Question 1

Which of the following is true with regard to an exculpatory clause?

Accepted Answer

A) An exculpatory clause excuses one party from liability for her own tortious conduct. 
B) Where one party has a superior bargaining position that has enabled him to impose an exculpatory clause upon the other, the courts are inclined to nullify the provision. 
C) An exculpatory clause may be unenforceable for unconscionability. 
D) All of these are true.

Question 2

Non-compete agreements drafted for employees of Internet companies:

Accepted Answer

A) are interpreted no differently in terms of standards of reasonableness than are agreements for other types of companies. 
B) are subject to larger geographic restrictions than for other types of companies. 
C) are subject to longer periods of reasonable duration. 
D) are irrelevant.

Question 3

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 4

In cases where one party to an illegal agreement is less at fault than the other, he will be allowed to recover payments made or property transferred.

Accepted Answer

A) True 
 B)False

Question 5

Custom Sales and Rentals uses a four-page contract with important contract terms buried in the fine print.This is an example of:

Accepted Answer

A) procedural unconscionability. 
B) a reasonable, legal business practice. 
C) a "Blue law." 
D) substantive unconscionability.

Question 6

R&R, Inc.entered into a contract with Scott, an agent, under the terms of which Scott would receive $20,000 if he stole trade secrets from the leading competitor of R&R.Scott performed his end of the agreement by delivering the trade secrets.If R&R now refuses to pay Scott for his services, Scott:

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 R&R. 
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 R&R.

Question 7

Courts require that for a contract to be unenforceable based on unconscionability, both substantive and procedural unconscionability must be equally present.

Accepted Answer

A) True 
 B)False

Question 8

Stuart promises to act as a guide and fishing instructor on a trip for a group of visiting dignitaries.The dignitaries agree to pay him $200 for his services.Stu completes his duties, but when they discover that Stu does not have a fishing license, they refuse to pay him.The agreement between Stu and the dignitaries is an illegal one, which is not enforceable.

Accepted Answer

A) True 
 B)False

Question 9

Al 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 sales contract, he agrees that he will refrain from practicing accounting anywhere within a 20-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.The sales agreement:

Accepted Answer

A) is being violated by Al. 
B) is invalid, because it is an illegal restraint of trade. 
C) is illegal, because it is a violation of public policy. 
D) will be divided into an enforceable, valid portion and an unenforceable, invalid portion, which is the time provision, because the two-year period is too long.

Question 10

William recently sold his successful business to Janice.The contract for the sale contained an unreasonable restriction that did not allow William to open a similar business for fifteen years.In this instance, the courts would likely:

Accepted Answer

A) reform the contract to make it reasonable and enforceable. 
B) require the parties to draft a new contract. 
C) enforce the contract as it is written. 
D) void the contract on grounds of unconscionability.

Question 11

What is the legal effect of an agreement that is criminal, tortious, or otherwise contrary to public policy, and why does it have that effect?

Accepted Answer

The answer of What is the legal effect of an...

Question 12

Patrick agrees to sell two different goods to his friend Ron, a retailer.One item is legal, and one item is illegal.The contract price is $2,000.In this case:

Accepted Answer

A) Patrick may not recover payment for either of the items, or in some cases, he may recover for the legal item, but not for the illegal item. 
B) Patrick may only recover for the legal item, and he may not recover for the illegal item. 
C) the contract is unconscionable under the UCC. 
D) Patrick may not recover payment for either of the items.

Question 13

Which of the following is correct with regard to an enforceable restraint of trade?

Accepted Answer

A) The restraint should be no more extensive than is required to protect a specified property interest. 
B) Restraints typically arise in connection with the sale of a business. 
C) A typical restraint is a covenant not to compete. 
D) All of these.

Question 14

A court would be likely to enforce an illegal contract:

Accepted Answer

A) under certain circumstances in which the aggrieved party was unaware of the illegality. 
B) where, although the contract is unconscionable, there is only procedural unconscionability. 
C) where the agreement is with an unlicensed attorney. 
D) under no circumstances.

Question 15

Bill bets his friend $100 that the Patriots 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.

Question 16

An exculpatory clause excusing a party from liability for harm caused by reckless conduct will generally make a contract unenforceable as a violation of public policy.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) is reasonable. 
B) is unreasonable, but enforceable since Andrew agreed to it. 
C) unduly interferes with the interests of the public. 
D) is reasonable, but only if Betty paid Andrew enough for the store to compensate him for lost business for three years.

Question 18

Although wagering is generally illegal, some states permit certain kinds of regulated gambling, especially wagering conducted by governmental agencies.

Accepted Answer

A) True 
 B)False

Question 19

Sarah is working hard on the mayoral campaign of Timothy.She thinks that just a few more votes could win the election, so she promises to pay her friend Violet $50 to register and vote.Violet does so, but Timothy loses the election, and Sarah now refuses to pay.The agreement is:

Accepted Answer

A) enforceable. 
B) unenforceable and opposed to public policy. 
C) one to obstruct the administration of justice. 
D) an unconscionable contract covered by the UCC.

Question 20

A contract prepared on a standard form and offering terms on a take-it-or-leave-it basis is called:

Accepted Answer

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

Exam 13: Illegal Bargains

Which of the following is true with regard to an exculpatory clause?

Non-compete agreements drafted for employees of Internet companies:

In cases where one party to an illegal agreement is less at fault than the other, he will be allowed to recover payments made or property transferred.

Custom Sales and Rentals uses a four-page contract with important contract terms buried in the fine print.This is an example of:

R&R, Inc.entered into a contract with Scott, an agent, under the terms of which Scott would receive $20,000 if he stole trade secrets from the leading competitor of R&R.Scott performed his end of the agreement by delivering the trade secrets.If R&R now refuses to pay Scott for his services, Scott:

Courts require that for a contract to be unenforceable based on unconscionability, both substantive and procedural unconscionability must be equally present.

William recently sold his successful business to Janice.The contract for the sale contained an unreasonable restriction that did not allow William to open a similar business for fifteen years.In this instance, the courts would likely:

What is the legal effect of an agreement that is criminal, tortious, or otherwise contrary to public policy, and why does it have that effect?

Patrick agrees to sell two different goods to his friend Ron, a retailer.One item is legal, and one item is illegal.The contract price is $2,000.In this case:

Which of the following is correct with regard to an enforceable restraint of trade?

A court would be likely to enforce an illegal contract:

Bill bets his friend $100 that the Patriots will win the next Super Bowl.This is an:

An exculpatory clause excusing a party from liability for harm caused by reckless conduct will generally make a contract unenforceable as a violation of public policy.

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

Although wagering is generally illegal, some states permit certain kinds of regulated gambling, especially wagering conducted by governmental agencies.

Sarah is working hard on the mayoral campaign of Timothy.She thinks that just a few more votes could win the election, so she promises to pay her friend Violet $50 to register and vote.Violet does so, but Timothy loses the election, and Sarah now refuses to pay.The agreement is:

A contract prepared on a standard form and offering terms on a take-it-or-leave-it basis is called: