Deck 15: Illegality

Question 1

Under the doctrine of unconscionability, courts would refuse to grant the equitable remedy of specific performance for breach of contract if the contract was oppressively unfair.

Answer 1

True
Explanation: Under the doctrine of unconscionability,courts refused to grant the equitable remedy of specific performance for breach of a contract if they found the contract to be oppressively unfair.

Question 2

To encourage people to cancel illegal contracts,courts will allow a person who rescinds such a contract before any illegal act has been performed to recover any consideration that he has given.

Answer 2

True
Explanation: To encourage people to cancel illegal contracts,courts will allow a person who rescinds such a contract before any illegal act has been performed to recover any consideration that he has given.

Question 3

An agreement to divorce one's spouse is considered to be illegal.

Answer 3

True
Explanation: An agreement that unreasonably tends to interfere with family relationships is considered illegal.

Question 4

Statutes that require proof of character and skill and impose penalties for violation are considered to be revenue raising in nature.

Question 5

Public policy never changes and courts always apply it in the same way.

Question 6

The origin of the policy against restrictions on competition in the market comes from common law.

Question 7

One example of procedural unconscionability is the use of "fine print" in stating a contractual provision.

Question 8

An agreement that violates legislative and court-made rules and creates a threat to public policy shall be denied enforcement on the ground of illegality.

Question 9

A contract of adhesion is one that the courts will always enforce because of the strong public policy underlying such contract.

Question 10

Courts will always enforce an exculpatory clause from a properly executed contract.

Question 11

A contract to commit a serious crime is a legal contract.

Question 12

A court will enforce a noncompetition clause even if its restraints are unduly burdensome either on the public or on the party whose ability to compete would be restrained.

Question 13

Any contract that is deemed illegal is also a criminal violation.

Question 14

An agreement can be illegal even if no statute specifically states that such an agreement is illegal.

Question 15

An exculpatory clause is a provision in a contract that purports to relieve one of the parties from tort liability.

Question 16

Courts will provide a remedy for the breach of illegal agreements.

Question 17

A noncompetition clause is also known as a "liability waiver."

Question 18

Even if both parties consent to an agreement,if a court finds the agreement illegal then it will not enforce it.

Question 19

For a noncompetition clause to be enforceable,the clause must serve a legitimate business purpose.

Question 20

The Uniform Commercial Code (UCC)allows the court to modify or limit the enforcement of a provision in a contract that is found to be unconscionable.

Question 21

Helga owns an insurance business in Idaho.Her clients are all Idaho residents.She later sells her business to Carlos.As part of the deal,the contract contains a noncompete clause that prevents Helga from operating an insurance business anywhere in Idaho,Washington,or Oregon for a period of five years.Six months after this sale,Helga opens an insurance business in Oregon.If Carlos seeks to enforce the noncompete agreement against Helga,will he probably be successful?

A)Yes,because this agreement is reasonable.
B)Yes,because the clause is not imposing an undue hardship.
C)No,because this agreement is not reasonable.
D)No,because the agreement is not yet converted into a treaty.

Question 22

In an employment contract,the noncompetition clause might be the only part of the contract:

A)that the parties put in writing.
B)that would be valid.
C)that would be unenforceable.
D)that would be illegal.

Question 23

Normally,an illegal contract is:

A)a quasi-contract.
B)implied-in-fact.
C)unenforceable.
D)voidable.

Question 24

Which of the following terms refers to a widely shared view about what ideas,interests,institutions,or freedoms promote public welfare?

A)Void contract
B)Public policy
C)Implied-in-fact policy
D)Express contract

Question 25

Which of the following statements is true regarding noncompetition clauses in employment contracts?

A)These clauses are illegal.
B)Employments contracts with these clauses are voidable.
C)These clauses put post-employment restrictions on the employees.
D)These clauses need to be ratified by the employer.

Question 26

A court has held that a certain contract violates public policy.This contract will be treated the same as a(n):

A)illegal contract.
B)contract between a minor and an adult.
C)private contract.
D)adhesive contract.

