Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Carl and Ron both work in road construction.They know that several jobs are going to be up for public bids, and agree between themselves that Carl will bid on one job and Ron will bid on the other, so that they both have work for the summer.When the bids are opened, Carl realizes that Ron has bid on both jobs.Ron is awarded both contracts.If Carl now wants to sue Ron for breach of contract:

Accepted Answer

A)  Carl would probably win on the basis of promissory estoppel since he has detrimentally relied upon Ron's representation that he would not bid. 
B)  since Carl is less at fault than Ron, the court will likely award Carl damages. 
C)  the agreement will not be enforced by the courts because it violates public policy. 
D)  the agreement will not be enforced by the courts because it obstructs the administration of justice. 
A)  Carl would probably win on the basis of promissory estoppel since he has detrimentally relied upon Ron's representation that he would not bid. 
B)  since Carl is less at fault than Ron, the court will likely award Carl damages. 
C)  the agreement will not be enforced by the courts because it violates public policy. 
D)  the agreement will not be enforced by the courts because it obstructs the administration of justice.

Question 3

A(n) __________ is a measure designed to protect the public from unqualified practitioners.

Accepted Answer

A)  exculpatory clause 
B)  revenue license 
C)  regulatory license 
D)  usury statute 
A)  exculpatory clause 
B)  revenue license 
C)  regulatory license 
D)  usury statute

Question 4

Where a stipulation in restraint of trade is part of the sale of a business, it may be valid if the restraint is within reasonable limitations to protect the business's goodwill.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Rose is working hard on Arlin's mayoral campaign.She thinks that just a few more votes could win the election, so she promises to pay her friend Violet $50 if she will register and vote for Arlin.Violet does so, but Arlin loses the election, and Rose now refuses to pay.Rose's agreement to pay Violet:

Accepted Answer

A)  is enforceable. 
B)  is unenforceable and opposed to public policy. 
C)  is an agreement to obstruct the administration of justice. 
D)  is an unconscionable contract covered by the UCC. 
A)  is enforceable. 
B)  is unenforceable and opposed to public policy. 
C)  is an agreement to obstruct the administration of justice. 
D)  is an unconscionable contract covered by the UCC.

Question 7

The Uniform Commercial Code provides that a court may scrutinize every contract for the sale of goods to determine whether, in its commercial setting, purpose, and effect, the contract is:

Accepted Answer

A)  exculpatory. 
B)  unconscionable. 
C)  usurious. 
D)  None of these. 
A)  exculpatory. 
B)  unconscionable. 
C)  usurious. 
D)  None of these.

Question 8

Delbert won a $500 bet with Samuel on the outcome of the World Series, but Samuel refuses to pay.Discuss what recourse Delbert has.If Delbert had instead bought a ticket from a state-operated lottery, would his recourse be different?

Accepted Answer

Delbert's bet with Samuel is an illegal

Question 9

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 10

Under which of the following circumstances would a court be unlikely to enforce the illegal contract?

Accepted Answer

A)  Where the aggrieved party was unaware of the illegality. 
B)  Where a party withdraws from an illegal agreement prior to performance. 
C)  Where the agreement is with an unlicensed attorney. 
D)  Where one of the parties is less at fault than the other. 
A)  Where the aggrieved party was unaware of the illegality. 
B)  Where a party withdraws from an illegal agreement prior to performance. 
C)  Where the agreement is with an unlicensed attorney. 
D)  Where one of the parties is less at fault than the other.

Question 11

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 12

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 13

Distinguish between procedural and substantive unconscionability.

Accepted Answer

Procedural unconscionability involves sc

Question 14

Rorzex, Inc.entered into a contract with Denzil under the terms of which Denzil would receive $20,000 if he stole trade secrets from the leading competitor of Rorzex.Denzil performed his end of the agreement by delivering the trade secrets.Rorzex now refuses to pay Denzil for his services.Denzil:

Accepted Answer

A)  may recover based upon the express contract of the parties. 
B)  may recover based upon a quasi-contractual theory in order to prevent the unjust enrichment of Rorzex. 
C)  will be unable to recover, because this is an illegal contract. 
D)  will be able to recover based upon promissory estoppel, because he has detrimentally relied upon the promises made by Rorzex. 
A)  may recover based upon the express contract of the parties. 
B)  may recover based upon a quasi-contractual theory in order to prevent the unjust enrichment of Rorzex. 
C)  will be unable to recover, because this is an illegal contract. 
D)  will be able to recover based upon promissory estoppel, because he has detrimentally relied upon the promises made by Rorzex.

