Question 1

Which of the following is true with regard to an exculpatory clause?

Accepted Answer

A) An exculpatory clause excuses one party from liability for her own tortious conduct. 
B) Where one party has a superior bargaining position that has enabled him to impose an exculpatory clause upon the other, the courts are inclined to nullify the provision. 
C) An exculpatory clause may be unenforceable for unconscionability. 
D) All of the above are true. 
A) An exculpatory clause excuses one party from liability for her own tortious conduct. 
B) Where one party has a superior bargaining position that has enabled him to impose an exculpatory clause upon the other, the courts are inclined to nullify the provision. 
C) An exculpatory clause may be unenforceable for unconscionability. 
D) All of the above are true.

Question 2

In the Pacific Custom Pools, Inc.v.Turner Construction Company case, the court found that:

Accepted Answer

A) the trial court erred in granting a motion for summary judgment on the basis that PCP had not been licensed in California and thus could not bring suit. 
B) the purpose of the relevant licensing law was to protect the public from incompetence and dishonesty in those who provide building and construction services. 
C) under the facts, PCP acted reasonably and in good faith to maintain its license. 
D) PCP met an exception to the California statute providing that a contractor may not maintain an action for the recovery of compensation for work requiring a license unless it had a license at all times during performance of the work. 
A) the trial court erred in granting a motion for summary judgment on the basis that PCP had not been licensed in California and thus could not bring suit. 
B) the purpose of the relevant licensing law was to protect the public from incompetence and dishonesty in those who provide building and construction services. 
C) under the facts, PCP acted reasonably and in good faith to maintain its license. 
D) PCP met an exception to the California statute providing that a contractor may not maintain an action for the recovery of compensation for work requiring a license unless it had a license at all times during performance of the work.

Question 3

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 4

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 the above. 
A) exculpatory. 
B) unconscionable. 
C) usurious. 
D) None of the above.

Question 5

__________ is a provision excusing one party from liability.

Accepted Answer

A) Procedural unconscionability 
B) An exculpatory clause 
C) Substantive unconscionability 
D) Tortious conduct 
A) Procedural unconscionability 
B) An exculpatory clause 
C) Substantive unconscionability 
D) Tortious conduct

Question 6

One type of restraint of trade is a covenant not to compete.

Accepted Answer

A) True 
 B)False

Question 7

Bill is currently enrolled in law school, expects to graduate and take the bar exam in order to be able to practice law.Before Bill becomes a lawyer, he promises to represent his friend, Tom, in a breach of contract action if Tom will pay him 25% of the settlement.Bill negotiates and the case settles for $50,000.Tom refuses to pay Bill.Bill then graduates and attempts to sue Tom.Bill has a legal right to enforce the agreement.

Accepted Answer

A) True 
 B)False

Question 8

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 an illegality created by circumstances of which he was unaware but the agreement appeared permissible on its face. 
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 an illegality created by circumstances of which he was unaware but the agreement appeared permissible on its face. 
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 9

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.This:

Accepted Answer

A) agreement is enforceable. 
B) agreement 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) agreement is enforceable. 
B) agreement 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 10

Which of the following would always be considered to be contrary to public policy?

Accepted Answer

A) A contract which contains a covenant not to compete. 
B) A contract offered on a take-it-or-leave-it basis. 
C) An agreement to pay someone to make false statements about a competitor's product. 
D) An agreement which contains an exculpatory clause. 
A) A contract which contains a covenant not to compete. 
B) A contract offered on a take-it-or-leave-it basis. 
C) An agreement to pay someone to make false statements about a competitor's product. 
D) An agreement which contains an exculpatory clause.

Question 11

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 12

Many states impose no limit on the rate of interest that may be charged on loans to corporations.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 the above 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 the above charges would be considered in determining the rate of interest under usury statutes.

Question 15

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) None of the above. 
A) wager 
B) usury statute 
C) Sunday statute 
D) None of the above.

Question 16

An exculpatory clause attempts to excuse one from liability for her own tortious conduct.

Accepted Answer

A) True 
 B)False

Question 17

Distinguish between procedural and substantive unconscionability.

Accepted Answer

Procedural unconscionability involves sc

Question 18

Some states require the lender to forfeit two or three times the amount of usurious interest charged.

Accepted Answer

A) True 
 B)False

Question 19

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 20

An agreement in connection with the sale of a business that prohibits the seller from engaging in the same or similar business for a period of twenty-five years would be unreasonable and unenforceable.

Accepted Answer

A) True 
 B)False

Exam 13: Illegal Bargains

Which of the following is true with regard to an exculpatory clause?

In the Pacific Custom Pools, Inc.v.Turner Construction Company case, the court found that:

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.

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:

__________ is a provision excusing one party from liability.

One type of restraint of trade is a covenant not to compete.

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

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.This:

Which of the following would always be considered to be contrary to public policy?

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?

Many states impose no limit on the rate of interest that may be charged on loans to corporations.

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.

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?

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

An exculpatory clause attempts to excuse one from liability for her own tortious conduct.

Distinguish between procedural and substantive unconscionability.

Some states require the lender to forfeit two or three times the amount of usurious interest charged.

An agreement in connection with the sale of a business that prohibits the seller from engaging in the same or similar business for a period of twenty-five years would be unreasonable and 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

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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