Question 1

If a contract is made with a person required by law to hold a license,and the purpose of the license is protection of the public,the contract made by an unlicensed person will generally be unenforceable.

Accepted Answer

A) True 
 B)False  True

Question 2

A contract may violate public policy even if the agreement does not violate a statute.

Accepted Answer

A) True 
 B)False  True

Question 3

John was a licensed physician in Michigan.When he retired to Florida,he started providing medical services to the people in his condo,relying on his Michigan license since he did not have a Florida license and there is no reciprocity between the two states.Isaac,John's next-door neighbor,owed John $2000 for medical services.John will be able to enforce the contract he made with Isaac.

Accepted Answer

A) True 
 B)False  False

Question 4

E-mation entered into a contract with a consumer,Ezra,a recent immigrant to the United States,who spoke very little English,and had no formal education.The contract provided for Ezra to pay $2500 for a computer system.The system was worth $400.If E-mation sued Ezra for enforcement the contract,what is the most likely result?

Accepted Answer

A)  The contract is enforceable because of usury statues.
B)  The contract is unenforceable because it is ancillary to a legitimate bargain.
C)  The contract is enforceable because of the exculpatory clause.
D)  The contract is unenforceable because it is unconscionable.

Question 5

Cherise contacted her insurance agent and said she was interested in purchasing several life insurance policies: (a)a policy on her own life for $100,000,naming her son and daughter as beneficiaries;(b)a policy on her neighbor's life for $100,000,since she had observed him engaging in reckless behavior,naming herself as beneficiary;(c)a $5,000 policy on another neighbor to cover a loan Cherise made to him,naming herself as beneficiary;and (d)a $250,000 policy on her business partner,naming herself as beneficiary.Discuss the legality of each of these potential contracts.

Accepted Answer

The answer of Cherise contacted her insurance agent and said...

Question 6

Discuss the pros and cons of gambling and state what the California Court of Appeals ruled regarding the treatment of gambling on credit.

Accepted Answer

The answer of Discuss the pros and cons of gambling...

Question 7

L & M loaned Joan $400 so that she could buy her textbooks for the current semester.L & M's terms for repayment of the loan (including interest)are $200 in two months,$200 in four months,and another $100 at the end of the fifth month.The legal maximum rate of interest on this type of loan is six percent per annum.L & M's loan is usurious.

Accepted Answer

A) True 
 B)False

Question 8

E-mation,Inc.hires Marvin to steal trade secrets from one of its competitors for $10,000.Marvin demands half of the money up front.E-mation pays Marvin $5000 but Marvin decides not to pursue theft of the trade secrets.E-mation sues Marvin for the return of the $5000.What will the court do with this contract?

Accepted Answer

A)  The court will order Marvin to return the $5000.
B)  The court will order Marvin to return the $5000 with interest.
C)  The court will order Marvin to obtain the trade secrets.
D)  The court will not do anything to help E-mation get its money back.

Question 9

Which of the following exculpatory clauses will most likely be enforceable?

Accepted Answer

A)  An exculpatory clause that relieves a riding stable of negligence.
B)  An exculpatory clause that relieves a riding stable of gross negligence.
C)  An exculpatory clause that relieves a riding stable from intentional torts.
D)  A riding stable's exculpatory clause that is hidden in an eight-page document that all riders are required to sign.

Question 10

Cynthia and Brian were friends.Brian was a dare devil.Because of his antics,Cynthia thought that Brian wasn't long for this life.Cynthia purchased a life insurance policy on Brian's life.Subsequently,Brian was killed in a car accident.Since Cynthia and Brian were friends,Cynthia had an insurable interest in his life and will be entitled to the insurance proceeds.

Accepted Answer

A) True 
 B)False

Question 11

Larry has the largest pizza business in the city.He learns that Henry is thinking of opening a competing pizza and pasta delivery business.Larry gives Henry $25,000 to not open his proposed business in the same city.Which statement is correct?

Accepted Answer

A)  The contract is voidable at Larry's option.
B)  The contract is void for lack of consideration.
C)  The contract is illegal and void.
D)  The contract is enforceable.

Question 12

In many states it is illegal to lend money to help someone gamble.

