Question 1

An agreement to restrain trade may be void on the grounds that it is:

Accepted Answer

A) fraudulent. 
B) contrary to public policy. 
C) illegal lobbying. 
D) unfair to merchants. 
A) fraudulent. 
B) contrary to public policy. 
C) illegal lobbying. 
D) unfair to merchants. B

Question 2

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.

Accepted Answer

A) True 
 B)False  True

Question 3

Art and Mary were good friends who went through high school and college together.Art eventually became a college philosophy professor and Mary went into the business world.Mary became a senior vice-president of a management firm and learned many of the company's trade secrets.Both Art and Mary signed one-year contracts with their respective employers.The contracts contained clauses that provided that they would not compete against their former employers for a period of one year after leaving their jobs.The area covered by the restrictions for both Art and Mary was a radius of 500 miles from the place of employment.
Both Art and Mary resigned and within two months took other jobs.Art went to work for another college 50 miles away,teaching philosophy.Mary took a job 75 miles from her former employment.Her new position was similar to her former job.The former employers sued to enforce the anticompetitive covenants in the original contracts.Discuss the probable outcome of the lawsuits.

Accepted Answer

The case against Art,the professor,will likely fail because the restrictive covenant is not necessary to protect the interest of the former employer.It is doubtful that a philosophy professor would be inflicting any harm on the former employer by teaching elsewhere.
The lawsuit against Mary probably will be successful because she knew trade secrets.She held a high position in her former company,and her competition could cause it harm.The restriction appears reasonable.

Question 4

Which of the following is not an example of a state penalty for violating usury law?

Accepted Answer

A) restricting the lender to the recovery of the loan but no interest whatsoever 
B) allowing the lender to recover the loan principal and interest up to the maximum contract rate 
C) restricting the lender to the recovery of the loan plus seventy-fifty percent (75%)of the interest 
D) requiring the lender to pay,as a penalty,double the interest the borrower paid on a usurious loan 
A) restricting the lender to the recovery of the loan but no interest whatsoever 
B) allowing the lender to recover the loan principal and interest up to the maximum contract rate 
C) restricting the lender to the recovery of the loan plus seventy-fifty percent (75%)of the interest 
D) requiring the lender to pay,as a penalty,double the interest the borrower paid on a usurious loan

Question 5

In most states the usury laws apply to loans made to both individuals and corporations.

Accepted Answer

A) True 
 B)False

Question 6

Sam Wilson often goes to the horse races,participates in his state's lottery,and invests heavily in the stock of major U.S.companies.At work,Wilson is approached by his coworkers and asked to participate in a football pool."It's totally based upon skill," his friends claim.In addition,Wilson's philanthropic club is holding a raffle in which an individual could win a new car.Are these activities gambling and therefore illegal activities?

Accepted Answer

Events sanctioned by the federal and sta

Question 7

One element involved in the determination of unconscionability is:

Accepted Answer

A) the comparative bargaining power of the parties. 
B) the opportunity to make a contract for better terms with someone else. 
C) the course of the economy after the contract is made. 
D) whether a loss will be sustained by performance of the contract. 
A) the comparative bargaining power of the parties. 
B) the opportunity to make a contract for better terms with someone else. 
C) the course of the economy after the contract is made. 
D) whether a loss will be sustained by performance of the contract.

Question 8

Agreements not to compete are always void.

Accepted Answer

A) True 
 B)False

Question 9

When a nationally-known neurosurgeon in Chicago,Illinois sells her practice,the contract may specify that the seller will not practice within a 100-mile radius of Chicago for one year.

Accepted Answer

A) True 
 B)False

Question 10

Agreements that are contrary to public policy are not binding.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) Plaintiff 
B) Defendant 
C) the less-guilty party,when public interest is advanced by granting relief 
D) a doctor who was unlicensed at the time of the making of an agreement for the provision of medical services,but who later obtained a proper license 
A) Plaintiff 
B) Defendant 
C) the less-guilty party,when public interest is advanced by granting relief 
D) a doctor who was unlicensed at the time of the making of an agreement for the provision of medical services,but who later obtained a proper license

Question 12

Which of the following types of contracts might be unenforceable as contrary to public policy?

