Deck 12: Legality

Question 1

A term may be substantively unconscionable if it is imposed upon the weaker party because of fine print.

Answer 1

False

Question 2

In State X the legal allowable interest rate is 12% per year. BossCard credit card company, headquartered in State Y where the allowable interest rate is 18% a year may offer credit to customers in State X at the 18% rate.

Answer 2

True

Question 3

If a contract contains an illegal employment non-compete clause, a court may cut out the illegal part and enforce the rest.

Answer 3

True

Question 4

Since 1890, with the enactment of the Clayton Act, the law of restraint of trade has been absorbed by federal and state antitrust statutes-there is no longer common-law restraint of trade..

Question 5

Property settlements before, during, or upon the breakup of a marriage are generally enforceable, since property is considered to be an essential incident of marriage.

Question 6

An agreement signed by Lowry, the president of an automobile company, not to work for any competitors during the term of his employment in the company is unlawful according to restraint of trade.

Question 7

Under the blue-pencil rule, a court can delete from the agreement only that part that is unreasonable to compete thenceforth.

Question 8

With the spread of anti-tax enthusiasms over the last 30-some years, all kinds of gambling have been legalized and regulated.

Question 9

If an attorney charges his client beyond what the statute allowed for procuring for the client a government pension, the pensioner cannot get the excess amount from the attorney.

Question 10

Although a court may determine the agreement made illegal, restitution will be allowed if the agreement requires one side to pay an amount disproportionate in relation to the contravention of public policy involved.

Question 11

A covenant not to compete during the term of employment is almost always enforceable.

Question 12

If a laborer is hired to ship a sealed consignment of marijuana, the trading of which is illegal, he is allowed payment for his services.

Question 13

After Linda was discovered by her employer to have embezzled $20,000 on the job, the employer promised not to press charges if she would repay the money. The promise is not enforceable.

Question 14

A contract of adhesion is almost always unenforceable as unconscionable.

Question 15

An exculpatory clause by which one party contractually relieves itself from liability for negligence in advance is unenforceable as a violation of public policy.

Question 16

Failure to hold a regulatory license bars recovery, but the absence of a revenue or registration does not.

Question 17

Bargains are illegal if they involve committing a crime or a tort, but not if they involve an activity contrary to public policy.

Question 18

If a contract is illegal, a promisee who has already performed under the contract can neither obtain performance of the act for which he bargained nor recover the money he paid or the value of the performance he made.

Question 19

Eleanor pays Zach $500 to poison Mrs. Roberts cottonwood tree that is blocking Eleanor's view of the ocean. Before Zach does the deed, Eleanor decides against the deal. She is entitled to her money back from Zach.

Question 20

Tom's promise to pay his son Jack $100,000 if he refrains from marrying for 20 years would be enforceable.

Question 21

State the three-step analysis for licensing.

Question 22

Which of the following bargains is statutorily illegal?

A) Unconscionable contract
B) Exculpatory clauses
C) Obstructing the administration of justice
D) Violating a public duty
E) Abusive consumer credit transactions

Question 23

A judicial order directing someone to stop doing what he or she should not do is a(n) _____.

A) restitution
B) restraint
C) exculpatory clause
D) injunction
E) novation

Question 24

Employment non-compete agreements are as readily enforceable as non-competes in the sale of a business.

Question 25

A contract presented to the offeree to take or leave without bargaining is known as a(n) _____.

A) contract of adhesion
B) aleatory contract
C) personal contract
D) conditional contract
E) unilateral contract

Question 26

Which of the following bargains does the court consider illegal?

A) Partial illegality
B) Party not equally at fault
C) Excusable ignorance
D) Contracts interfering with family relations
E) Party withdrawing before performance

Question 27

Jason, 17 and unaware that minors (<18 years) cannot engage in prize-fight boxing matches, agrees with the manager of the gym where he works out to engage in a prize fight and to split the prize with the manager. After the fight, the manager refuses to give Jason any money. Jason may sue the manager.

Question 28

Which of the following is/are true?

A) Alice and Max agree to bet on a soccer game and deliver their money to Ross. However, before the payout, Alice decides she wants out. She can recover her money.
B) A truck driver, forbidden by federal law from working overtime, nevertheless does; he is entitled to no pay for the overtime.
C) Husband and wife entered into a post-marital agreement whereby the husband granted the wife all of his interest of the parties' community property should he use illicit and illegal drugs. The agreement is not enforceable.
D) Bespoke Tailors signs a contract with Trymore Trucking containing a clause limiting the trucking company's liability for any loss of cargo to $50, unless otherwise agreed; nothing else was agreed. Trymore's driver stole $250,000 worth of goods (and the truck), which were never recovered. The limitation of liability is so small in comparison to the loss that it will be struck down as unconscionable.
E) Two of the above are true [a and c].

Question 29

There is no such thing as usury laws any more.

Question 30

Which of the following is true about unconscionable contracts?

A) A term is substantially unconscionable if it is imposed upon the weaker party because of inconspicuous print.
B) "Unconscionable" is not defined in the Restatement or the UCC.
C) Procedural unconscionability arises where the affected terms deprive a party of any real remedy for breach.
D) Courts find unconscionable contracts in the context of commercial transactions rather than consumer transactions.
E) In the case of consumer transactions, the assumption is that the parties tend to be sophisticated businesspeople, able to look out for their own contract interests.

Question 31

Which of the following is made illegal according to common law?

A) Gambling contracts
B) Unconscionable contracts
C) Sunday contracts
D) Usury
E) Licensing contracts

Question 32

What is an "unconscionable" contract is defined by both Article 2 and the common law of contracts.

Question 33

Consolidated Amalgamated Inc. pays a lobbyist $20,000 to draft and lobby legislators for a bill that would give Consolidated a large tax cut. The agreement is a violation of public policy.

Question 34

What is an exculpatory clause? In what cases is it enforceable? In what cases is it unenforceable?

Question 35

In the early 1980s major credit card companies moved their headquarters from New York City to Sioux Falls, South Dakota to avoid what contract restrictions?

A) Sunday contract
B) moral obligation
C) usury
D) exculpatory clause
E) partial illegality

Question 36

Charging interest in excess of the legal limit is known as _____.

A) restraint of trade
B) predatory lending
C) debt bondage
D) usury
E) perjury