Question 1

A __________ is a law establishing a maximum rate of permissible interest for which a lender and borrower of money may contract.

Accepted Answer

A)  wager 
B)  usury statute 
C)  Sunday statute 
D)  blue sky law. 
A)  wager 
B)  usury statute 
C)  Sunday statute 
D)  blue sky law.

Question 2

An agreement to refrain from a particular trade, profession, or business is enforceable if two requirements are met: that the purpose of the restraint is to protect a property interest of the promisee and the restraint is no more extensive than is reasonably necessary to protect that interest.

Accepted Answer

A) True 
 B)False

Question 3

An adhesion contract is offered on a "take-it-or-leave-it" basis.

Accepted Answer

A) True 
 B)False

Question 4

Courts will never limit freedom of contract.

Accepted Answer

A) True 
 B)False

Question 5

A contract of adhesion:

Accepted Answer

A)  is automatically unenforceable. 
B)  consists largely of boilerplate provisions, such as a standard-form insurance policy. 
C)  is a contract that exhibits either procedural or substantive unconscionability. 
D)  is a contract containing multiple exculpatory clauses. 
A)  is automatically unenforceable. 
B)  consists largely of boilerplate provisions, such as a standard-form insurance policy. 
C)  is a contract that exhibits either procedural or substantive unconscionability. 
D)  is a contract containing multiple exculpatory clauses.

Question 6

Which of the following would generally be considered to be a revenue-raising licensing law?

Accepted Answer

A)  A statute requiring that doctors be licensed. 
B)  A statute requiring that salespeople be licensed, but not establishing any educational or training requirements. 
C)  A statute requiring public school teachers to be licensed. 
D)  A statute that requires insurance agents to pass a test before selling insurance in a state. 
A)  A statute requiring that doctors be licensed. 
B)  A statute requiring that salespeople be licensed, but not establishing any educational or training requirements. 
C)  A statute requiring public school teachers to be licensed. 
D)  A statute that requires insurance agents to pass a test before selling insurance in a state.

Question 7

Oswald applied for a loan from Pointe Lenders. Pointe's reasonable cost of checking Oswald's credit will be considered as part of the financing charge when determining whether Pointe's rate of interest exceeds that allowable under the usury statute.

Accepted Answer

A) True 
 B)False

Question 8

The Code and the Restatement both contain definitions of what constitutes "unconscionable" conduct.

Accepted Answer

A) True 
 B)False

Question 9

In some states, a lender who charges a usurious rate forfeits both the principal and interest on the loan.

Accepted Answer

A) True 
 B)False

Question 10

What is the legal effect of an agreement that is criminal, tortious, or otherwise contrary to public policy, and why does it have that effect?

Accepted Answer

Such an agreement is illegal and unenfor

Question 11

Sam, a student, promises to act as a guide on a fishing trip for a group of visiting dignitaries. The dignitaries agree to pay him $200 for his services. Sam guides them, but when they discover that Sam does not have a fishing license, they refuse to pay him. The agreement is an illegal one, which is not enforceable.

Accepted Answer

A) True 
 B)False

Question 12

Claudia sells her highly successful hair salon to Carl. In the sales contract, Claudia agrees never to open a hair salon in the state. Which of the following best describes this contract clause?

Accepted Answer

A)  Void as an illegal violation of a statute. 
B)  Valid as a reasonable restraint on trade. 
C)  Unenforceable as a violation of public policy. 
D)  Binding as fair protection. 
A)  Void as an illegal violation of a statute. 
B)  Valid as a reasonable restraint on trade. 
C)  Unenforceable as a violation of public policy. 
D)  Binding as fair protection.

Question 13

It is legal for a candidate for public office to make a bargain with a supporter to give them a certain appointment following the election in return for support.

Accepted Answer

A) True 
 B)False

Question 14

Philip has been in training for several months and now plans to run in the school-sponsored, 10-mile, fun-run mini-marathon. He completes and signs an entry blank which contains the statement, "I hereby agree to hold the sponsors harmless for any injury sustained as a result of participation in this event no matter how such injury may be caused." 
a. What is the legal term for this clause in the agreement? 
b. Is the clause valid and legally enforceable? Explain its legal effect.

Accepted Answer

a. This is an exculpatory clause. 
b. Th

Question 15

Where parties to a failed agreement are in pari delicto , a court will provide a remedy to the injured party.

