Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Archie bets his friend Jerry $100 that the Packers 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 D)
F) A) and D)

Question 3

The sole nursing home in the county offers a long-term care agreement. The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis. Such a contract is called:

Accepted Answer

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

Question 4

Which of the following would always be considered to be contrary to public policy?

Accepted Answer

A)   A contract which contains a covenant not to compete.
B)   A contract offered on a take-it-or-leave-it basis.
C)   An agreement to pay someone to make false statements about a competitor's product.
D)   An agreement which contains an exculpatory clause.E) All of the above
F) B) and C)

Question 5

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

Accepted Answer

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)   Two answers are correct but not all three.E) A) and B)
F) C) and D)

Question 6

Rose is working hard on Arlin's mayoral campaign. She thinks that just a few more votes could win the election, so she promises to pay her friend Violet $50 if she will register and vote for Arlin. Violet does so, but Arlin loses the election, and Rose now refuses to pay. Rose's agreement to pay Violet:

Accepted Answer

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

Question 7

In considering a covenant not to compete in an employment contract, the court in the case of Payroll Advance, Inc. v. Yates said in its opinion:

Accepted Answer

A)   in order to obtain an injunction it is necessary for the employer to show that actual damage has occurred.
B)   covenants not to compete are presumptively valid, and they are enforceable to the extent they are reasonable.
C)   the question of reasonableness of a restraint requires consideration of such circumstances as the subject matter of the contract, the purpose to be served, the situation of the parties, the extent of the restraint, and the specialization of the business.
D)   Two of these answers are correct.E) A) and B)
F) A) and C)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Philip has been in training for several months and now plans to run in the school-sponsored, 10-mile, fun-run mini-marathon. He completes and signs an entry blank which contains the statement, "I hereby agree to hold the sponsors harmless for any injury sustained as a result of participation in this event no matter how such injury may be caused." 
a. What is the legal term for this clause in the agreement? 
b. Is the clause valid and legally enforceable? Explain its legal effect.

Accepted Answer

a. This is an exculpatory clause.
b. Th...

Question 10

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:

Accepted Answer

A)   out of luck because the clause was communicated to her.
B)   out of luck because she should have insured the package.
C)   likely to collect from DP since exculpatory clauses always violate public policy.
D)   likely to collect from DP because it attempted to excuse intentional and reckless behavior.E) A) and D)
F) A) and C) D

Question 11

Courts will never limit freedom of contract.

Accepted Answer

A) True 
 B)False

Question 12

Nanette wanted to purchase a new car and found one she liked at Minson Motors. Several important contractual terms were buried in the written agreement and some of the meaning of the contract was obscured by legal jargon. The contract involved:

Accepted Answer

A)   procedural unconscionability.
B)   substantive unconscionability.
C)   adhesion.
D)   exculpatory clauses.E) A) and B)
F) None of the above

Question 13

Who usually enters into employment contracts and what provision is commonly included regarding possible restraint of trade? Explain the purpose of such provisions.

Accepted Answer

Salespeople, management personnel, and other employees frequently are required to sign employment contracts prohibiting them from competing with their employers during their time of employment and for some additional stated period after termination. The purpose of the restraint is to protect a property interest of the promisee. Employment contracts are also frequently signed among corporations and partnerships involving professionals, such as accountants, lawyers, investment brokers, stockbrokers, or doctors. These groups of people may enter into restraint of trade contracts to prevent fellow professionals from selling their practices and then setting up a similar practice nearby and taking clients or patients that they had essentially agreed to refrain from treating or working with after selling their business.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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.

Accepted Answer

A) True 
 B)False  True

Question 16

The court in National Business Services, Inc. v. Wright found a noncompete agreement drafted for an employee of an Internet company was:

Accepted Answer

A)   no different in enforceability than noncompete agreements for other types of companies.
B)   subject to smaller geographic restrictions than for other types of companies.
C)   unreasonable in duration with a one-year time restriction.
D)   subject to larger geographic restrictions than for other types of companies.E) B) and D)
F) B) and C)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 state.E) All of the above
F) B) and D)

Question 20

Many states impose no limit on the rate of interest that may be charged:

Accepted Answer

A)   on loans to corporations.
B)   on consumer credit card transactions.
C)   on any consumer loan.
D)   All of the above.
E)   Two of the aboe.F) A) and E)
G) All of the above

Exam 13: Illegal Bargains

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

Correct Answer
verified

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

Correct Answer
verified

The sole nursing home in the county offers a long-term care agreement. The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis. Such a contract is called:

Correct Answer
verified

Which of the following would always be considered to be contrary to public policy?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

In considering a covenant not to compete in an employment contract, the court in the case of Payroll Advance, Inc. v. Yates said in its opinion:

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
a. This is an exculpatory clause.
b. Th...
View Answer

Correct Answer
verified
D

Courts will never limit freedom of contract.

Correct Answer
verified

Nanette wanted to purchase a new car and found one she liked at Minson Motors. Several important contractual terms were buried in the written agreement and some of the meaning of the contract was obscured by legal jargon. The contract involved:

Correct Answer
verified

Who usually enters into employment contracts and what provision is commonly included regarding possible restraint of trade? Explain the purpose of such provisions.

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

Correct Answer
verified

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.

Correct Answer
verified
True

The court in National Business Services, Inc. v. Wright found a noncompete agreement drafted for an employee of an Internet company was:

Correct Answer
verified

Many states impose no limit on the rate of interest that 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 similar business for a period of twenty-five years would be unreasonable and unenforceable.

Correct Answer
verified

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

Correct Answer
verified

Many states impose no limit on the rate of interest that may be charged:

Correct Answer
verified

Exam 13: Illegal Bargains

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The sole nursing home in the county offers a long-term care agreement. The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis. Such a contract is called:

Correct AnswerverifiedShow Answer

Which of the following would always be considered to be contrary to public policy?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In considering a covenant not to compete in an employment contract, the court in the case of Payroll Advance, Inc. v. Yates said in its opinion:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answerverifieda. This is an exculpatory clause. b. Th...View AnswerShow Answer

Correct AnswerverifiedD

Courts will never limit freedom of contract.

Correct AnswerverifiedShow Answer

Nanette wanted to purchase a new car and found one she liked at Minson Motors. Several important contractual terms were buried in the written agreement and some of the meaning of the contract was obscured by legal jargon. The contract involved:

Correct AnswerverifiedShow Answer

Who usually enters into employment contracts and what provision is commonly included regarding possible restraint of trade? Explain the purpose of such provisions.

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedTrue

The court in National Business Services, Inc. v. Wright found a noncompete agreement drafted for an employee of an Internet company was:

Correct AnswerverifiedShow Answer

Many states impose no limit on the rate of interest that 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 similar business for a period of twenty-five years would be unreasonable and unenforceable.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Many states impose no limit on the rate of interest that may be charged:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. This is an exculpatory clause.
b. Th...
View Answer

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified