Question 1

The term "public policy" is precisely and narrowly defined in the Restatement.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

An agreement in connection with the sale of a business that prohibits the seller from engaging in the same or a similar business for a period of twenty-five years would be unreasonable.

Accepted Answer

A) True 
 B)False

Question 4

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.E) A) and C)
F) All of the above A

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 primary restraint
B)   Valid as a reasonable restraint on trade
C)   An unenforceable restraint of trade contrary to public policy
D)   Binding as fair protectionE) B) and C)
F) A) and B)

Question 8

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  True

Question 9

Bargains are illegal if they involve a crime or tort but not if they are merely against public policy.

Accepted Answer

A) True 
 B)False

Question 10

"Blue laws" usually apply to contracts of necessity and charity.

Accepted Answer

A) True 
 B)False

Question 11

At common law,a valid contract may not be entered into on Sunday.

Accepted Answer

A) True 
 B)False

Question 12

Theresa is a travel agent at the Fly Away Travel Agency.She has signed an agreement with her employer which prohibits her from working in any similar business in any town within a 100-mile radius of where she works.If she wants to quit her job and go to work for another travel agency,it is likely that:

Accepted Answer

A)   a court would uphold these restrictions.
B)   if no trade secrets are involved,and she has no dominion over customers,a court would rule the restrictions to be invalid.
C)   if the period of time of the agreement is under five years,it will be upheld by the court.
D)   a court would rule the restrictions invalid unless her work is done predominantly online.E) B) and D)
F) A) and B)

Question 13

One type of restraint of trade is a covenant not to compete.

Accepted Answer

A) True 
 B)False

Question 14

Don has an employment contract with Dunkirk Ice Cream.He sells ice cream and novelty ice cream products.He has nine children and doesn't make enough money,so he decides to see if another dairy will hire him,too."After all," he reasons,"most stores carry four or five different brands." His employment contract prohibits him from competing.If Don sells for another dairy in addition to Dunkirk,will he be in trouble under his contract?

Accepted Answer

A)   No,it is unenforceable as against public policy.
B)   Yes,it is likely to be enforceable during employment.
C)   No,the prohibition against competing is enforceable only after he quits Dunkirk.
D)   A court would have to rule on the enforceability of the covenant not to compete since courts are reluctant to enforce such covenants during a period of employment.E) C) and D)
F) A) and B)

Question 15

Define "unconscionability" and distinguish between procedural and substantive unconscionability.

Accepted Answer

Unconscionability means contrary to the ...

Question 16

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.E) C) and D)
F) B) and C)

Question 17

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 para delicto.
B)   partial illegality.
C)   substantive unconscionability.
D)   procedural unconscionability.E) A) and D)
F) A) and B)

Question 18

Which of the following would generally be considered to be a revenue-raising licensing law?

Accepted Answer

A)   A statute requiring that doctors be licensed
B)   A statute requiring that salespeople be licensed,but not establishing any educational or training requirements
C)   A statute requiring public school teachers to be licensed
D)   A statute that requires insurance agents to pass a test before selling insurance in a stateE) B) and C)
F) A) and B)

Question 19

A number of states have enacted statutes exempting the following types of lenders from their usury laws:

Accepted Answer

A)   eligible lenders of installment loans.
B)   lenders for large consumer loans.
C)   lenders of unsubsidized educational loans.
D)   None of these.Only certain types of transactions rather than types of lenders are exempted.E) A) and B)
F) A) and C)

Question 20

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.E) B) and C)
F) A) and B) B

Exam 13: Illegal Bargains

The term "public policy" is precisely and narrowly defined in the Restatement.

Correct Answer
verified

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

Correct Answer
verified

An agreement in connection with the sale of a business that prohibits the seller from engaging in the same or a similar business for a period of twenty-five years would be unreasonable.

Correct Answer
verified

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

Correct Answer
verified
A

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

Correct Answer
verified

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

Correct Answer
verified

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?

Correct Answer
verified

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

Correct Answer
verified
True

Bargains are illegal if they involve a crime or tort but not if they are merely against public policy.

Correct Answer
verified

"Blue laws" usually apply to contracts of necessity and charity.

Correct Answer
verified

At common law,a valid contract may not be entered into on Sunday.

Correct Answer
verified

Correct Answer
verified

One type of restraint of trade is a covenant not to compete.

Correct Answer
verified

Correct Answer
verified

Define "unconscionability" and distinguish between procedural and substantive unconscionability.

Correct Answer
verified
Unconscionability means contrary to the ...
View Answer

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

Correct Answer
verified

Correct Answer
verified

Which of the following would generally be considered to be a revenue-raising licensing law?

Correct Answer
verified

A number of states have enacted statutes exempting the following types of lenders from their usury laws:

Correct Answer
verified

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

Correct Answer
verified
B

Exam 13: Illegal Bargains

The term "public policy" is precisely and narrowly defined in the Restatement.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An agreement in connection with the sale of a business that prohibits the seller from engaging in the same or a similar business for a period of twenty-five years would be unreasonable.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedTrue

Bargains are illegal if they involve a crime or tort but not if they are merely against public policy.

Correct AnswerverifiedShow Answer

"Blue laws" usually apply to contracts of necessity and charity.

Correct AnswerverifiedShow Answer

At common law,a valid contract may not be entered into on Sunday.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One type of restraint of trade is a covenant not to compete.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Define "unconscionability" and distinguish between procedural and substantive unconscionability.

Correct AnswerverifiedUnconscionability means contrary to the ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would generally be considered to be a revenue-raising licensing law?

Correct AnswerverifiedShow Answer

A number of states have enacted statutes exempting the following types of lenders from their usury laws:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedB

Correct Answer
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Correct Answer
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A

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True

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Unconscionability means contrary to the ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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B