Exam 13: Illegal Bargains

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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.

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Question 1

Correct Answer:

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

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Question 2

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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.

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:

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Question 3

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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:

(Multiple Choice)

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Question 4

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

(True/False)

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Question 5

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.

(True/False)

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Question 6

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:

(Multiple Choice)

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Question 7

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:

(Multiple Choice)

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Question 8

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

(Multiple Choice)

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Question 9

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

(True/False)

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Question 10

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

(Multiple Choice)

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Question 11

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:

(Multiple Choice)

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Question 12

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

(Multiple Choice)

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Question 13

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

(Multiple Choice)

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Question 14

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

(Multiple Choice)

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Question 15

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

(True/False)

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Question 16

Courts will never limit freedom of contract.

(True/False)

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Question 17

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.

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Question 18

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

(Multiple Choice)

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Question 19

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

(True/False)

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Question 20

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Exam 13: Illegal Bargains

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.

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.

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.

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:

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:

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

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

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

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:

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

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

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

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

Courts will never limit freedom of contract.

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

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

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