Question 1

The failure to obtain a license required by a statute for revenue-raising purposes:

Accepted Answer

A)  affects the legality of the unlicensed person's agreements and it will be considered void. 
B)  results in generally unenforceable contracts. 
C)  does not affect the legality of unlicensed persons' agreements. 
D)  automatically declares the contract void for the protection of the public. 
A)  affects the legality of the unlicensed person's agreements and it will be considered void. 
B)  results in generally unenforceable contracts. 
C)  does not affect the legality of unlicensed persons' agreements. 
D)  automatically declares the contract void for the protection of the public. C

Question 2

What is the legal effect of a contract of adhesion?

Accepted Answer

A contract of adhesion is a contract in which the only choice for one of the parties is between "adhering" to the terms dictated by the other party or not contracting at all. A court may refuse to enforce such an agreement as contrary to public policy. Clauses in fine print or in such technical language that an ordinary person would not understand their meaning have also been stricken on this basis. Unequal bargaining power standing alone is not enough to justify unenforceability, however. It must also appear that the party with superior power used it to take unfair advantage of the other party to the agreement. The courts are especially likely to find such inequality in cases involving consumer contracts with businesses, although numerous cases exist in which contracts between small companies and large industrial giants have been held to be adhesion contracts. Although courts are increasingly willing to prevent oppression and unfair surprise by finding agreements to be contracts of adhesion, they will not use this doctrine to relieve people of their bad bargains.

Question 3

If a contract is divisible, the court:

Accepted Answer

A)  voids the entire contract. 
B)  enforces the legal parts of the contract. 
C)  enforces the entire contract. 
D)  rules that the entire contract is unenforceable. 
A)  voids the entire contract. 
B)  enforces the legal parts of the contract. 
C)  enforces the entire contract. 
D)  rules that the entire contract is unenforceable. B

Question 4

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 5

Which of the following is a reason for voiding a contract based on illegality?

Accepted Answer

A)  Both of the parties are ignorant of the facts that made the bargain illegal. 
B)  It is in violation of the Code alone, not the common law. 
C)  It is contrary to public policy. 
D)  The court does not allow the recovery of damages. 
A)  Both of the parties are ignorant of the facts that made the bargain illegal. 
B)  It is in violation of the Code alone, not the common law. 
C)  It is contrary to public policy. 
D)  The court does not allow the recovery of damages.

Question 6

The legal concept of unconscionability:

Accepted Answer

A)  is part of the doctrine of freedom of contract. 
B)  rules that certain sections of contracts are voidable. 
C)  pertains to unequal bargains. 
D)  comes into effect only during contracts between consumers and large companies. 
A)  is part of the doctrine of freedom of contract. 
B)  rules that certain sections of contracts are voidable. 
C)  pertains to unequal bargains. 
D)  comes into effect only during contracts between consumers and large companies.

Question 7

A party to an illegal agreement generally cannot recover damages for breach of the agreement, recover consideration given to the other party, or recover in quasi contract for benefits conferred on the other party.

Accepted Answer

A) True 
 B)False

Question 8

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 9

_____ is an example of an illegal wager.

Accepted Answer

A)  Stock transactions on a daily basis 
B)  Betting on the future performance of a stock 
C)  Commodity transactions 
D)  Risk-shifting agreements 
A)  Stock transactions on a daily basis 
B)  Betting on the future performance of a stock 
C)  Commodity transactions 
D)  Risk-shifting agreements

Question 10

Which of the following statements is true of the idea of public policy?

Accepted Answer

A)  A court's view of public policy is determined by what the court believes is in the best interests of society. 
B)  Public policy is not affected by any social or economic change. 
C)  Courts have limited discretion in ruling on questions of public policy. 
D)  The discretion of courts provide the legal system less flexibility that ensures a strict adherence to policies. 
A)  A court's view of public policy is determined by what the court believes is in the best interests of society. 
B)  Public policy is not affected by any social or economic change. 
C)  Courts have limited discretion in ruling on questions of public policy. 
D)  The discretion of courts provide the legal system less flexibility that ensures a strict adherence to policies.

