Question 1

_____ is a provision in a contract that attempts to relieve one party to the contract from liability for the consequences of his or her negligence.

Accepted Answer

A)  Exculpatory clause 
B)  Indemnification clause 
C)  Arbitration clause 
D)  Severability clause 
A)  Exculpatory clause 
B)  Indemnification clause 
C)  Arbitration clause 
D)  Severability clause

Question 2

Exculpatory clauses are generally unenforceable if they seek to avoid liability for:

Accepted Answer

A)  better monetary benefit for one side. 
B)  accidental damages. 
C)  fraud or willful misconduct. 
D)  negligence. 
A)  better monetary benefit for one side. 
B)  accidental damages. 
C)  fraud or willful misconduct. 
D)  negligence.

Question 3

Contracts of adhesion are:

Accepted Answer

A)  contracts from unequal bargains. 
B)  contracts injurious to public service. 
C)  contracts to influence fiduciaries. 
D)  contracts in restraint of trade. 
A)  contracts from unequal bargains. 
B)  contracts injurious to public service. 
C)  contracts to influence fiduciaries. 
D)  contracts in restraint of trade.

Question 4

What are usury laws and Blue Laws?

Accepted Answer

Usury laws prohibit charging more than a

Question 5

Statutes that impose a significant license fee and allow anyone who pays the fee to obtain a license are classified as regulatory.

Accepted Answer

A) True 
 B)False

Question 6

What factors do the courts consider in determining whether a contract is unconscionable?

Accepted Answer

The factors considered by the court in d

Question 7

Recovery is allowed only for performance rendered before the parties learned of the illegality and only if the illegality does not involve immoral behavior or present a serious threat to the public welfare.

Accepted Answer

A) True 
 B)False

Question 8

Mayor Magnus wants to recruit a Harvard economist,Milton,as the chief developer for the Small Town's economic development division.The legal cap on the job of chief developer is $60,000.Magnus offers Milton $100,000.The contract is:

Accepted Answer

A)  voidable. 
B)  unlawful. 
C)  exculpatory. 
D)  enforceable. 
A)  voidable. 
B)  unlawful. 
C)  exculpatory. 
D)  enforceable.

Question 9

One of the primary reasons for not enforcing illegal contracts is to deter people from entering into such contracts in the first place.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true of unconscionable contracts?

Accepted Answer

A)  The doctrine of unconscionability can be used to relieve people of their bad bargains. 
B)  The courts do not have the freedom to remedy unconscionable contracts. 
C)  The courts do not define unconscionable, leaving it instead for the Code to define. 
D)  A court may refuse to enforce an unconscionable contract as contrary to public policy. 
A)  The doctrine of unconscionability can be used to relieve people of their bad bargains. 
B)  The courts do not have the freedom to remedy unconscionable contracts. 
C)  The courts do not define unconscionable, leaving it instead for the Code to define. 
D)  A court may refuse to enforce an unconscionable contract as contrary to public policy.

Question 11

Which of the following statements is true of contracts having fiduciaries?

Accepted Answer

A)  Agreements by fiduciaries that favor the interests of a third person at the expense of their principals' interests is considered legal. 
B)  Any agreement that tends to induce a fiduciary to breach his or her fiduciary duties is considered legal. 
C)  A fiduciary is a provision in a contract that attempts to relieve one party to the contract from liability for the consequences of his or her own negligence. 
D)  A fiduciary can lawfully enter an agreement by fully and fairly disclosing the conflict to his or her principal or beneficiary in advance. 
A)  Agreements by fiduciaries that favor the interests of a third person at the expense of their principals' interests is considered legal. 
B)  Any agreement that tends to induce a fiduciary to breach his or her fiduciary duties is considered legal. 
C)  A fiduciary is a provision in a contract that attempts to relieve one party to the contract from liability for the consequences of his or her own negligence. 
D)  A fiduciary can lawfully enter an agreement by fully and fairly disclosing the conflict to his or her principal or beneficiary in advance.

Question 12

Agreements designed solely to restrict trade are legal.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is true of exculpatory clauses?

Accepted Answer

A)  Exculpatory clauses are always illegal and cannot be taken up in court. 
B)  Exculpatory clauses, when enforced, can effectively relieve a party of liability for the consequences of his own negligence. 
C)  Exculpatory clauses are effective only when the party which benefits by the clause owes a duty to the public. 
D)  Exculpatory clauses that seek to avoid liability for willful misconduct or fraud, however, are generally enforceable. 
A)  Exculpatory clauses are always illegal and cannot be taken up in court. 
B)  Exculpatory clauses, when enforced, can effectively relieve a party of liability for the consequences of his own negligence. 
C)  Exculpatory clauses are effective only when the party which benefits by the clause owes a duty to the public. 
D)  Exculpatory clauses that seek to avoid liability for willful misconduct or fraud, however, are generally enforceable.

