Exam 13: Illegal Bargains

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

Al has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sales contract, he agrees that he will refrain from practicing accounting anywhere within a 20-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home. The sales agreement:

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

A covenant not to compete is a type of restraint of trade that courts today will enforce under certain circumstances.

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:

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

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

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

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?

Bill is currently enrolled in law school. He expects to graduate and take the bar exam in order to be able to practice law. Before Bill becomes a lawyer, he promises to represent his friend, Tom, in a breach of contract action if Tom will pay him 25% of the settlement. Bill negotiates and the case settles for $50,000. Tom refuses to pay Bill. Bill then graduates and attempts to sue Tom. Bill has a legal right to enforce the agreement.

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

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

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

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

Mel owns a neighborhood grocery store that he would like to sell. Katrina is interested in purchasing the business, but she is concerned because she knows that Mel has built up a lot of goodwill over the years, and she wonders whether Mel might not just open another store down the block and take all of the business from the old store with him. Katrina asks for and receives from Mel a clause in the sales 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? _a. ^{The agreement is a covenant in restraint of trade in connection with the sale of a}

A contract prepared on a standard form and offering terms on a take-it-or-leave-it basis is called:

A court would be likely to enforce an illegal contract:

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

An exculpatory clause excusing a party from liability for harm caused by reckless conduct will generally make a contract unenforceable as a violation of public policy.

The usual means of enforcing an agreement prohibiting an employee from competing in a described territory for a stated period of time is by injunction.