Exam 14: Legality

Larry has the largest pizza business in the city.He learns that Henry is thinking of opening a competing pizza and pasta delivery business.Larry gives Henry $25,000 to not open his proposed business in the same city.Which statement is correct?

Barb has been a children's day care provider for several years in the small town of Sallton.She has decided to give it all up and move to the big city for excitement and adventure.She sells her business to Ken,agreeing not to open a competing business within five miles of Sallton for a period of nine months.After five months of the big city life,Barb is broke and moves back to Sallton.She opens a small day care business.Ken sues on the non-compete clause.What is the most likely result?

Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fee will be a percentage of the recovery Lenny obtains for Cindy in her pending divorce.State law makes such a contingency fee arrangement illegal in divorce actions.What will be the probable outcome if Lenny attempts to enforce the agreement?

L & M loaned Joan $400 so that she could buy her textbooks for the current semester.L & M's terms for repayment of the loan (including interest)are $200 in two months,$200 in four months,and another $100 at the end of the fifth month.The legal maximum rate of interest on this type of loan is 6 percent per annum.L & M's loan is usurious.

Morality plays no part of gambling contract legality.

In many states it is illegal to lend money to help someone gamble.

E-mation entered into a contract with a consumer,Ezra,a recent immigrant to the United States who spoke very little English and had no formal education.The contract provided for Ezra to pay $2,500 for a computer system.The system was worth $400.If E-mation sued Ezra for enforcement of the contract,what is the most likely result?

Roger parked his car at a garage that has a large sign at the entrance saying,"This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.

Discuss the pros and cons of gambling and state what the California Court of Appeals ruled regarding the treatment of gambling on credit.

To be valid,an agreement not to compete must be ancillary to a legitimate bargain.

Discuss exculpatory clauses,and designate when an exculpatory clause is unenforceable.

A contract most likely will be declared unconscionable if

Mike owns a house in a low-income area of a large city.Mike is on disability,and his total monthly income is $700.A sales representative visits his home to sell him a water purification system.Mike signs a contract that calls for monthly payments of $500 for the next 10 years.The water system is worth no more than $1,000.Mike thought he was signing a permission slip allowing the salesman to conduct a free water test to determine the toxins in the water.How would a court most likely describe this contract?

Cherise contacted her insurance agent and said she was interested in purchasing several life insurance policies: (a)a policy on her own life for $100,000,naming her son and daughter as beneficiaries;(b)a policy on her neighbor's life for $100,000,since she had observed him engaging in reckless behavior,naming herself as beneficiary;(c)a $5,000 policy on another neighbor to cover a loan Cherise made to him,naming herself as beneficiary;and (d)a $250,000 policy on her business partner,naming herself as beneficiary.Discuss the legality of each of these potential contracts.

A court is unlikely to enforce the non-compete agreement Kelly and Amber signed because of which of the following clauses?

Judith is a CPA with an excellent reputation and client base.She sells her tax preparation business to Shawn,and the sales contract includes a non-compete clause restricting Judith from opening a similar business for one year within a 10-mile radius of her former office.If she opens a tax preparation office five miles away after one year,a court would probably

If a contract is made with a person required by law to hold a license,and the purpose of the license is protection of the public,the contract made by an unlicensed person will generally be unenforceable.

An unconscionable contract is one that a court refuses to enforce because of

Giving possession and control of personal property to another person is referred to as

John was a licensed physician in Michigan.When he retired to Florida,he started providing medical services to the people in his condo,relying on his Michigan license since he did not have a Florida license and there is no reciprocity between the two states.Isaac,John's next-door neighbor,owed John $2,000 for medical services.John will be able to enforce the contract he made with Isaac.