Question 15

Who usually enters into employment contracts and what provision is commonly included regarding possible restraint of trade? Explain the purpose of such provisions.

Accepted Answer

Salespeople, management personnel, and o

Question 16

The usual means of enforcing an agreement prohibiting an employee from competing in a described territory for a stated period of time is by injunction.

Accepted Answer

A) True 
 B)False

Question 17

Mel has a neighborhood grocery store that he would like to sell.Casey is interested in purchasing the business, but he is concerned because he knows that Mel has built up a lot of goodwill over the years, and he wonders whether Mel might not just open another store down the block and take all of the business from the old store with him.Casey asks for and receives from Mel a clause in the sale agreement that Mel will not open another grocery store within a 150-mile radius of the old store for a period of at least ten years.
a.What is this agreement called? 
b.Is the negotiated clause a valid one? Explain why or why not.
c.What guidelines would a court ordinarily use in determining whether to enforce such a clause?

Accepted Answer

a.The agreement is a covenant not to com

Question 18

Permissible lender's expenses, which would not be considered in determining the rate of interest under usury statutes, include all but which of the following?

Accepted Answer

A)  Cost of title examination. 
B)  Reasonable cost of drawing up the necessary documents. 
C)  A charge to the borrower of $500 to investigate the borrower's credit, when it actually cost the lender $75. 
D)  All of these charges would be considered in determining the rate of interest under usury statutes. 
A)  Cost of title examination. 
B)  Reasonable cost of drawing up the necessary documents. 
C)  A charge to the borrower of $500 to investigate the borrower's credit, when it actually cost the lender $75. 
D)  All of these charges would be considered in determining the rate of interest under usury statutes.

Question 19

The legal effect of a usurious loan varies from state to state.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 13: Illegal Bargains

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

A(n) __________ is a measure designed to protect the public from unqualified practitioners.

Where a stipulation in restraint of trade is part of the sale of a business, it may be valid if the restraint is within reasonable limitations to protect the business's goodwill.

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 Uniform Commercial Code provides that a court may scrutinize every contract for the sale of goods to determine whether, in its commercial setting, purpose, and effect, the contract is:

Delbert won a $500 bet with Samuel on the outcome of the World Series, but Samuel refuses to pay.Discuss what recourse Delbert has.If Delbert had instead bought a ticket from a state-operated lottery, would his recourse be different?

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?

Under which of the following circumstances would a court be unlikely to enforce the illegal 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.

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

Distinguish between procedural and substantive unconscionability.

Rorzex, Inc.entered into a contract with Denzil under the terms of which Denzil would receive $20,000 if he stole trade secrets from the leading competitor of Rorzex.Denzil performed his end of the agreement by delivering the trade secrets.Rorzex now refuses to pay Denzil for his services.Denzil:

Who usually enters into employment contracts and what provision is commonly included regarding possible restraint of trade? Explain the purpose of such provisions.

The usual means of enforcing an agreement prohibiting an employee from competing in a described territory for a stated period of time is by injunction.

Permissible lender's expenses, which would not be considered in determining the rate of interest under usury statutes, include all but which of the following?

The legal effect of a usurious loan varies from state to state.

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

Introduction to Law

Business Ethicspart Ii: the Legal Environment of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Negligence and Strict Liabilitypart Iii: Contracts

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remediespart Iv: Sales

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remediespart V: Negotiable Instruments

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transferspart Vi: Agency

Relationship of Principal and Agent

Relationship With Third Partiespart Vii: Business Associations

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 Corporationspart Viii: Debtor and Creditor Relations

Secured Transactions and Suretyship

Bankruptcypart Ix: Regulation of Business

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

International Business Lawpart X: Property

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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