William obtains a loan from a bank at 4.5 percent interest. The state where he obtains the loan has a usury statute that limits interest rates to a 3.5 percent maximum. William's contract with the bank is
A)enforceable only if William does not attempt to disaffirm it.
B)enforceable only if the bank does not attempt to disaffirm it.
C)enforceable only if both William and the bank knew of the statute whenthe contract was signed.
D)not enforceable.

Question

Quizplus · Accepted Answer

Usury statutes are put in place to protect borrowers from excessive interest rates. If the interest rate charged by the bank exceeds the maximum rate allowed by the state's usury statute, the contract is considered usurious and unenforceable. In this case, William's contract with the bank violates the usury statute since the interest rate charged is higher than the legal limit. Therefore, the contract is not enforceable.

William Obtains a Loan from a Bank at 4