Question 27

Paul is hired by Soprano as a security guard.At the time of hiring,Paul signs an agreement that relieves Soprano from workers' compensation liability.This agreement is most likely:

A)enforceable because Paul and Soprano have equal bargaining power.
B)unenforceable because it includes intentional torts.
C)enforceable so long as the terms of the agreement are conspicuously disclosed.
D)unenforceable as a violation of public policy.

Question 28

Which of the following constrains the employee from divulging or using certain information gained during his employment?

A)Nonsolicitation agreement
B)Nondisclosure agreement
C)Noncompetition clause
D)Deed of trust

Question 29

Which of the following is most true regarding noncompetition clauses in contracts?

A)Such clauses are not used during employment contracts.
B)Such clauses will be enforced if they have a legitimate business purpose.
C)Such clauses are enforced only for protecting the environment and conserving resources.
D)Such clauses help in promoting free trade.

Question 30

Which of the following is not a category of illegal agreements?

A)Agreements that violate statues
B)Agreements that violate public policy developed by courts
C)Unconscionable agreements and contracts of adhesion
D)Agreements to bring more profit to one party than the other

Question 31

When a court says that an agreement is illegal,it most likely means that the agreement:

A)has not mentioned a time period for which the agreement is valid.
B)does not identify the parties involved in the agreement.
C)is related to buying and selling of trade secrets.
D)violates public policy.

Question 32

Mr.Green enters into a contract with Ms.White to purchase legal ingredients that he plans to use to perfect an illegal marijuana manufacturing operation.Ms.White is aware that Mr.Green intends to use the ingredients for an illegal purpose.She refuses to pay the amount owed to Mr.Green and he sues in court.What is the court likely to do?

A)Recognize the contract but only allow 50% economic recovery for Mr.Green since his products were used to produce illegal items.
B)The court will likely not enforce Mr.Green's contract since it was part of an illegal action.
C)The court will likely enforce the agreement if Mr.Green registered the contract with the Secretary of State's office.
D)The court will enforce the agreement if Mr.Green has lived in the forum state longer than Ms.White.

Question 33

Roger and Erick make a bet concerning whether a certain rich citizen will die within the next year.Neither party has any economic interest in this person's fate,except for that created by the bet.This agreement is:

A)unenforceable if statutes prohibit wagering agreements.
B)unenforceable because it tends toward the commission of a crime.
C)unconscionable because it contemplates the destruction of life.
D)a valid and enforceable risk-allocation agreement.

Question 34

In which of the following situations is a court most likely to refuse to enforce a noncompetition clause?

A)The clause is not ratified by the employer.
B)The employment contract,which contains the clause,is an implied-in-fact contract.
C)The clause restricts employees from engaging in a "common calling."
D)The employment contract,which contains the clause,is a quasi-contract.

Question 35

Todd is a licensed real estate broker in Ohio.One of Todd's largest clients,Sun Corp. ,contracted in writing with Todd to find a purchaser for its plant in New York and agreed to pay him a 6% commission if he was successful.Todd located a buyer who purchased the plant.Unknown to Todd,New York has a real estate broker's licensing statute which is regulatory in nature,intended to protect the public against unqualified persons.Todd violated the licensing statute by failing to obtain a New York license.If Sun refuses to pay Todd any commission and Todd brings an action against Sun,he will be entitled to recover:

A)nothing.
B)a fee based on the actual hours spent.
C)the commission agreed upon.
D)out of pocket expenses only.

Question 36

Sam,a plumber,entered into a contract for $75,000 with Orr,Inc. ,to perform certain plumbing services in a building owned by Orr.After Sam had satisfactorily performed the work,Orr discovered that Sam had violated the state licensing statute by failing to obtain a plumbing license.As a result,Orr refused to pay Sam.The licensing statute was enacted merely to raise revenue for the state.An independent appraisal of Sam's work indicated that the building's fair market value increased by $70,000 as a result of Sam's work.The cost of the materials that Sam supplied was worth $35,000.If Sam sues Orr,Sam will be entitled to recover:

A)nothing.
B)$35,000.
C)$70,000.
D)$75,000.