Accepted Answer

A) a contract that is contrary to the protection of the public welfare,health,or safety 
B) a contract that is contrary to the protection of the person 
C) a contract that is contrary to the protection of recognized social institutions 
D) all of the above 
A) a contract that is contrary to the protection of the public welfare,health,or safety 
B) a contract that is contrary to the protection of the person 
C) a contract that is contrary to the protection of recognized social institutions 
D) all of the above

Question 13

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

Accepted Answer

A) the Uniform Contract Code 
B) whether the agreement might harm the public welfare 
C) whether the contract is wise or foolish 
D) whether the contract operates unequally between the parties 
A) the Uniform Contract Code 
B) whether the agreement might harm the public welfare 
C) whether the contract is wise or foolish 
D) whether the contract operates unequally between the parties

Question 14

An illegal provision in a contract:

Accepted Answer

A) causes the entire contract to be voidable. 
B) causes the entire contract to be rescinded. 
C) can be ignored by the parties in their performance of the remaining provisions of the contract,assuming that the remaining portions of the contract can stand on their own. 
D) can be ignored by the parties,because an illegal provision in a contract is not deemed substantial. 
A) causes the entire contract to be voidable. 
B) causes the entire contract to be rescinded. 
C) can be ignored by the parties in their performance of the remaining provisions of the contract,assuming that the remaining portions of the contract can stand on their own. 
D) can be ignored by the parties,because an illegal provision in a contract is not deemed substantial.

Question 15

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

Accepted Answer

A) Usury 
B) credit misfeasance 
C) petty theft 
D) credit malfeasance 
A) Usury 
B) credit misfeasance 
C) petty theft 
D) credit malfeasance

Question 16

Public policy:

Accepted Answer

A) can be precisely defined 
B) is frequently used by the courts as a reason to invalidate contracts 
C) is protections from that which violates any established interest of society 
D) all of the above 
A) can be precisely defined 
B) is frequently used by the courts as a reason to invalidate contracts 
C) is protections from that which violates any established interest of society 
D) all of the above

Question 17

An agreement not to compete is enforceable:

Accepted Answer

A) in the sale of a business. 
B) between competitors. 
C) in contracts for the sale of goods. 
D) in contracts for the sale of securities. 
A) in the sale of a business. 
B) between competitors. 
C) in contracts for the sale of goods. 
D) in contracts for the sale of securities.

Question 18

Even if part of a contract is illegal,the court may enforce a divisible,legal part of the contract.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

When a court finds a clause of a contract unconscionable at the time it was made,it may enforce the remainder of the contract.

Accepted Answer

A) True 
 B)False

Exam 16: Legality and Public Policy

An agreement to restrain trade may be void on the grounds that it 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.

Which of the following is not an example of a state penalty for violating usury law?

In most states the usury laws apply to loans made to both individuals and corporations.

One element involved in the determination of unconscionability is:

Agreements not to compete are always void.

When a nationally-known neurosurgeon in Chicago,Illinois sells her practice,the contract may specify that the seller will not practice within a 100-mile radius of Chicago for one year.

Agreements that are contrary to public policy are not binding.

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

Which of the following types of contracts might be unenforceable as contrary to public policy?

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

An illegal provision in a contract:

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

Public policy:

An agreement not to compete is enforceable:

Even if part of a contract is illegal,the court may enforce a divisible,legal part of the contract.

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

When a court finds a clause of a contract unconscionable at the time it was made,it may enforce the remainder of the contract.

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

The Legal Environment of International Trade

Crimes

Torts

Intellectual Property Rights

Cyberlaw

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Writing, electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Instruments, parties, and Negotiability

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor-Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Types of Business Organizations

Partnerships

LPs, LLCs, and LLPs

Corporate Formation

Shareholder Rights in Corporations

Securities Regulation

Accountants Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents Estates and Trusts

Filters