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Exam 13: Illegal Bargains

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Question 31

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Numerous states impose no limit on the rate of interest that may be charged on:

A) loans to corporations.
B) credit card transactions.
C) loans made by certain designated types of lenders.
D) All of these.

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Question 32

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The usual means of enforcing an agreement prohibiting an employee from competing in a described territory for a stated period of time is by injunction.

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Question 33

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The courts will enforce an agreement declared illegal by statute.

Which of the following would be considered a valid and legally enforceable agreement?

The UCC provides that if a court as a matter of law finds a contract for the sale of goods or a clause of such a contract to have been unconscionable at the time it was made, the court may:

Nell gives Al $50 in return for Al's promise to defame Sara.Nell hopes to ruin Sara's chances at a promotion.Nell finds out that Al did not hold up his end of the agreement.Which of the following statements is true?

Carl and Rob are both engaged in road construction work.They know that several jobs are going to be up for public bids, and agree between themselves that Carl will bid on one job and Rob will bid on the other, so that they both have work for the summer.When the bids are opened, Carl realizes that Rob has bid on both jobs.Rob is awarded both contracts.If Carl now wants to sue Rob for breach of contract:

As a general rule, illegal contracts are unenforceable and neither party can successfully sue the other for breach or recover for any performance rendered.

An adhesion contract is offered on a "take-it-or-leave-it" basis.

Divided Parcel (DP) includes the following on its mailing receipts: "We are not responsible for any damages to packages whether or not through the fault or negligence of our employees.Send packages at your own risk." Mary reads this clause but sends her watch back to its manufacturer to be repaired anyway.The watch is destroyed when the DP driver negligently drops and runs over the package.Mary is:

"Blue laws" usually apply to activities of necessity and charity.

A number of states have enacted statutes exempting the following types of lenders from their usury laws:

Theresa is a travel agent at the Fly Away Travel Agency.She has signed an agreement with her employer which prohibits her from working in any similar business in any town within a 100-mile radius of where she works.If she wants to quit her job and go to work for another travel agency, it is likely that:

Maximum rates of interest that are permitted under usury statutes are uniform from state to state.

John operates a small repair business and is in desperate need of a certain type of building material.He obtains the material from a large corporation, but is charged a grossly unreasonable price and is forced to buy other material he does not need.In view of the buyer's unequal bargaining power and unreasonable terms of the contract, this may be a case of:

An agreement in connection with the sale of a business that prohibits the seller from engaging in the same or a similar business for a period of twenty-five years would be unreasonable.

An agreement to refrain from a particular trade, profession, or business is enforceable if two requirements are met: that it protects a property interest of the promisee and that the restraint is no more extensive than is reasonably necessary to protect that interest.

A covenant not to compete is a type of restraint of trade that courts today will enforce under certain circumstances.

The courts readily enforce a covenant not to compete during the period of employment.

Where a stipulation in restraint of trade is a part of the contract for the sale of a business, it may be valid if the restraint is within reasonable limitations to protect the business's goodwill.