Question 37

Noncompete clauses in contracts:

A)are never enforced because they violate anti-trust laws.
B)are never enforced because they are unethical.
C)are always enforced under the doctrine of "freedom of contract."
D)are enforced if found to be reasonable.

Question 38

Which of the following is NOT a requirement in the enforceability of a noncompetition clause?

A)The noncompetition clause must serve a legitimate business purpose.
B)The noncompetition clause must be regarding the sale of goods.
C)The restriction on competition must be reasonable in time,geographic area,and scope.
D)The noncompetition clause should not impose an undue hardship.

Question 39

Which of the following is not a factor when a court considers whether an agreement is illegal for public policy reasons?

A)The importance of the public policy involved.
B)Whether both parties knew the agreement was illegal.
C)The seriousness of any wrongdoing involved.
D)If enforcement of the agreement would interfere with the public policy involved.

Question 40

If a statute is considered to be ________,the purpose of the legislation is to protect the public against dishonest or incompetent practitioners.

A)regulatory
B)enforceable
C)adhesive
D)ancillary

Question 41

Toby,an Ohio real estate broker,misrepresented to Allen that he was licensed in Michigan under Michigan's statute regulating real estate brokers.Allen signed a standard form listing contract agreeing to pay Toby a 6% commission for selling Allen's home in Michigan.Toby sold Allen's home.Under the circumstances,Allen is:

A)not liable to Toby for any amount because of the rule of mirror image which needs to be fulfilled for creating a binding contract.
B)not liable to Toby for any amount because Toby violated the Michigan licensing requirements.
C)liable to Toby only for the value of services rendered under the quasi-contract theory.
D)liable to Toby for the full commission under the promissory estoppel theory.

Question 42

An agreement that unreasonably tends to interfere with family relationships will be considered ________.

A)implied-in-fact
B)valid
C)exculpatory
D)illegal

Question 43

Which of the following is a possible example of procedural unconscionability?

A)A clause excluding a seller's liability for consequential damages from a defective good.
B)A clause imposing a penalty for failure to deliver the goods on time.
C)A high price term in a contract.
D)A fine-print price term in a contract.

Question 44

Courts may decline to enforce unconscionable terms or contracts.This provision is provided in:

A)Section 12 of UCC.
B)Section 208 of UCC.
C)Section 4 of UCC.
D)Section 208 of Restatement (SeconD)of Contracts.

Question 45

Which of the following was NOT taken into account by classical law in assessing contracts?

A)Fraud
B)Duress
C)Misrepresentation
D)Fairness

Question 46

Under the doctrine of ________,courts would refuse to grant the equitable remedy of specific performance for breach of a contract if they found the contract to be oppressively unfair.

A)unconscionability
B)mirror image
C)community-of-interest
D)contract bar

Question 47

Which of the following is also termed a "liability waiver"?

A)Exculpatory clause
B)Nondisclosure agreement
C)Confidentiality clause
D)Noncompetition clause

Question 48

Which of the following is an example of substantive unconscionability?

A)Terms that are stated in "fine print"
B)A disparity in bargaining power between the parties
C)High-pressure sales tactics
D)Unjustifiably harsh terms

Question 49

Wayne and Mia are friends in Idaho,where gambling is illegal and they are aware of it.Wayne and Mia bet $1,000 on which day Paradise Creek will flood its banks.They have no financial interest in Paradise Creek.Wayne wins this bet.Mia pays Wayne the $1,000,but later that day,regrets it and sues Wayne to get her $1,000 back.The court would probably rule in favor of:

A)Mia,since gambling was illegal.
B)Mia,because a bet is considered to a form of an implied-in-fact contract.
C)Wayne,because he won the bet fair and square,so the court will enforce the wager.
D)Wayne,since the court will "leave the parties where it finds them" in cases like this.

Question 50

Which of the following is true regarding an exculpatory clause?

A)It is illegal in nature.
B)It is also termed a "release."
C)It is invalid in negligence cases.
D)It imposes strict liability on the guilty party.

