Exam 16: Legality and Public Policy

Fees charged by a lender for the reasonable expense of making a loan, such as the cost of appraising property, are treated as interest for purposes of the usury law.

A noncompetition covenant may be held invalid because of vagueness concerning the duration and geographic area of the restriction.

The failure to have a license will not render agreements void if the license:

Today, what is an important element in determining the validity of a contract?

An illegal provision in a contract:

One element involved in the determination of unconscionability is:

If a contract can be interpreted in two ways, one legal and the other illegal, the court will assume that the legal meaning was intended unless the contrary is clearly indicated.

A provision in a contract that gives what the court believes is too much of an advantage over a buyer may be held void as unconscionable.

Legislation commonly requires that an installment-sale contract specify the cash price, down payment, finance charges, and insurance costs.

An agreement not to compete is enforceable:

If a contract appears to be legal on its face, it will be enforceable even if it was entered into for an illegal purpose.

Penalties for violating usury laws are uniform from state to state.

Which of the following is not illegal?

When money is loaned at a greater rate of interest than is allowed by law, __________ is committed.

An agreement between Jim and his 18-year-old daughter, Betty, provides that he will give her $25,000 if she does not marry until after her 22nd birthday. One month after reaching the age of 22, Betty, still unmarried, claims the $25,000. Jim refuses to pay, claiming that the agreement was illegal. Is Jim correct?

An agreement to slander a third person would not be enforceable because slander is a(n):

An unlicensed doctor can sue a patient for the doctor's fee if the patient in fact recovered because of the doctor's care.

Ordinarily, a court will not consider whether a contract is fair or unfair.

Which party to an illegal agreement may get relief from the court?

Courts are quick to invalidate contracts on the ground that they are contrary to public policy because such contracts are so offensive to society.