Question 1

L & M loaned Joan $400 so that she could buy her textbooks for the current semester.L & M's terms for repayment of the loan (including interest)are,$200 in two months,$200 in four months,and another $100 at the end of the fifth month.The legal maximum rate of interest on this type of loan is six percent per annum.L & M's loan is usurious.

Accepted Answer

A) True 
 B)False

Question 2

An exculpatory clause is generally unenforceable when:

Accepted Answer

A)   it attempts to release a party from liability for ordinarily negligent behavior.
B)   it involves public transportation.
C)   it is written clearly and in bold, large print.
D)   the affected activity is a recreational activity.

Question 3

A contract most likely will be declared unconscionable if:

Accepted Answer

A)   it is unbalanced, making it unfair to one party.
B)   it contains a cancellation clause.
C)   it is oppressive and the weaker party did not fully understand the consequences of the agreement.
D)   it is signed by a minor for an item of luxury.

Question 4

To be valid,an agreement not to compete must be ancillary to a legitimate bargain.

Accepted Answer

A) True 
 B)False

Question 5

Mike owns a house in a poor area of a large city.Mike is on disability and his total monthly income is $700.A sales representative visits his home,selling a water purification system.Mike signs a contract that calls for monthly payments of $500 for the next 10 years.The water system is worth no more than $1000.Mike thought he was signing a permission slip allowing the salesman to conduct a free water test to determine the toxins in the water.How would a court most likely describe this contract?

Accepted Answer

A)   The contract is fully enforceable as written.
B)   The contract is unenforceable because it is unconscionable.
C)   The contract is enforceable, but only up to the value of the water system.
D)   The contract is unenforceable because it is exculpatory.

Question 6

An insurance contract is not considered to be a legalized form of gambling because:

Accepted Answer

A)   one must have an insurable interest in the person being insured.
B)   insurance contracts are underwritten by reputable companies.
C)   insurance activities are regulated by the state department of insurance.
D)   All of the above.

Exam 13: Legality

A contract most likely will be declared unconscionable if:

Correct Answer
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An insurance contract is not considered to be a legalized form of gambling because:

Correct Answer
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Correct Answer
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To be valid,an agreement not to compete must be ancillary to a legitimate bargain.

Correct Answer
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Correct Answer
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An exculpatory clause is generally unenforceable when:

Correct Answer
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Exam 13: Legality

A contract most likely will be declared unconscionable if:

Correct AnswerverifiedShow Answer

An insurance contract is not considered to be a legalized form of gambling because:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To be valid,an agreement not to compete must be ancillary to a legitimate bargain.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An exculpatory clause is generally unenforceable when:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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