Question 51

A ________ is a contract,usually on a standardized form,offered by a party who is in a superior bargaining position on a "take-it-or-leave-it" basis.

A)quasi-contract
B)contract of adhesion
C)executory contract
D)bilateral contract

Question 52

An exculpatory clause that protects a person from liability for fraud is:

A)valid but unenforceable.
B)valid if it is in writing.
C)against public policy.
D)valid if both parties agree.

Question 53

Joe is the owner of the restaurant "Yummy Bites." Neil is an employee of a competitor's restaurant "Mom's Kitchen." Joe pays Neil $1,000 to obtain recipes from "Mom's Kitchen." In the meantime,Joe has second thoughts and forbids Neil to obtain such recipes.Joe wants to get his money back.Identify the most accurate statement that might help Joe.

A)Joe can recover the amount because he has rescinded the contract before any illegal act has been done by Neil.
B)Joe cannot recover the amount because he has entered into an illegal contract.
C)Joe cannot recover the amount because such contracts are unenforceable and illegal.
D)Joe can recover the amount because the contract between him and Neil is a quasi-contract.

Question 54

In technical legal terms,a party not equally in the wrong is said to be not in ________.

A)res ipsa loquitur
B)ab initio
C)pari delicto
D)ad idem

Question 55

Which of the following is a possible outcome if a court finds that a contract or a term in a contract is unconscionable?

A)It will refuse to enforce the entire agreement.
B)It will impose punitive damages on the guilty party.
C)It will allow the injured party to recover damages.
D)It will ask for arbitration in the matter.

Question 56

A(n)________ clause is a provision in a contract that purports to relieve one of the parties from tort liability.

A)exculpatory
B)implied-in-fact
C)quasi
D)expressed

Question 57

Agreements made by unmarried people who are living together:

A)are unenforceable regardless of their nature.
B)are enforceable if they do not involve the division of property.
C)are unenforceable if one of the parties is married to someone else.
D)are considered to be against public policy.

Question 58

To determine ________ unconscionability,courts will scrutinize the contract terms themselves to determine whether they are oppressive,unreasonably one-sided,or unjustifiably harsh.

A)procedural
B)voidable
C)substantive
D)associative

Question 59

________ is generally taken to mean the absence of meaningful choice together with terms unreasonably advantageous to one of the parties.

A)Unconscionability
B)Illegality
C)Adhesion
D)Rescission

Question 60

Amy is hired by BigMart as a cashier.At the time of hiring,Amy is required to sign an arbitration agreement under which she agreed to settle any and all claims she might have relating to her employment by final and binding arbitration before a neutral arbitrator and in accordance with BigMart's "Dispute Resolution Rules and Procedures" which is a separate ten-page document containing complex procedural details.Under the agreement,Amy is required to pay for all arbitration-related costs,and BigMart can still sue Amy in civil court for claims arising from her employment.A court will most likely view this agreement as:

A)unenforceable since it is a quasi-contract.
B)enforceable because it is an arbitration agreement.
C)unconscionable because it is an adhesion contract that is oppressive.
D)enforceable because it is part of a valid employment agreement.

Question 61

If part of an agreement is legal and part is illegal,the courts will:

A)declare the entire agreement to be void.
B)ask both the parties to ratify the agreement before considering it for evaluation.
C)enforce the legal part so long as it is possible to separate the two parts.
D)impose punitive damages on both the parties.

Question 62

What would happen if courts enforced agreements that involve the violation of a statute?

A)They would frustrate the purpose for which the legislature passed the statute.
B)The legislature would override such decisions.
C)It would promote obedience of the law.
D)The public would show greater respect for courts.

Question 63

A contract is said to be ________-that is,the legal part can be separated from the illegal part-if the contract consists of several promises or acts by one party,each of which corresponds with an act or a promise by the other party.

A)implied-in-fact
B)voidable
C)unenforceable
D)divisible

Question 64

Statutes that impose a significant license fee and allow anyone who pays the fee to obtain a license are usually classified as ________.

A)regulatory
B)revenue raising
C)enabling
D)transparent

Question 65

In the case in the text,Coma Corporation v.Kansas Department of Labor,why did the court find in favor of the Department?

