Question 1

The court in National Business Services,Inc.v.Wright found a noncompete agreement drafted for an employee of an Internet company was:

Accepted Answer

A) no different in enforceability than noncompete agreements for other types of companies. 
B) subject to smaller geographic restrictions than for other types of companies. 
C) unreasonable in duration with a one-year time restriction. 
D) subject to larger geographic restrictions than for other types of companies. 
E) Both (c) and (d). 
A) no different in enforceability than noncompete agreements for other types of companies. 
B) subject to smaller geographic restrictions than for other types of companies. 
C) unreasonable in duration with a one-year time restriction. 
D) subject to larger geographic restrictions than for other types of companies. 
E) Both (c) and (d).

Question 2

Bill is currently enrolled in law school.He 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 3

Andria,an attorney,has a personal injury case which is set for trial next week.She needs a good doctor to testify on behalf of her client,so she contacts Dr.Wood who agrees to testify on behalf of Andria's client at the trial.In return for Dr.Wood's testimony,Andria agrees to pay Dr.Wood $10,000 if they win the case,and $5,000 if they lose.Dr.Wood agrees.The agreement between Andria and Dr.Wood is unenforceable.

Accepted Answer

A) True 
 B)False

Question 4

In considering a covenant not to compete in an employment contract,the court in the case of Payroll Advance,Inc.v.Yates said in its opinion:

Accepted Answer

A) in order to obtain an injunction it is necessary for the employer to show that actual damage has occurred. 
B) covenants not to compete are presumptively valid, and they are enforceable to the extent they are reasonable. 
C) the question of reasonableness of a restraint requires consideration of such circumstances as the subject matter of the contract, the purpose to be served, the situation of the parties, the extent of the restraint, and the specialization of the business. 
D) Both (b) and (c). 
A) in order to obtain an injunction it is necessary for the employer to show that actual damage has occurred. 
B) covenants not to compete are presumptively valid, and they are enforceable to the extent they are reasonable. 
C) the question of reasonableness of a restraint requires consideration of such circumstances as the subject matter of the contract, the purpose to be served, the situation of the parties, the extent of the restraint, and the specialization of the business. 
D) Both (b) and (c).

Question 5

Al,an accountant,has a tax service and accounting business in Redwood City.He decides to move to Center City,which is 150 miles away and sells his accounting practice to Able and Baker,a CPA firm.In the sale contract,he agrees that he will refrain from practicing accounting anywhere within a 60-mile radius of Redwood City for a period of two years.However,on weekends he returns to his house in Redwood City,and when clients call him,he meets with them in his home.In this case:

Accepted Answer

A) Al is in violation of the sale agreement, which contained restrictions that would probably be held to be valid. 
B) the agreement is invalid, because it is an illegal restraint on trade. 
C) the agreement is illegal, because it is a violation of public policy. 
D) the two-year provision is likely to be held invalid, because it is too long a period of time. 
A) Al is in violation of the sale agreement, which contained restrictions that would probably be held to be valid. 
B) the agreement is invalid, because it is an illegal restraint on trade. 
C) the agreement is illegal, because it is a violation of public policy. 
D) the two-year provision is likely to be held invalid, because it is too long a period of time.

Question 6

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

Accepted Answer

A) that 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) that 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) that, 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) that 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) that 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) that, 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 7

Identify five exceptions to the general rule that illegal contracts are unenforceable.

Accepted Answer

a.A regulatory licensing statute is enac

Question 8

Specific lender usury statutes rather than the general usury statute generally apply to real estate mortgages and small consumer loans.

Accepted Answer

A) True 
 B)False

Question 9

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 10

The courts readily enforce a covenant not to compete during the period of employment.

Accepted Answer

A) True 
 B)False

Question 11

Carlos owns a store in Polk County.His trade extends throughout River City,but not beyond the county limits.He sells his store to Virginia and,as part of the transaction,agrees not to engage in the same business anywhere within the state for a period of four years.The agreement:

Accepted Answer

A) is reasonable. 
B) is unreasonable. 
C) unduly interferes with the interests of the public. 
D) Two of the above, (b) and (c). 
A) is reasonable. 
B) is unreasonable. 
C) unduly interferes with the interests of the public. 
D) Two of the above, (b) and (c).

Question 12

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 13

A contract of adhesion:

Accepted Answer

A) is automatically unenforceable. 
B) consists largely of boilerplate provisions, such as a standard-form insurance policy. 
C) is a contract that exhibits either procedural or substantive unconscionability. 
D) is a contract containing multiple exculpatory clauses. 
A) is automatically unenforceable. 
B) consists largely of boilerplate provisions, such as a standard-form insurance policy. 
C) is a contract that exhibits either procedural or substantive unconscionability. 
D) is a contract containing multiple exculpatory clauses.

Question 14

Sam,a student,promises to act as a guide on a fishing trip for a group of visiting dignitaries.The dignitaries agree to pay him $200 for his services.Sam guides them,but when they discover that Sam does not have a fishing license,they refuse to pay him.The agreement is an illegal one,which is not enforceable.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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 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

Courts will never limit freedom of contract.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 13: Illegal Bargains

The court in National Business Services,Inc.v.Wright found a noncompete agreement drafted for an employee of an Internet company was:

In considering a covenant not to compete in an employment contract,the court in the case of Payroll Advance,Inc.v.Yates said in its opinion:

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

Identify five exceptions to the general rule that illegal contracts are unenforceable.

Specific lender usury statutes rather than the general usury statute generally apply to real estate mortgages and small consumer loans.

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 courts readily enforce a covenant not to compete during the period of employment.

Carlos owns a store in Polk County.His trade extends throughout River City,but not beyond the county limits.He sells his store to Virginia and,as part of the transaction,agrees not to engage in the same business anywhere within the state for a period of four years.The agreement:

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?

A contract of adhesion:

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:

Courts will never limit freedom of contract.

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

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.

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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