Deck 12: Legality

Question 1

The first statewide blue law was enacted in the United States in 1788

Answer 1

True

Question 2

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

Answer 2

True

Question 3

Restitution will be allowed if party has to pay a penalty, which is disproportionate in relation to the contravention of public policy involved.

Answer 3

True

Question 4

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

Question 5

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 6

In Marquette v. First Omaha Service Corp., the Supreme Court ruled in favor of the national bank on the basis of _____.

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

Question 7

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

Question 8

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

Question 9

Which of the following bargains is made illegal according to the statute?

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

Question 10

Suppose Tom and Harry bet on the FIFA world and Harry loses. Harry has the right to recover his money before it is paid out to Tom.

Question 11

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

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

Which of the following bargains is illegal?

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) Dipp pays Fynn, an agent statutorily required to have a license, $100,000 for a plot but later got to know that Fynn was unlicensed. The contractor is entitled to the payment.
C) Max hires Rosy for $1,000 to arrange a bribe for the company's security. However, Max has a change of heart. He can recover the money.
D) A physician forbidden by federal law from working overtime nevertheless does so. He is entitled to payment for overtime.

Question 14

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

Question 15

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 16

Since 1890, with the enactment of the Clayton Act, the law of restraint of trade has been absorbed by federal and state antitrust statutes.

Question 17

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 18

In Marquette v. First Omaha Service Corp., the Supreme Court ruled in favor of the national bank on the basis of usury.

Question 19

Which of the following is true of licensing?

A) A regulatory license is imposed to ensure that practitioners register their address so they can be found if a disgruntled client wants to serve them legal papers for a lawsuit.
B) A revenue license is intended to protect the public health, safety, and welfare.
C) Failure to hold a revenue license does not bar recovery.
D) A practitioner should demonstrate his abilities by an examination to get a revenue license.
E) Some regulatory licenses require practitioners to demonstrate that they have insurance.

Question 20

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 21

Which of the following would be considered a reasonable restraint-of-trade?

A) Ginny promises Tibbs that she would never sell the car that he sold to her.
B) Timothy sells a café to Ron and promises not to open a competing café for the next five years.
C) Julie gets a job in a hotel, which requires her to sign a bond that prevents her from working in any other hotel for a period of one year until resignation.
D) Libby sells her pet store to Nina and promises not to open a competing pet store in town for one year.
E) Rosh threatens to fire his housekeeper if he does not show up for work Christmas Eve.

Question 22

An exculpatory clause will generally be held valid if _____.

A) the agreement involves a business generally thought suitable for public regulation.
B) the party seeking exculpation is performing a business of great importance to the public.
C) the party purports to be performing the service to just anybody who comes along.
D) the parties are dealing at arms' length, able to bargain about the contract.
E) the property of the purchaser is placed under control of the seller, independent of his negligence.

Question 23

Since 1890, with the enactment of this act, the law of restraint of trade has been absorbed by federal and state antitrust statutes.

A) The Clayton Antitrust Act
B) The Robinson-Patman Act
C) The Sherman Act
D) The Federal Trade Commission Act
E) The Hart-Scott-Rodino Antitrust Improvements Act

Question 24

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

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

Question 25

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 26

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

Question 27

Which of the following led the court to its final decision in the Bovard v. American Horse Enterprises case?

A) The corporation was not engaged in jewelry production.
B) Bovard had recovered the corporate machinery through self-help.
C) The consideration for the contract was contrary to the policy of express law.
D) The policy against manufacture of drug paraphernalia was explicit in the statute.
E) The parties were not in pari delicto.

Question 28

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 29

According to the blue pencil rule, _____.

A) courts can delete from the non-compete agreement only that part that is unreasonable and enforce the remainder.
B) every contract by which anyone is restrained from engaging in a lawful profession is to that extent void.
C) an order directing a person to stop what he should not do would be issued.
D) courts may refuse unconscionable contracts.
E) a court may find the contract divisible and enforce only the parts that are not unconscionable.

Question 30

State the three-step analysis for licensing.

Question 31

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

A) Gambling contracts
B) Sale of business
C) Sunday contracts
D) Usury
E) Licensing contracts

Question 32

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

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