Question 1

Usury laws protect borrowers from paying excessively high interest rates.

Accepted Answer

A) True 
 B)False  True

Question 2

Andrews made a $100 bet with Caruso on the World Series. When he lost, Andrews refused to pay Caruso the $100. What are Caruso's rights?

Accepted Answer

None. Making a bet on the outcome of the World Series violates a state's gambling statutes. The agreement between Andrews and Caruso, therefore, cannot be enforced.

Question 3

Any agreement that limits competition by controlling or fixing prices is illegal.

Accepted Answer

A) True 
 B)False  True

Question 4

If an agreement is partially legal and partially illegal, the

Accepted Answer

A)  legal part of the agreement may be enforced if it can be separated from the illegal part. 
B)  entire agreement is considered to be illegal. 
C)  entire agreement is considered to be legal. 
D)  parties to the agreement have a choice of declaring it legal or illegal. 
A)  legal part of the agreement may be enforced if it can be separated from the illegal part. 
B)  entire agreement is considered to be illegal. 
C)  entire agreement is considered to be legal. 
D)  parties to the agreement have a choice of declaring it legal or illegal.

Question 5

Billings and Durick, who are competing distributors, made an agreement whereby Billings promised that he would not sell his goods in a specified area, and Durick promised that she would not sell her goods in another specified area. The agreement was made to keep prices high by eliminating competition. This arrangement was

Accepted Answer

A)  legal because it was made in reasonable restraint of trade in order to control prices and territory. 
B)  legal because a binding contract was made willingly by both parties. 
C)  illegal because it called for unreasonable restraint of trade by controlling prices and territories. 
D)  illegal because agreements that allow manufacturers to set prices are voidable. 
A)  legal because it was made in reasonable restraint of trade in order to control prices and territory. 
B)  legal because a binding contract was made willingly by both parties. 
C)  illegal because it called for unreasonable restraint of trade by controlling prices and territories. 
D)  illegal because agreements that allow manufacturers to set prices are voidable.

Question 6

A provision excusing one party from liability for negligence is

Accepted Answer

A)  an exculpatory clause. 
B)  a revocation clause. 
C)  a disaffirmatory clause. 
D)  forbearance. 
A)  an exculpatory clause. 
B)  a revocation clause. 
C)  a disaffirmatory clause. 
D)  forbearance.

Question 7

If both parties to an illegal agreement are in pari delicto, neither party can successfully sue the other to seek enforcement of the agreement.

Accepted Answer

A) True 
 B)False

Question 8

If an agreement contains an illegal part that can be separated, the entire agreement is void.

Accepted Answer

A) True 
 B)False

Question 9

If the purpose of a licensing statute is to raise money, an agreement with an unlicensed person is

Accepted Answer

A)  void. 
B)  valid. 
C)  unenforceable. 
D)  voidable. 
A)  void. 
B)  valid. 
C)  unenforceable. 
D)  voidable.

Question 10

Anderson agreed to pay Dawes for acting as a real estate agent. Dawes was not properly licensed. This agreement was

Accepted Answer

A)  illegal and voidable. 
B)  legal and valid. 
C)  illegal and void. 
D)  permissible. 
A)  illegal and voidable. 
B)  legal and valid. 
C)  illegal and void. 
D)  permissible.

Question 11

Maile agrees to sell his retail men's shop in Cleveland, Ohio, to Lunger. Lunger wishes to have a restrictive clause against competition by Maile included in the sales contract. Which restrictive clause against the seller would be enforceable?

Accepted Answer

A)  Never to engage in a similar business in Cleveland 
B)  Not to engage in a similar business for the next two years anywhere in the state of Ohio 
C)  Not to engage in any type of business anywhere in Cleveland for the next year 
D)  Not to engage in a men's shop business within a radius of one mile for the next year 
A)  Never to engage in a similar business in Cleveland 
B)  Not to engage in a similar business for the next two years anywhere in the state of Ohio 
C)  Not to engage in any type of business anywhere in Cleveland for the next year 
D)  Not to engage in a men's shop business within a radius of one mile for the next year

Question 12

While illegal contracts have civil penalties, the parties involved may also be subject to criminal penalties.

Accepted Answer

A) True 
 B)False

Question 13

If two parties enter into an agreement that both know is illegal, the parties are said to be ____________________.

Accepted Answer

The answer of If two parties enter into an agreement...

Question 14

A contract of adhesion places one party in a superior position because of its unfavorable clauses.

Accepted Answer

A) True 
 B)False

Question 15

An agreement too harsh or unfair to be upheld in a court of law is considered to be ____________________.

