Question 1

A contract may be considered legal although it

Accepted Answer

Contracts involving gaming that is legalized by the state can be considered legal, as they comply with state laws and regulations. Contracts that are prohibited by statute, contrary to public policy, or result in a crime are generally considered illegal and unenforceable.

Question 2

Courts will allow recovery based on an illegal agreement when

Accepted Answer

Courts may permit recovery if the parties to the illegal agreement are not equally at fault, recognizing a distinction in the degree of culpability between the parties involved. This can allow the less culpable party to potentially recover.

Question 3

Billings and Durick, who are competing distributors, made an agreement whereby Billings promised that he would not sell his goods in a specified area, and Durick promised that she would not sell her goods in another specified area. The agreement was made to keep prices high by eliminating competition. This arrangement was

Accepted Answer

This arrangement is illegal because it involves an unreasonable restraint of trade, aiming to control prices and territories, which violates antitrust laws designed to promote competition and prevent monopolies.

Question 4

____________________ laws require persons to have permits to practice their occupations.

Accepted Answer

The answer of ____________________ laws require persons to have permits...

Question 5

The Harrow Health Club placed a clause in a contract with a patron that relieved the club of liability for intentional wrongdoing by its employees. One evening near closing time, an employee struck and injured a patron for her (the patron's) failure to leave on time. The Harrow Club refused to pay the patron for her injuries because of the disclaimer of liability clause in the contract. Is the Harrow Health Club liable to the patron for injuries she (the patron) suffered?

Accepted Answer

Courts typically do not enforce contract clauses that absolve a party from liability for intentional harm caused to another party. Such clauses are often considered against public policy.

Question 6

Unlicensed workers are generally permitted to recover money they earn if the licensing statute is merely intended to obtain ____________________.

Accepted Answer

The answer of Unlicensed workers are generally permitted to recover...

Question 7

____________________ is the fee paid by a borrower for the use of money.

Accepted Answer

The answer of ____________________ is the fee paid by a...

Question 8

Usury statutes apply only to

Accepted Answer

Usury statutes specifically apply to loans of money, regulating the maximum interest rate that can be charged.

Question 9

The First National Bank lends Simmons $1,000. Simmons agrees to pay the bank the original loan plus $1,500 interest within a six-month period. This is an example of a(n)

Accepted Answer

The interest rate charged by the First National Bank is excessively high, likely exceeding legal limits, which makes it a usurious loan. Usury laws set maximum interest rates that can be charged on loans to prevent exploitation.

Question 10

A provision excusing one party from liability for negligence is

Accepted Answer

An exculpatory clause is a contract provision that relieves one party from liability for harm caused by negligence.

Question 11

Maile agrees to sell his retail men's shop in Cleveland, Ohio, to Lunger. Lunger wishes to have a restrictive clause against competition by Maile included in the sales contract. Which restrictive clause against the seller would be enforceable?

Accepted Answer

Restrictive clauses against competition must be reasonable in terms of time, geographic area, and scope of activity to be enforceable. Choice D is the most reasonable and enforceable option because it limits the restriction to a specific type of business (men's shop), within a limited geographic area (one mile radius), and for a short duration (one year).

Question 12

Which of the following would be unenforceable because the subject matter is illegal?

Accepted Answer

Contracts that involve the suppression of criminal charges in exchange for money or other benefits are considered contrary to public policy and are therefore unenforceable. This is because they can potentially obstruct the course of justice.

Question 13

Which of the following would be unenforceable because the subject matter is illegal?

Accepted Answer

An agreement where an employer promises not to press charges against an employee for embezzlement in exchange for restitution involves the suppression of a crime, which is illegal and therefore unenforceable.

Question 14

If an agreement is partially legal and partially illegal, the

Accepted Answer

The legal part of an agreement can be enforced if it is separable from the illegal part, allowing the lawful aspects of the contract to stand on their own.

Question 15

Knebel's parents promised her $3,000 if she would not marry before age twenty-one. Knebel agreed. This agreement is

Accepted Answer

This agreement is valid because it is a form of a conditional gift, where the condition is that Knebel does not marry before the age of twenty-one. There is nothing illegal or inherently unenforceable about such an agreement.

Question 16

Which contract would ordinarily be considered illegal?

Accepted Answer

Contracts that involve bribery or corruption, such as paying a senator to vote in a certain way, are considered illegal because they violate public policy and laws against corruption.

Question 17

An agreement is ____________________ if its performance requires one party to commit a tort or a crime.

Accepted Answer

The answer of An agreement is ____________________ if its performance...

Question 18

Covenants not to compete are generally upheld in court if

Accepted Answer

Covenants not to compete are generally upheld if the restrictions on territory and time are reasonable, ensuring they do not unfairly restrict trade or employment opportunities.

Question 19

If two parties enter into an agreement that both know is illegal, the parties are said to be ____________________.

Accepted Answer

The answer of If two parties enter into an agreement...

Question 20

A contract is unconscionable if

Accepted Answer

Unconscionability in contract law refers to an agreement that is so one-sided or so unfair that it shocks the conscience. This typically happens when the terms of the contract heavily favor one party over the other, often due to significant imbalances in bargaining power, knowledge, or sophistication.

Quiz 10: Legality

A contract may be considered legal although it

Courts will allow recovery based on an illegal agreement when

____________________ laws require persons to have permits to practice their occupations.

Unlicensed workers are generally permitted to recover money they earn if the licensing statute is merely intended to obtain ____________________.

____________________ is the fee paid by a borrower for the use of money.

Usury statutes apply only to

The First National Bank lends Simmons $1,000. Simmons agrees to pay the bank the original loan plus $1,500 interest within a six-month period. This is an example of a(n)

A provision excusing one party from liability for negligence is

Maile agrees to sell his retail men's shop in Cleveland, Ohio, to Lunger. Lunger wishes to have a restrictive clause against competition by Maile included in the sales contract. Which restrictive clause against the seller would be enforceable?

Which of the following would be unenforceable because the subject matter is illegal?

Which of the following would be unenforceable because the subject matter is illegal?

If an agreement is partially legal and partially illegal, the

Knebel's parents promised her $3,000 if she would not marry before age twenty-one. Knebel agreed. This agreement is

Which contract would ordinarily be considered illegal?

An agreement is ____________________ if its performance requires one party to commit a tort or a crime.

Covenants not to compete are generally upheld in court if

If two parties enter into an agreement that both know is illegal, the parties are said to be ____________________.

A contract is unconscionable if