Question 14

Statutes that require proof of character and skill and impose a penalty for violation are considered:

Accepted Answer

A)  regulatory. 
B)  usury. 
C)  wagering. 
D)  revenue raising. 
A)  regulatory. 
B)  usury. 
C)  wagering. 
D)  revenue raising.

Question 15

Sam was an accomplished long-distance runner who entered the Big City Marathon.In order to participate,he had to sign a "General Release of Claim," which said that he assumed all risk of competition and released all claims against the Marathon and its sponsors.During the marathon,Sam was found unconscious.He died a few hours later.Sam's estate filed a wrongful death suit against Marathon.Is the suit enforceable under the exculpatory clause?

Accepted Answer

Sam had willingly participated in the ev

Question 16

When a person whom a regulatory statute seeks to protect enters into an agreement in violation of the statute,the protected person:

Accepted Answer

A)  is only allowed to enforce the agreement. 
B)  cannot recover in quasi contract for benefits conferred on the other party. 
C)  cannot recover for any loss but may enforce the agreement. 
D)  may either enforce the contract or recover any consideration he or she has parted with. 
A)  is only allowed to enforce the agreement. 
B)  cannot recover in quasi contract for benefits conferred on the other party. 
C)  cannot recover for any loss but may enforce the agreement. 
D)  may either enforce the contract or recover any consideration he or she has parted with.

Question 17

When one or both parties to an illegal bargain are ignorant of the facts that made the bargain illegal,the court is most likely to:

Accepted Answer

A)  never allow either party to recover damages for breach of the agreement. 
B)  allow recovery for performance rendered before the parties learned of the illegality. 
C)  declare the bargain unconscionable. 
D)  regard the contract a serious threat to public welfare and declare it void. 
A)  never allow either party to recover damages for breach of the agreement. 
B)  allow recovery for performance rendered before the parties learned of the illegality. 
C)  declare the bargain unconscionable. 
D)  regard the contract a serious threat to public welfare and declare it void.

Question 18

Regulatory statutes are designed primarily to:

Accepted Answer

A)  regulate betting and gambling. 
B)  protect the public from dishonest persons. 
C)  prohibit charging more than a stated amount of interest for the use of money. 
D)  prohibit the performance of certain work and the transaction of certain business on Sunday. 
A)  regulate betting and gambling. 
B)  protect the public from dishonest persons. 
C)  prohibit charging more than a stated amount of interest for the use of money. 
D)  prohibit the performance of certain work and the transaction of certain business on Sunday.

Question 19

Which of the following remedies is used in cases involving illegal wagering contracts?

Accepted Answer

A)  Forfeiture of excess interest 
B)  Enforceability of the contract in such cases 
C)  Weekday ratification of contracts 
D)  No remedies in such cases 
A)  Forfeiture of excess interest 
B)  Enforceability of the contract in such cases 
C)  Weekday ratification of contracts 
D)  No remedies in such cases

Question 20

The penalty for violation of usury laws includes the forfeiture of interest and principal.

Accepted Answer

A) True 
 B)False

Exam 15: Illegality

_____ is a provision in a contract that attempts to relieve one party to the contract from liability for the consequences of his or her negligence.

Exculpatory clauses are generally unenforceable if they seek to avoid liability for:

Contracts of adhesion are:

What are usury laws and Blue Laws?

Statutes that impose a significant license fee and allow anyone who pays the fee to obtain a license are classified as regulatory.

What factors do the courts consider in determining whether a contract is unconscionable?

Recovery is allowed only for performance rendered before the parties learned of the illegality and only if the illegality does not involve immoral behavior or present a serious threat to the public welfare.

Mayor Magnus wants to recruit a Harvard economist,Milton,as the chief developer for the Small Town's economic development division.The legal cap on the job of chief developer is $60,000.Magnus offers Milton $100,000.The contract is:

One of the primary reasons for not enforcing illegal contracts is to deter people from entering into such contracts in the first place.

Which of the following is true of unconscionable contracts?

Which of the following statements is true of contracts having fiduciaries?

Agreements designed solely to restrict trade are legal.

Which of the following statements is true of exculpatory clauses?

Statutes that require proof of character and skill and impose a penalty for violation are considered:

When a person whom a regulatory statute seeks to protect enters into an agreement in violation of the statute,the protected person:

When one or both parties to an illegal bargain are ignorant of the facts that made the bargain illegal,the court is most likely to:

Regulatory statutes are designed primarily to:

Which of the following remedies is used in cases involving illegal wagering contracts?

The penalty for violation of usury laws includes the forfeiture of interest and principal.

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Propertypart Two Contracts

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remediespart Three Sales

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contractspart Four Agency and Employment

The Agency Relationship-Creation, duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws-Part Five Business Organizations

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountantspart Six Property

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance-Part Seven Commercial Paper

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Introduction to Security

Security Interests in Personal Property

Bankruptcy-Part Nine Government Regulation

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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