Business Law Chapter 15

Private lotteries, which generally are held to be illegal, involve three elements:

prize, chance, and consideration.

When parties are not in pari delicto, the least guilty party is granted relief when it is in the public interest.

True

A standard arbitration clause can be substantively unconscionable if the fees and costs are so excessive as to deny the innocent party the ability to resolve his claim.

False

A take-it-or-leave-it contract of adhesion is an example of substantive unconscionability.

False

Agreements not to compete are always void.

False

Agreements that are contrary to public policy are binding but voidable.

False

An agreement is illegal only when either its performance is a crime.

False

An unlicensed doctor can sue a patient for the doctor's fee if the patient in fact recovered because of the doctor's care.

False

Fees charged by a lender for the reasonable expense of making a loan, such as the cost of appraising property, are treated as interest for purposes of the usury law.

False

If an illegal agreement has already been performed, either party can sue for damages.

False

In most states the usury laws apply to loans made to both individuals and corporations.

False

Substantive unconscionability has to do with matters of freedom of assent.

False

When a nationally-known neurosurgeon in Chicago, Illinois sells her practice, the contract may specify that the seller will not practice within a 100-mile radius of Chicago for one year.

True

A court may sever an unconscionable clause from a contract and enforce the remainder of the contract.

True

A noncompetition covenant may be held invalid because of vagueness concerning the duration and geographic area of the restriction.

True

An agreement may involve the performance of several promises, some of which are illegal and some legal.

True

An agreement that calls for the commission of a civil wrong is illegal and void.

True

An agreement that unreasonably restrains trade is illegal and void on the ground that it is contrary to public policy.

True

If a contract can be interpreted in two ways, one legal and the other illegal, the court will assume that the legal meaning was intended unless the contrary is clearly indicated.

True

If the law is intended to protect one of the parties to an otherwise illegal contract, that party may seek relief in court.

True

In certain situations, the law may hold a contract provision unenforceable because it is too harsh or oppressive to one of the parties.

True

In the absence of a valid restrictive covenant, the seller of a business may compete with an ex-employee and solicit customers of the former employer.

True

Legislation commonly requires that an installment-sale contract specify the cash price, down payment, finance charges, and insurance costs.

True

Ordinarily, a court will not consider whether a contract is fair or unfair.

True

Participation in a free raffle without consideration is lawful, because there is no lottery.

True

Parties to illegal agreements are generally not entitled to help from the courts.

True

When money is loaned at a greater rate of interest than is allowed by law, __________ is committed.

Usury​

Which of the following is not illegal?

a "giveaway" to every tenth person entering a department store

All of the following are types of contracts that might be unenforceable as contrary to public policy except:

a contract that does not harm the public good

A(n) _______ contract is a take-it-or-leave-it contract that is unenforceable because it is deemed to be too harsh or oppressive to one of the contracting parties.

adhesion

An illegal provision in a contract:

can be ignored by the parties in their performance of the remaining legal provisions of the contract.

​An agreement to slander a third person would not be enforceable because slander is a(n):

civil wrong.

An agreement to restrain trade may be void on the grounds that it is:

contrary to public policy.

In the sale of a business, all the following elements are necessary to create an enforceable noncompete clause, except:

estimated value of the seller's business

Sales promotion schemes calling for the distribution of property according to chance among the purchasers of goods are:

illegal as lotteries.

An agreement not to compete is enforceable:

in the sale of a business.

Public policy:

is protections from that which violates any established interest of society

One element involved in the determination of unconscionability is:

the comparative bargaining power of the parties.

The validity of a contract is not affected by:

the fact that the contract turned out to be a bad bargain for one of the parties.

Which party to an illegal agreement may get relief from the court?

the less-guilty party, when public interest is advanced by granting relief

Dealing honestly, reasonably, and in good faith means all the following except:

these are express duties in every contract for services.

In an employment contract, agreements not to compete are:

valid, if the restriction is reasonable and necessary for the protection of the former employer

Illegal agreements are:

void.

All of the following agreements represent an unreasonable restraint of trade except:

​a valid restrictive covenant.

The failure to have a license will not render agreements void if the license:

​is readily obtainable by anyone who offers payment of a required fee

Even if a contract appears legal on its face, it may be unenforceable if:

​the contract has an illegal purpose.