Exam 16: Legality and Public Policy

Private lotteries,which generally are held to be illegal,involve three elements:

Which party to an illegal agreement may get relief from the court?

Which of the following agreements represent(s)an unreasonable restraint of trade?

Public policy:

To stabilize the industry,manufacturers of the same or similar products may agree that each will market its product in a specified geographic area of the country and will not market its product in the territory assigned to other manufacturers.

Ordinarily,a court will not consider whether a contract is fair or unfair.

Agreements that are illegal are:

Companywide standardized form contracts imposed on a "take-it-or-leave it" basis by a party with superior bargaining strength are called contracts of collusion.

Fees charged by a lender for the reasonable expense of making a loan,such as the cost of appraising property,are treated as interest for purposes of the usury law.

Agreements not to compete are always void.

Which of the following types of contracts might be unenforceable as contrary to public policy?

Agreements that are contrary to public policy are not binding.

Sam Wilson often goes to the horse races,participates in his state's lottery,and invests heavily in the stock of major U.S.companies.At work,Wilson is approached by his coworkers and asked to participate in a football pool."It's totally based upon skill," his friends claim.In addition,Wilson's philanthropic club is holding a raffle in which an individual could win a new car.Are these activities gambling and therefore illegal activities?

An agreement between Jim and his 18-year-old daughter,Betty,provides that he will give her $25,000 if she does not marry until after her 22nd birthday.One month after reaching the age of 22,Betty,still unmarried,claims the $25,000. Jim refuses to pay,claiming that the agreement was illegal.Is Jim correct?

Which of the following is not an example of a state penalty for violating usury law?

Art and Mary were good friends who went through high school and college together.Art eventually became a college philosophy professor and Mary went into the business world.Mary became a senior vice-president of a management firm and learned many of the company's trade secrets.Both Art and Mary signed one-year contracts with their respective employers.The contracts contained clauses that provided that they would not compete against their former employers for a period of one year after leaving their jobs.The area covered by the restrictions for both Art and Mary was a radius of 500 miles from the place of employment. Both Art and Mary resigned and within two months took other jobs.Art went to work for another college 50 miles away,teaching philosophy.Mary took a job 75 miles from her former employment.Her new position was similar to her former job.The former employers sued to enforce the anticompetitive covenants in the original contracts.Discuss the probable outcome of the lawsuits.

A contract that is deemed to be too harsh or oppressive to one of the contracting parties may be unenforceable under the concept of:

Which of the following is not illegal?

When money is loaned at a greater rate of interest than is allowed by law,__________ is committed.

In every contract there exists an expressed covenant of good faith and fair dealing.