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Exam 13: Illegal Bargains

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Question 31

Multiple Choice

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An agreement to refrain from a particular trade, profession, or business is enforceable if:

A) the purpose of the restraint is to protect a property interest of the promisee.
B) the agreement is for no longer than two years.
C) the restraint is no more extensive than is reasonably necessary to protect the promisee's property interest.
D) Both (a) and (c) are correct.

E) A) and B)
F) None of the above

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Question 32

Multiple Choice

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Archie bets his friend Jerry $100 that the Packers will win the next Super Bowl.This is an:

A) unconscionable contract and therefore illegal.
B) illegal wagering agreement.
C) agreement to obstruct justice and therefore illegal.
D) illegal restraint of trade.

E) A) and C)
F) A) and D)

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Question 33

Multiple Choice

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Which of the following contracts is generally held to be unenforceable?

Divided Parcel (DP) includes the following on its mailing receipts: "We are not responsible for any damages to packages whether or not through the intentional or reckless fault or negligence of our employees.Send packages at your own risk." Mary reads this clause but sends her watch back to the manufacturer to be repaired anyway.The watch is destroyed when the DP driver uses the package for a ball and tosses it to his buddy.Mary is:

Non-compete agreements drafted for employees of Internet companies:

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

The Code and the Restatement both contain definitions of what constitutes "unconscionable" conduct.

An agreement to refrain from a particular trade, profession, or business is enforceable if two requirements are met: that the purpose of the restraint is to protect a property interest of the promisee and the restraint is no more extensive than is reasonably necessary to protect that interest.

Elmer promises to pay Fred $100 if Fred will register and vote in the next election as a Democrat.This is:

Edward, an engineer, is working on a new design for some highly technical equipment which Martus, Inc.hopes to market within the next five years.The employment agreement between Edward and Martus states that Edward will not go to work for another company in the same business for a period of two years after termination of his employment with Martus, Inc.This agreement is void and unenforceable because, although Martus is a very specialized company, the agreement would make it difficult for Edward to find other employment.

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?

The legal effect of a usurious loan varies from state to state.

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:

In some states, a lender who charges a usurious rate forfeits both the principal and interest on the loan.

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 three years.The agreement:

Courts will never limit freedom of contract.

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

State-operated lotteries have come under increasing regulation because of statutes criminalizing wagers.

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?

Which of the following would be considered a valid and legally enforceable agreement?