the application of any unconscionable clause as to avoid any unconscionable result. 
D) All of the above. 
A) refuse to enforce the contract. 
B) enforce the remainder of the contract without the unconscionable clause. 
C) limit the application of any unconscionable clause as to avoid any unconscionable result. 
D) All of the above.

Question 2

A gambling contract is illegal unless it is a type of wagering specifically authorized by state statute.

Accepted Answer

A) True 
 B)False

Question 3

An unconscionable contract is one that a court refuses to enforce because of

Accepted Answer

A) fundamental unfairness. 
B) illegality. 
C) its limit to free trade. 
D) overt vagueness. 
A) fundamental unfairness. 
B) illegality. 
C) its limit to free trade. 
D) overt vagueness.

Question 4

Morality plays no part of gambling contract legality.

Accepted Answer

A) True 
 B)False

Question 5

A contract most likely will be declared unconscionable if

Accepted Answer

A) it allows for an extremely high rate of interest to be charged. 
B) it contains a cancellation clause. 
C) it is oppressive and one-sided. 
D) it is signed by a minor for an item of luxury. 
A) it allows for an extremely high rate of interest to be charged. 
B) it contains a cancellation clause. 
C) it is oppressive and one-sided. 
D) it is signed by a minor for an item of luxury.

Question 6

According to section 2-302 of the UCC,if a court finds as a matter of law that a clause of a contract was unconscionable at the time the contract was made,the court must refuse to enforce the contract.

Accepted Answer

A) True 
 B)False

Question 7

Discuss exculpatory clauses,and designate when an exculpatory clause is unenforceable.

Accepted Answer

An exculpatory clause is one that attemp

Question 8

Mike owns a house in a poor area of a large city.Mike is on disability and his total monthly income is $700.A sales representative visits his home,selling a water purification system.Mike signs a contract that calls for monthly payments of $500 for the next 10 years.The water system is worth no more than $1000.Mike thought he was signing a permission slip allowing the salesman to conduct a free water test to determine the toxins in the water.How would a court most likely describe this contract?

Accepted Answer

A) The contract is fully enforceable as written. 
B) The contract is unenforceable because it is unconscionable. 
C) The contract is enforceable, but only up to the value of the water system. 
D) The contract is unenforceable because it is exculpatory. 
A) The contract is fully enforceable as written. 
B) The contract is unenforceable because it is unconscionable. 
C) The contract is enforceable, but only up to the value of the water system. 
D) The contract is unenforceable because it is exculpatory.

Question 9

When Mohammed was hired by Pomico,Inc.,he signed the following agreement,"Upon termination of my employment with Pomico,I agree not to work for a competing company within 20 miles of Pomico's headquarters for one year." This agreement,important to protecting secret information developed in the employer's business,is

Accepted Answer

A) an unenforceable exculpatory agreement. 
B) an unenforceable usurious agreement. 
C) an enforceable bailment agreement. 
D) an enforceable agreement not to compete. 
A) an unenforceable exculpatory agreement. 
B) an unenforceable usurious agreement. 
C) an enforceable bailment agreement. 
D) an enforceable agreement not to compete.

Question 10

An exculpatory clause is generally unenforceable when

Accepted Answer

A) it attempts to release a party from liability for ordinarily negligent behavior. 
B) it involves public transportation. 
C) it is written clearly and in bold, large print. 
D) the affected activity is a recreational activity. 
A) it attempts to release a party from liability for ordinarily negligent behavior. 
B) it involves public transportation. 
C) it is written clearly and in bold, large print. 
D) the affected activity is a recreational activity.

Question 11

Which of the following is an example of an exculpatory clause?

Accepted Answer

A) Creditor charges 38% interest on a loan 
B) Seller is not responsible for property damage regardless of the cause of the injury 
C) Buyer agrees to pay any costs of litigation 
D) Employee agrees to never work for a competing company 
A) Creditor charges 38% interest on a loan 
B) Seller is not responsible for property damage regardless of the cause of the injury 
C) Buyer agrees to pay any costs of litigation 
D) Employee agrees to never work for a competing company

Question 12

In a noncompete agreement,the term "ancillary" means that

Accepted Answer

A) both parties must have a stake in the outcome. 
B) the agreement is harmless to the general public. 
C) the noncompetition agreement must be part of a larger agreement. 
D) the noncompetition agreement is unfair to the employee, but not the employer. 
A) both parties must have a stake in the outcome. 
B) the agreement is harmless to the general public. 
C) the noncompetition agreement must be part of a larger agreement. 
D) the noncompetition agreement is unfair to the employee, but not the employer.

Question 13

To be valid,an agreement not to compete must be ancillary to a legitimate bargain.

Accepted Answer

A) True 
 B)False

Question 14

To be valid,a noncompete clause must be

Accepted Answer

A) ancillary to a legitimate bargain. 
B) reasonable in time, geographical area, and scope of activity when ancillary to the sale of a business. 
C) necessary to protect trade secrets, confidential information, or customer lists developed over an extended time when ancillary to an employment contract. 
D) All of the above. 
A) ancillary to a legitimate bargain. 
B) reasonable in time, geographical area, and scope of activity when ancillary to the sale of a business. 
C) necessary to protect trade secrets, confidential information, or customer lists developed over an extended time when ancillary to an employment contract. 
D) All of the above.

Question 15

Which of the following relationships generally fails to create an insurable interest?

Accepted Answer

A) Husband and wife 
B) Doctor and patient 
C) Debtor and creditor 
D) Chief executive officer and corporation 
A) Husband and wife 
B) Doctor and patient 
C) Debtor and creditor 
D) Chief executive officer and corporation

Question 16

Roger parked his car at a garage that has a large sign at the entrance saying,"This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.

