Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

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. C

Question 3

The sole nursing home in the county offers a long-term care agreement.The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis.Such a contract is called:

Accepted Answer

A) exculpatory. 
B) a usurious contract. 
C) an illegal restraint of trade. 
D) an adhesion contract. 
A) exculpatory. 
B) a usurious contract. 
C) an illegal restraint of trade. 
D) an adhesion contract. D

Question 4

John operates a small repair business and is in desperate need of a certain type of building material.He obtains the material from a large corporation,but is charged a grossly unreasonable price and is forced to buy other material he does not need.In view of the buyer's unequal bargaining power and unreasonable terms of the contract,this may be a case of:

Accepted Answer

A) in pari delicto. 
B) partial illegality. 
C) substantive unconscionability. 
D) procedural unconscionability. 
A) in pari delicto. 
B) partial illegality. 
C) substantive unconscionability. 
D) procedural unconscionability.

Question 5

Archie bets his friend Jerry $100 that the Packers will win the next Super Bowl.This is an:

Accepted Answer

A) unconscionable contract and therefore illegal. 
B) illegal wagering agreement. 
C) agreement to obstruct justice and therefore illegal. 
D) illegal restraint of trade. 
A) unconscionable contract and therefore illegal. 
B) illegal wagering agreement. 
C) agreement to obstruct justice and therefore illegal. 
D) illegal restraint of trade.

Question 6

Courts usually will require evidence for a transaction to be usurious.What factors will the courts require as evidence of usury?

Accepted Answer

(a)a loan 
(b)of money
(c)whic

Question 7

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 8

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

Accepted Answer

A) True 
 B)False

Question 9

A bargain by a candidate for public office to make a certain appointment following the election is legal.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

An agreement to refrain from a particular trade,profession,or business is enforceable if:

Accepted Answer

A) the purpose of the restraint is to protect a property interest of the promisee. 
B) the agreement is for no longer than two years. 
C) the restraint is no more extensive than is reasonably necessary to protect the promisee's property interest. 
D) Both (a) and (c) are correct. 
A) the purpose of the restraint is to protect a property interest of the promisee. 
B) the agreement is for no longer than two years. 
C) the restraint is no more extensive than is reasonably necessary to protect the promisee's property interest. 
D) Both (a) and (c) are correct.

Question 12

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 13

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 14

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 15

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 16

Before granting an injunction enjoining a former employee from competing in a described territory,the courts insist that the employer demonstrate that the restriction is __________ to protect the employer's legitimate interest.

Accepted Answer

A) exculpatory 
B) unconscionable 
C) necessary 
D) usurious 
A) exculpatory 
B) unconscionable 
C) necessary 
D) usurious

Question 17

A contract that requires a person to commit a tort will be enforced by the courts.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Nell gives Big Al $50 in return for Al's promise to defame Sara.Nell hopes to ruin Sara's chances at a promotion.Nell finds out that Al did not hold up his end of the agreement.Which of the following statements is true?

Accepted Answer

A) Nell can get the money back from Al through litigation. 
B) Nell can get the money back and force Al to do as he promised. 
C) Legally, Nell can neither get the money back nor force Al to do as he promised. 
D) Nell can force Al to act through an appeal to the courts, but Al gets to keep the $50. 
A) Nell can get the money back from Al through litigation. 
B) Nell can get the money back and force Al to do as he promised. 
C) Legally, Nell can neither get the money back nor force Al to do as he promised. 
D) Nell can force Al to act through an appeal to the courts, but Al gets to keep the $50.

Question 20

Edward,an engineer,is working on a new design for some highly technical equipment which Martus,Inc.hopes to market within the next five years.The employment agreement between Edward and Martus states that Edward will not go to work for another company in the same business for a period of two years after termination of his employment with Martus,Inc.This agreement is void and unenforceable because,although Martus is a very specialized company,it would make it difficult for Edward to find other employment.

Accepted Answer

A) True 
 B)False

Exam 13: Illegal Bargains

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

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?

The sole nursing home in the county offers a long-term care agreement.The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis.Such a contract is called:

Archie bets his friend Jerry $100 that the Packers will win the next Super Bowl.This is an:

Courts usually will require evidence for a transaction to be usurious.What factors will the courts require as evidence of usury?

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:

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

A bargain by a candidate for public office to make a certain appointment following the election is legal.

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

An agreement to refrain from a particular trade,profession,or business is enforceable if:

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?

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

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

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.

Before granting an injunction enjoining a former employee from competing in a described territory,the courts insist that the employer demonstrate that the restriction is __________ to protect the employer's legitimate interest.

A contract that requires a person to commit a tort will be enforced by the courts.

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

Nell gives Big Al $50 in return for Al's promise to defame Sara.Nell hopes to ruin Sara's chances at a promotion.Nell finds out that Al did not hold up his end of the agreement.Which of the following statements is true?

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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