Deck 10: Illegal Agreements

Question 1

​ What are some of the contracts that are contrary to public policy? Describe any two contracts.

Answer 1

Some of the contracts that are contrary to public policy are:
(1)Contracts limiting the freedom of marriage: It is contrary to public policy to enter into any contract the effect of which is to limit the freedom of marriage. Such contracts are void. The following provisions in contracts have been held to render the contract a nullity:
1. An agreement whereby one party promises never to marry.
2. An agreement to refrain from marrying for a definite period of time.
3. An agreement not to marry certain named individuals.
Similarly, marriage brokerage contracts are unenforceable as against public policy. A marriage brokerage contract is one in which a person agrees to pay another for negotiating, procuring, or bringing about a marriage.
(2)Contracts injuring the public service: Any contract that may, from its very nature, injure public service is void. A person may contract as an attorney to appear before any public authority to encourage or oppose the passage of any bill. But a contract to use improper influence such as bribery to obtain the desired results is void.
Contracts to use one's influence in obtaining a public contract that by statute must be let to the lowest responsible bidder, to obtain pardons and paroles, or to pay a public official more or less than the statutory salary are also void.

Question 2

Which of the following is true of contracts that limit the freedom of marriage?

A)An agreement where one party promises never to marry is held valid.
B)An agreement not to marry during minority is valid.
C)A marriage brokerage contract is enforceable by law.
D)An agreement to refrain from marrying for a definite time period is invariably valid.

Answer 2

B

Question 3

The courts will generally still allow a wrongdoer to enforce a contract against an innocent party.

Answer 3

False

Question 4

In which of the following situations is a state most likely to enforce a usury law?

A)X purchases two crates of liquor from a minor.
B)X sells a plot of land at a rate higher than the maximum contract rate.
C)X sends two boxes of unapproved medicines to children in Africa.
D)X charges a very high rate of interest on money borrowed by Y.

Question 5

A person who sells alcoholic beverages to a minor when such a sale is prohibited can recover on the contract.

Question 6

The legal rate of interest is a rate:

A)that is higher than the contract rate .
B)at which no interest is charged .
C)that is over and above the rate that is lawfully allowed .
D)that is applied when no rate is specified .

Question 7

If a druggist sells morphine to one who does not have a prescription, a suit to collect the price would  be successful.

Question 8

If a contract is divisible so that the legal parts can be performed separately from the illegal parts, then the legal parts of the contract are:

A)enforceable .
B)void .
C)unconscionable .
D)quasi-contractual in nature .

Question 9

​ A contract must be for a lawful purpose, which must be achieved in a lawful manner, otherwise the contract is:

A)voidable.
B)void.
C)rescinded.
D)ratified.

Question 10

Which of the following is true of Sunday contracts?

A)They are universal across states.
B)Judicial interpretation has had no impact on their formulation.
C)Their laws are a result of statutes .
D)They make it mandatory to prosecute all violators of such contracts .

Question 11

The penalty for usury is uniform in all states.

Question 12

Most statutes requiring a license to operate certain types of businesses or professions are enacted to protect the public from incompetent operators.

Question 13

Contracts obstructing the administration of justice are unenforceable.

Question 14

A contract is indivisible if it can be performed in ways other than as an entity.

Question 15

Contracts entered into on Sundays are illegal in every state.

Question 16

An agreement not to marry during minority is invalid.

Question 17

​ A gambling contract is a transaction wherein the parties stand to win or lose based on pure chance.

Question 18

A contract not to compete is valid in which of the following instances?

A)Two large businesses dividing sales territory for themselves to avoid competition
B)The buyer of a business prohibiting the seller from engaging in the same business in a certain town
C)A business agreeing not to operate in a state to eliminate competition in that state
D)Three businesses agreeing to take turns providing services to a community on a monthly basis in order to avoid competition.

Question 19

Contracts which are designed to limit competition are acceptable by law.

Question 20

Which of the following is an example of a contract contrary to public policy?

A)A purchases a motorcycle from B at a price much lower than its real value.
B)A agrees to sell 1000 tonnes of rice to the local government.
C)A agrees to appoint B as sheriff, provided he helps him win the local elections.
D)A agrees to give $100 to B if he wins the lottery.