Question 11

Contracts of adhesion refer to contracts in which the only choice for one of the parties is between "adhering" to the terms dictated by the other party or not contracting at all.

Accepted Answer

A) True 
 B)False

Question 12

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 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

An agreement that calls for the commission of a crime is illegal, while an agreement that calls for the commission of a tort is not illegal.

Accepted Answer

A) True 
 B)False

Question 15

Usury laws allow charging more than a stated amount of interest for the use of money.

Accepted Answer

A) True 
 B)False

Question 16

What is the legal effect of a contract that is designed to influence a fiduciary?

Accepted Answer

Any agreement that tends to induce a fid

Question 17

A party that enters into an illegal contract can recover the considerations given if the party:

Accepted Answer

A)  reports the illegal act to law enforcement after committing it. 
B)  rescinds the contract before any illegal act has been performed. 
C)  demonstrates an unequal bargain due to the illegal contract. 
D)  rescinds the contract immediately after the illegal act has been performed. 
A)  reports the illegal act to law enforcement after committing it. 
B)  rescinds the contract before any illegal act has been performed. 
C)  demonstrates an unequal bargain due to the illegal contract. 
D)  rescinds the contract immediately after the illegal act has been performed.

Question 18

Rent control laws are implemented to limit the exercise of private bargaining power.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following types of contracts is created when a party with superior bargaining power imposes unfair terms on the other party?

Accepted Answer

A)  Executory contracts 
B)  Unconscionable contracts 
C)  Bilateral contracts 
D)  Express contracts 
A)  Executory contracts 
B)  Unconscionable contracts 
C)  Bilateral contracts 
D)  Express contracts

Question 20

Timothy is a construction worker in one of the leading firms of a city. His employment contract includes a clause which says he cannot work as a construction worker within the city for fifteen years once he leaves the company. This clause is:

Accepted Answer

A)  illegal as it is injurious to public service. 
B)  only illegal if it violates state or federal antitrust laws. 
C)  illegal as a contract in restraint of trade. 
D)  legal because the employer can add any constraint to the agreement. 
A)  illegal as it is injurious to public service. 
B)  only illegal if it violates state or federal antitrust laws. 
C)  illegal as a contract in restraint of trade. 
D)  legal because the employer can add any constraint to the agreement.

Exam 15: Illegality

The failure to obtain a license required by a statute for revenue-raising purposes:

What is the legal effect of a contract of adhesion?

If a contract is divisible, the court:

Contracts of adhesion are:

Which of the following is a reason for voiding a contract based on illegality?

The legal concept of unconscionability:

A party to an illegal agreement generally cannot recover damages for breach of the agreement, recover consideration given to the other party, or recover in quasi contract for benefits conferred on the other party.

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:

_____ is an example of an illegal wager.

Which of the following statements is true of the idea of public policy?

Contracts of adhesion refer to contracts in which the only choice for one of the parties is between "adhering" to the terms dictated by the other party or not contracting at all.

Which of the following is true of unconscionable contracts?

Which of the following statements is true of exculpatory clauses?

An agreement that calls for the commission of a crime is illegal, while an agreement that calls for the commission of a tort is not illegal.

Usury laws allow charging more than a stated amount of interest for the use of money.

What is the legal effect of a contract that is designed to influence a fiduciary?

A party that enters into an illegal contract can recover the considerations given if the party:

Rent control laws are implemented to limit the exercise of private bargaining power.

Which of the following types of contracts is created when a party with superior bargaining power imposes unfair terms on the other party?

Timothy is a construction worker in one of the leading firms of a city. His employment contract includes a clause which says he cannot work as a construction worker within the city for fifteen years once he leaves the company. This clause is:

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

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Licensing and Intellectual Property

The Nature and Origins of Contracts

Creating a Contract: Offers

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Consideration

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The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

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Remedies for Breach of Sales Contracts

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Liability of Principals and Agents to Third Parties

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Checks and Electronic Fund Transfers

Introduction to Security

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