A)Kansas has a strong and longtime public policy protecting wages and wage earners.
B)Kansas courts do not recognize employment contracts with illegal aliens.
C)Kansas law forbid the court from recognizing the validity of the contract.
D)Kansas is a pro-employer state.

Question 66

When a legislature has specifically stated that a particular contract is void,a court need only:

A)cancel the contract.
B)interpret and apply the statute.
C)decide whether the contract is against public policy.
D)decide whether the contract is unconscionable.

Question 67

Sally agrees to sell Mary her old kitchen appliances for $3,000.Little does Sally know,Mary intends to use the appliances to cook methamphetamine.Mary paid $500 in cash and wrote a check for the remaining amount.The check bounced and Sally sued Mary to recover the remaining money.What is likely the result:

A)Sally is entitled to $2,500 because she was unaware of Mary's intention.
B)Sally is entitled to $2,500 because Mary is in possession if the appliances.
C)Sally is entitled to $2,500 because even if she knew of Mary's intention there was proper consideration.
D)Sally is entitled to nothing.

Question 68

A contract that "shocks the conscience of the court" is said to be ________.

A)illegal
B)voidable
C)exculpatory
D)unconscionable

Question 69

Whether a statute is a regulatory statute or a revenue-raising statute depends on:

A)common law.
B)the plain meaning of the language.
C)the intent of the legislature.
D)interpretation by administrative agencies.

Question 70

In the case in the text,Clark's Sale and Service,Inc.v.Smith,why did the court refuse to enforce the restrictive covenant?

A)The restrictive covenant was overly broad and indivisible.
B)The restrictive covenant did not serve a legitimate business purpose.
C)The restrictive covenant was unreasonable in time.
D)The restrictive covenant imposed an undue hardship on Smith.

Question 71

The policy against restraints on competition is based on the economic judgment that the public interest is best served by:

A)freedom of association.
B)freedom of contract.
C)free competition.
D)laissez-faire.

Question 72

In the case in the text,Walters v.YMCA,what was the court's holding?

A)The language of the exculpatory clause was void and unenforceable as against public policy.
B)Then language of the exculpatory clause was overly broad and unenforceable as against public policy.
C)The language of the exculpatory clause was appropriate under the circumstances and Walters could not recover.
D)The language of the exculpatory clause was unenforceable because parties cannot free themselves of negligence liability.

Question 73

Generally,statutes that require proof of character and skill and impose penalties for violation are considered to be ________ in nature.

A)remedial
B)revenue-raising
C)regulatory
D)enabling

Question 74

Courts tend to judge noncompetition clauses in ________ by a stricter standard than they judge similar clauses contained in ________.

A)ancillary agreements;employment contracts
B)employment contracts;contracts for the sale of a business
C)contracts for the sale of a business;employment contracts
D)ancillary agreements;contracts for the sale of a business

Question 75

Where no separate consideration is exchanged for the legal and illegal parts of an agreement,the agreement is said to be ________.

A)unconscionable
B)rescind
C)indivisible
D)adhesive

Question 76

Courts often refer to unfairness in the bargaining process as ________.

A)undue influence
B)lack of power
C)substantive unconscionability
D)procedural unconscionability

Question 77

The requirements of regulatory statutes indicate that they were intended:

A)to regulate competition.
B)to incentivize innovation.
C)for the protection of corporations.
D)for the protection of the public.

Question 78

Which of the following will not make an agreement illegal?

A)An agreement that violates a statute.
B)An agreement that violates public policy.
C)An agreement that is unconscionable.
D)An agreement that is not timely ratified.

Question 79

An exculpatory clause that is written in ________ and conspicuous print is more likely to be enforced than one written in ________ and presented in fine print.

A)ambiguous language;legalese
B)legalese;clear language
C)clear language;legalese
D)legalese;ambiguous language

Question 80

The fact that statutes requiring a license only requires payment of a fee indicates that the purpose of the law is to:

A)raise money.
B)protect the public.
C)protect professions.
D)incentivize entrepreneurs.