Accepted Answer

A) True 
 B)False

Question 17

Wendell,new to the area,selects a doctor from the telephone book and visits that doctor to have a splinter extracted.Unbeknownst to Wendell,the doctor has never passed the state licensing exams.Later,when Wendell discovers the truth,he refuses to pay his bill.If the doctor sues for recovery of the fee,will the court support the doctor's claim?

Accepted Answer

A) Yes, it was up to Wendell to verify the doctor's qualifications prior to having the splinter extracted. 
B) No, the court is likely to take the position that it is not in the public's best interest to enforce contracts with unlicensed doctors. 
C) It depends on whether Wendell's injury healed properly. 
D) Yes, it is unconscionable that Wendell would not pay a bill he owed. 
A) Yes, it was up to Wendell to verify the doctor's qualifications prior to having the splinter extracted. 
B) No, the court is likely to take the position that it is not in the public's best interest to enforce contracts with unlicensed doctors. 
C) It depends on whether Wendell's injury healed properly. 
D) Yes, it is unconscionable that Wendell would not pay a bill he owed.

Question 18

Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fee will be a percentage of the recovery Lenny obtains for Cindy in her pending divorce.State law makes such a contingency fee arrangement illegal in divorce actions.What will be the probable outcome if Lenny attempts to enforce the agreement?

Accepted Answer

A) The contract will be valid.Cindy would not have been able to afford an attorney otherwise and therefore Lenny was doing a public service. 
B) The contract will be voidable at Cindy's option. 
C) The contract will be void as violating a statute. Lenny will not be able to recover anything. 
D) The contract will be unenforceable if Lenny did not get the agreement in writing. 
A) The contract will be valid.Cindy would not have been able to afford an attorney otherwise and therefore Lenny was doing a public service. 
B) The contract will be voidable at Cindy's option. 
C) The contract will be void as violating a statute. Lenny will not be able to recover anything. 
D) The contract will be unenforceable if Lenny did not get the agreement in writing.

Question 19

Rudolph overhears Macy's plans to go skydiving over spring break.Not really knowing Macy,but figuring it's worth a chance,Rudolph rushes out and buys an insurance policy for $100,000 on Macy's life.Macy does in fact meet her demise jumping out of the airplane.Rudolph can collect the $100,000.

Accepted Answer

A) True 
 B)False

Question 20

Barb has been a children's day care provider for several years in the small town of Sallton.She has decided to give it all up and move to the big city for excitement and adventure.She sells her business to Ken,agreeing not to open a competing business within five miles of Sallton for a period of nine months.After five months of the big city life,Barb is broke and moves back to Sallton.She opens a small day care business.Ken sues on the noncompete clause.What is the most likely result?

Accepted Answer

A) Ken wins.The agreement is enforceable. 
B) Barb wins. The agreement is denying her the right to do the only thing she knows how to do. 
C) Barb wins. The agreement is not enforceable because it is not ancillary to a legitimate bargain. 
D) Barb wins. The agreement is not reasonable as to time. 
A) Ken wins.The agreement is enforceable. 
B) Barb wins. The agreement is denying her the right to do the only thing she knows how to do. 
C) Barb wins. The agreement is not enforceable because it is not ancillary to a legitimate bargain. 
D) Barb wins. The agreement is not reasonable as to time.

Exam 14: Legality

The UCC deals with unconscionability in a contract by providing that a court may:

A gambling contract is illegal unless it is a type of wagering specifically authorized by state statute.

An unconscionable contract is one that a court refuses to enforce because of

Morality plays no part of gambling contract legality.

A contract most likely will be declared unconscionable if

According to section 2-302 of the UCC,if a court finds as a matter of law that a clause of a contract was unconscionable at the time the contract was made,the court must refuse to enforce the contract.

Discuss exculpatory clauses,and designate when an exculpatory clause is unenforceable.

An exculpatory clause is generally unenforceable when

Which of the following is an example of an exculpatory clause?

In a noncompete agreement,the term "ancillary" means that

To be valid,an agreement not to compete must be ancillary to a legitimate bargain.

To be valid,a noncompete clause must be

Which of the following relationships generally fails to create an insurable interest?

Roger parked his car at a garage that has a large sign at the entrance saying,"This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.

Rudolph overhears Macy's plans to go skydiving over spring break.Not really knowing Macy,but figuring it's worth a chance,Rudolph rushes out and buys an insurance policy for $100,000 on Macy's life.Macy does in fact meet her demise jumping out of the airplane.Rudolph can collect the $100,000.

Introduction to Law

Business Ethics and Corporate Social Responsibility

International Law

Common Law, Statutory Law, and Administrative Law

Constitutional Law

Dispute Resolution

Crime

Intentional Torts and Business Torts

Negligence, Strict Liability, and Product Liability

Cyberlaw and Privacy

Introduction to Contracts

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Consideration

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Written Contracts

Third Parties

Performance, Breach and Discharge

Remedies

Practical Contracts

Introduction to Sales

Ownership, Risk and Warranties

Performance and Remedies

Secured Transactions

Creating a Negotiable Instrument

Liability for Negotiable Instruments

Accountants' Liability

Agency Law

Employment and Labor Law

Employment Discrimination

Starting a Business: LLCs and Other Options

Partnerships

Life and Death of a Corporation

Management Duties

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Bankruptcy

Securities Regulation

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Real Property and Landlord Tenant

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Planning for the Future: Estates and Insurance

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