Accepted Answer

The answer of An agreement too harsh or unfair to...

Question 16

Exculpatory clauses relieve a party in advance for liability for the tort of negligence.

Accepted Answer

A) True 
 B)False

Question 17

If a person unknowingly deals with an unlicensed individual, the courts will usually allow the person to recover any money paid to the unlicensed individual.

Accepted Answer

A) True 
 B)False

Question 18

A contract may be considered legal although it

Accepted Answer

A)  is specifically prohibited by statute. 
B)  involves gaming legalized by the state. 
C)  is contrary to public policy. 
D)  results in a crime if the person committing the criminal act is given a prison sentence. 
A)  is specifically prohibited by statute. 
B)  involves gaming legalized by the state. 
C)  is contrary to public policy. 
D)  results in a crime if the person committing the criminal act is given a prison sentence.

Question 19

____________________ is the fee paid by a borrower for the use of money.

Accepted Answer

The answer of ____________________ is the fee paid by a...

Question 20

Knebel's parents promised her $3,000 if she would not marry before age twenty-one. Knebel agreed. This agreement is

Accepted Answer

A)  void. 
B)  valid. 
C)  unenforceable. 
D)  illegal. 
A)  void. 
B)  valid. 
C)  unenforceable. 
D)  illegal.

Exam 10: Legality

Usury laws protect borrowers from paying excessively high interest rates.

Andrews made a $100 bet with Caruso on the World Series. When he lost, Andrews refused to pay Caruso the $100. What are Caruso's rights?

Any agreement that limits competition by controlling or fixing prices is illegal.

If an agreement is partially legal and partially illegal, the

A provision excusing one party from liability for negligence is

If both parties to an illegal agreement are in pari delicto, neither party can successfully sue the other to seek enforcement of the agreement.

If an agreement contains an illegal part that can be separated, the entire agreement is void.

If the purpose of a licensing statute is to raise money, an agreement with an unlicensed person is

Anderson agreed to pay Dawes for acting as a real estate agent. Dawes was not properly licensed. This agreement was

Maile agrees to sell his retail men's shop in Cleveland, Ohio, to Lunger. Lunger wishes to have a restrictive clause against competition by Maile included in the sales contract. Which restrictive clause against the seller would be enforceable?

While illegal contracts have civil penalties, the parties involved may also be subject to criminal penalties.

If two parties enter into an agreement that both know is illegal, the parties are said to be ____________________.

A contract of adhesion places one party in a superior position because of its unfavorable clauses.

An agreement too harsh or unfair to be upheld in a court of law is considered to be ____________________.

Exculpatory clauses relieve a party in advance for liability for the tort of negligence.

If a person unknowingly deals with an unlicensed individual, the courts will usually allow the person to recover any money paid to the unlicensed individual.

A contract may be considered legal although it

____________________ is the fee paid by a borrower for the use of money.

Knebel's parents promised her $3,000 if she would not marry before age twenty-one. Knebel agreed. This agreement is

Foundations of Law and the Role of Ethics in Business

The Legal System in the United States and Its Constitutional Foundation

Personal, Business, and Cyber Crimes and the American Criminal Justice System

Tort Law: Traditional Torts and Cyber Torts

Litigation and Alternatives for Settling Civil Disputes

Contract Law: a Beginning

Agreement: Offer and Acceptance

Consideration

Capacity

Memorialize Contracts in Writingstatute of Frauds

Transfer of Contract Rights and Duties

The Termination of Contracts: Discharge

The Termination of Contracts: Breach of Contract

Formation of Sales and Lease Contracts

The Sales Contract: Transfer of Title and Risk of Loss

The Sales Contract: Performance, Breach, and Remedies for Breach

Product Liability Law

Nature and Types of Negotiable Instruments

Issue, Transfer, Indorsement, and Discharge of Negotiable Instruments

Rights and Duties of Parties

Checks and the Banking System in the Twenty-First Century

Employer-Employee Relationship

Principal-Agent Relationship

Principal-Agent, Employer-Employee, and Third-Party Relationships

Sole Proprietorships, Partnerships, and Limited Liability Organizations

Corporations and Franchising

Government Regulation of Business

Basic Legal Concepts of Property

Renting Real Property

Buying and Selling Real Property

Nature and Types of Bailments

Wills, Intestacy, and Estate Planning

Protecting the Consumer and the Taxpayer

Protecting the Borrower

Protecting the Creditor

Property, Casualty and Automobile Insurance

Personal Insurance

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