Accepted Answer

A) True 
 B)False

Question 16

Alatan owns a building supply store in Russ County. His trade extends throughout River City, the largest city in Russ County, but not beyond the county limits. He sells his store to Hilary and, as part of the transaction, agrees not to engage in the same business anywhere in River City for a period of two years. In this case:

Accepted Answer

A)  the geographic restraint is reasonable. 
B)  this agreement is unreasonable. 
C)  the agreement unduly interferes with the interest of the public. 
D)  the time limit is reasonable, but the geographic restraint is not. 
A)  the geographic restraint is reasonable. 
B)  this agreement is unreasonable. 
C)  the agreement unduly interferes with the interest of the public. 
D)  the time limit is reasonable, but the geographic restraint is not.

Question 17

Don has an employment contract with Dunkirk Ice Cream. He sells ice cream and novelty ice cream products. He has nine children and doesn't make enough money, so he decides to see if another dairy will hire him, too. "After all," he reasons, "most stores carry four or five different brands." His employment contract prohibits him from competing. If Don sells for another dairy in addition to Dunkirk, will he be in trouble under his contract?

Accepted Answer

A)  No, it is unenforceable as against public policy. 
B)  Yes, it is likely to be enforceable during employment. 
C)  No, the prohibition against competing is enforceable only after he quits Dunkirk. 
D)  A court would have to rule on the enforceability of the covenant not to compete since courts are reluctant to enforce such covenants during a period of employment. 
A)  No, it is unenforceable as against public policy. 
B)  Yes, it is likely to be enforceable during employment. 
C)  No, the prohibition against competing is enforceable only after he quits Dunkirk. 
D)  A court would have to rule on the enforceability of the covenant not to compete since courts are reluctant to enforce such covenants during a period of employment.

Question 18

Maximum rates of interest that are permitted under usury statutes vary from state to state.

Accepted Answer

A) True 
 B)False

Question 19

Opal wanted to purchase a smartphone and found one she liked at Live Talk Mobile. Several important contractual terms were buried in the written agreement and some of the meaning of the contract was obscured by legal jargon. The contract involved:

Accepted Answer

A)  procedural unconscionability. 
B)  substantive unconscionability. 
C)  adhesion. 
D)  exculpatory clauses. 
A)  procedural unconscionability. 
B)  substantive unconscionability. 
C)  adhesion. 
D)  exculpatory clauses.

Question 20

Identify five exceptions to the general rule that illegal contracts are unenforceable.

Accepted Answer

The rule of unenforceability is subject

Exam 13: Illegal Bargains

A __________ is a law establishing a maximum rate of permissible interest for which a lender and borrower of money may contract.

An agreement to refrain from a particular trade, profession, or business is enforceable if two requirements are met: that the purpose of the restraint is to protect a property interest of the promisee and the restraint is no more extensive than is reasonably necessary to protect that interest.

An adhesion contract is offered on a "take-it-or-leave-it" basis.

Courts will never limit freedom of contract.

A contract of adhesion:

Which of the following would generally be considered to be a revenue-raising licensing law?

Oswald applied for a loan from Pointe Lenders. Pointe's reasonable cost of checking Oswald's credit will be considered as part of the financing charge when determining whether Pointe's rate of interest exceeds that allowable under the usury statute.

The Code and the Restatement both contain definitions of what constitutes "unconscionable" conduct.

In some states, a lender who charges a usurious rate forfeits both the principal and interest on the loan.

What is the legal effect of an agreement that is criminal, tortious, or otherwise contrary to public policy, and why does it have that effect?

Claudia sells her highly successful hair salon to Carl. In the sales contract, Claudia agrees never to open a hair salon in the state. Which of the following best describes this contract clause?

It is legal for a candidate for public office to make a bargain with a supporter to give them a certain appointment following the election in return for support.

Where parties to a failed agreement are in pari delicto , a court will provide a remedy to the injured party.

Maximum rates of interest that are permitted under usury statutes vary from state to state.

Opal wanted to purchase a smartphone and found one she liked at Live Talk Mobile. Several important contractual terms were buried in the written agreement and some of the meaning of the contract was obscured by legal jargon. The contract involved:

Identify five exceptions to the general rule that illegal contracts are unenforceable.

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance Breach and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits Collections and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property Property Insurance Bailments and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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