Accepted Answer

A) True 
 B)False

Question 13

Judith is a CPA with an excellent reputation and client base.She sells her tax preparation business to Shawn,and the sales contract includes a noncompete clause restricting Judith from opening a similar business for one year within a 10-mile radius of her former office.If she opens a tax preparation office five miles away after one year,a court would probably

Accepted Answer

A)  grant an injunction barring her from operating the new office.
B)  order confiscation of all of her new client files and turn them over to Shawn.
C)  refuse to become involved, as the noncompete clause was illegal.
D)  refuse to enforce the noncompete clause, as it is unreasonable regarding time and geographic area.

Question 14

Eintz Corp.hired Jose to bribe a foreign government official into awarding a $3 million contract to Eintz.Eintz gave Jose $10,000 in cash to make the bribe payment and $2000 for Jose's efforts.Instead of paying the bribe,Jose pocketed all of the money.If Eintz sues Jose,Eintz will

Accepted Answer

A)  be able to recover the $12,000.
B)  be able to recover the $3 million lost on the contract.
C)  be able to recover the $2,000 but not the $10,000.
D)  not be able to recover the $12,000.

Question 15

Differentiate between licensing requirements designed to protect the public and those designed to generate revenue.

Accepted Answer

The answer of Differentiate between licensing requirements designed to protect...

Question 16

In bailment cases,exculpatory clauses

Accepted Answer

A)  are very rarely used.
B)  are somewhat more likely to be enforced than in other types of cases.
C)  ordinarily involve an attempt to limit liability for damage to persons rather than property.
D)  are not enforced because any harm is to property and not persons.

Question 17

Giving possession and control of personal property to another person is referred to as

Accepted Answer

A)  adhesion.
B)  usury.
C)  unconscionability.
D)  bailment.

Question 18

Barbara,a skilled welder,was hired at Mainco Enterprises for a welding position.She was asked to sign a noncompete clause limiting future employment if she left Mainco.A court would be very likely to enforce the noncompete clause unless the time or geographic restriction is unreasonable.

Accepted Answer

A) True 
 B)False

Question 19

When Randy,an electrician,accepted a job with Buren Construction,Randy signed the following agreement,"Upon termination of my employment with Buren Construction,I agree never to work for another employer as an electrician." If Randy resigns from Buren Construction,this agreement would be upheld under the theory of freedom of contract.

Accepted Answer

A) True 
 B)False

Question 20

An insurance contract is NOT considered to be an illegal form of "wagering" because

Accepted Answer

A)  one must have an insurable interest in the person being insured.
B)  insurance contracts are underwritten by reputable companies.
C)  insurance activities are regulated by the state department of insurance.
D)  the money being paid out comes from premiums collected over time.

Exam 14: Legality

If a contract is made with a person required by law to hold a license,and the purpose of the license is protection of the public,the contract made by an unlicensed person will generally be unenforceable.

A contract may violate public policy even if the agreement does not violate a statute.

Discuss the pros and cons of gambling and state what the California Court of Appeals ruled regarding the treatment of gambling on credit.

Which of the following exculpatory clauses will most likely be enforceable?

Larry has the largest pizza business in the city.He learns that Henry is thinking of opening a competing pizza and pasta delivery business.Larry gives Henry $25,000 to not open his proposed business in the same city.Which statement is correct?

In many states it is illegal to lend money to help someone gamble.

Eintz Corp.hired Jose to bribe a foreign government official into awarding a $3 million contract to Eintz.Eintz gave Jose $10,000 in cash to make the bribe payment and $2000 for Jose's efforts.Instead of paying the bribe,Jose pocketed all of the money.If Eintz sues Jose,Eintz will

Differentiate between licensing requirements designed to protect the public and those designed to generate revenue.

In bailment cases,exculpatory clauses

Giving possession and control of personal property to another person is referred to as

Barbara,a skilled welder,was hired at Mainco Enterprises for a welding position.She was asked to sign a noncompete clause limiting future employment if she left Mainco.A court would be very likely to enforce the noncompete clause unless the time or geographic restriction is unreasonable.

An insurance contract is NOT considered to be an illegal form of "wagering" because