CH. 10 HW QUiZ (BUSI 2301)

Ben and Judy Sims purchase West Palm Dry Cleaning, a well-known dry cleaning business, from Sam. As part of the purchase agreement, the Sims include a provision prohibiting Sam from entering the dry cleaning business in the same town for the next year. Is such a contract valid?

a. Yes, because this contract reasonably restricts Sam's ability to operate as to both the time and place.

Keller Telecom provides phone services to the Texas County Jail, allowing inmates to make supervised phone calls. The contract for phone services is awarded through a public bidding process, and by statute, the contract must be awarded to the lowest bidder. When the contract is up to be rebid, Keller Telecom contracts with Saul Evans, the former presiding commissioner of Texas County to help secure the phone contract. With Saul's help, Texas County awards Keller Telecom the contract once again, despite having other companies that placed lower bids for the service. Under this scenario, the contract between Keller Telecom and Saul Evans is:

a. void, because it injures the public service.

The Westport Meadows Owners Association sued some homeowners within the subdivision for unpaid assessments and dues with interest. The Association's by-laws prescribed that a late charge would accrue on delinquent dues at a rate of 1.5 percent per thirty days. That amounted to 18 percent per year. The homeowners alleged that the interest rate was usurious, as state law set the maximum amount of interest at 16 percent. How should the court decide this case?

b. The Association cannot charge more than 16 percent, because that is the maximum contract rate.

Jerry and Nancy bet $250 on a basketball game between the New York Knicks and the Boston Celtics. Both Jerry and Nancy hand over their bet money to Cameron, who will act as a stakeholder in this bet. Which of the following is true of this scenario?

c. If Jerry breaches this contract then the courts will not allow Nancy to recover damages from Jerry.

Richard owns a construction company into which he wishes to introduce his eldest son, Mark, as a partner. But in order for Mark to become a partner, he has to sign a contract drafted by Richard in which he stipulates that Mark cannot get married as long as he is a partner to Richard in the construction company. Mark signs the contract and becomes a partner. Which of the following is true in this scenario?

c. The contract made by Richard is void.

Sarah's elderly aunt promises to give Sarah her entire collection of valuable jewelry in exchange for Sarah's promise to never marry her friend Ben. In this scenario, which of the following is true?

c. This contract is void, because it limits the freedom of marriage.

Car Title Loan Co. lends money to Bob at an interest rate of 25%, well above the maximum contract rate. This is an example of a(n):

c. usurious contract.

Which of the following is an example of a contract contrary to public policy?

d. A agrees to appoint B as sheriff, provided he helps him win the local elections.

The legal rate of interest is a rate:

d. that is applied when no rate is specified.