Business law chp 15

Section ______ of the ______ recognizes the idea of an unconscionable contract.

2-302; Uniform Commercial Code

Which of the following is an illegal agreement in violation of anti-wagering statutes?

A wagering contract

Which of the following is more important than the right of individuals to bargain freely?

The public welfare

When parties create a new risk for the sole purpose of bearing it, that is ______.

an illegal wager

Which of the following laws prohibit the performance of certain work and the transaction of certain business on Sunday?

Blue laws

Which of the following is correct regarding public policy?

Changing social conditions may make what was acceptable in the past acceptable today.

The most common kind of regulatory statute requires which of the following to get a license before engaging in any regulated activity? (Check all that apply)

Corporations Persons Partnerships

True or false: Only a few states have statutes that either prohibit or regulate gambling.

False Reason: All states have statutes that either prohibit or regulate gambling.

True or false: An agreement that tends to induce a fiduciary to breach his or her fiduciary duties is not necessarily illegal.

False Reason: Any agreement that tends to induce a fiduciary to breach his fiduciary duties is illegal.

True or false: A contract that cannot be performed without committing a tort is illegal.

True Reason: Yes, a contract that cannot be performed without committing a tort is illegal.

Which of the following types of contracts are often described as so unfair that they "shock the conscience of the court?"

Unconscionable

A party who is ignorant of a contract's illegality due to ________ that regulate(s) the other party's business may recover for performance rendered ______ the party learned of the illegality,

a special statute; before

A court may refuse to enforce a contract of as contrary to public policy.

adhesion

Courts allow parties to recover ______ if they ______ an illegal agreement ______ anyone performs an illegal act.

any consideration they have given; rescind; before

A contract that ______ without committing a tort is illegal.

cannot be performed

The hands off approach means that a party to an illegal agreement generally ______. (Check all that apply)

cannot recover consideration given to the other party cannot recover damages for breach of contract

Courts are especially likely to find inequality in bargaining power in cases involving ______.

consumer contracts with businesses

A(n) ______ is a contract in which the only choice for one of the parties is between adhering to the terms dictated by the other party or not contracting at all.

contract of adhesion

If a contract is ______ —that is, if the legal parts can be separated from the illegal parts—the courts will enforce the legal parts of the contract.

divisible

If the main purpose of a contract can be achieved without enforcing an illegal part of the contract, a court will ______.

enforce the main part of the agreement

A(n) _______ is a provision in a contract that attempts to relieve one party to the contract from liability for the consequences of his negligence.

exculpatory clause

Even though it is often said that ignorance of the law is no excuse, courts have sometimes allowed recovery if one or both parties to an illegal bargain are ignorant of the ______.

facts that made the bargain illegal

A(n) ______ is a person in a position of trust or confidence, such as a trustee, an agent, or a partner.

fiduciary

A basic assumption underlying our economic system is that as a general rule, the public interest is best served by ______.

free competition

A basic assumption underlying our economic system is that the public interest is generally best served by ______.

free competition

A court will generally not enforce an illegal agreement, and it will not grant any relief to the parties involved. The reason for this rule is to ______.

further the public interest

Courts generally have a(n) _____ approach to illegal agreements and leave the parties where it finds them.

hands off

Even if a bargain is illegal, if it involves ________ the contract will be enforced if the illegality does not involve ______ or a serious threat to the public welfare.

ignorance of the law, immoral behavior

An agreement that induces or compensates a public servant to deviate from her duties is ______.

illegal

An agreement to pay a public servant to influence his decisions is ______.

illegal

Any agreement that tends to induce a fiduciary to breach her duties is _______.

illegal

If Carol and Mark sign a contract for acts that are individually lawful, the contract may still be _______ if the net effect of the contract is criminal.

illegal

If Mirabella hires Mason, her co-worker, to throw a pie in her supervisor's face, their agreement is ______.

illegal

In some states, contracts for surrogacy are ______ and contrary to public policy.

illegal

An agreement that calls for the commission of a crime ______.

is illegal

Generally, an agreement with an unlicensed person to perform regulated services ______.

is illegal and unenforceable

Even if the parties have formed an otherwise binding contract, the agreement is unenforceable if ______. (Check all that apply)

its formation is illegal its performance is illegal it is contrary to the public interest

If contracting parties agree who shall bear an existing risk, that is a(n) ______ agreement.

legal risk-shifting

Property insurance contracts are classic examples of ______ agreements.

legal risk-shifting

A commodity market transaction is a good example of a(n) ________ bargain.

legal speculative

A stock market transaction is a good example of a(n) ______ bargain.

legal speculative

When determining the ______ of an agreement, the courts presume the parties ______ a legal result.

legality; intended

Citizens of a ______ state are generally allowed to _______ an unlicensed foreign corporation.

licensing; enforce their contracts with

An agreement that is contrary to a general rule of _____ is considered illegal.

public policy

The ______ is simply more important than the right of individuals to ______.

public welfare, bargain freely

Where the sole purpose of a licensing statute is to ______, the failure to obtain a license ______ the agreement.

raise revenue; does not affect the legality of

When analyzing a contract that appears to restrain trade, courts look very closely to determine whether the restraint imposed is _______ or should be struck down for violating ______.

reasonable; public policy

If a party has legally performed on an illegal contract, courts may allow that party to the contract and recover any consideration given.

rescind

Statutes that impose a license fee but allow anyone who pays the fee to obtain a license are classified as ______.

revenue-raising

The reason courts will allow an exception to the 'hands off' rule and allow an ignorant person to recover is that public policy ______.

should not seek to punish the person a statute seeks to protect

If a court has any doubts about the legality of an agreement, the doubts are resolved in favor of _______.

the legality of the agreement

Courts in different states may differ in their views on what constitutes good public policy. As a result, ______.

the same contract can be legal in one state and illegal in another.

A party to an illegal contract who has already performed would not have much incentive to recover ______ if courts did not have an exception to the _______ approach to illegal contracts.

the value of her performance; hands off

The Uniform Commercial Code (UCC) does not define ______, leaving it instead for the courts to define.

unconscionable

An exculpatory clause that seeks to avoid liability for willful misconduct or fraud is generally ______.

unenforceable

If Mark pays Bruce to burn down Frank's place of business, the agreement would be ______ and ______ and Mark ______ recoup the money he paid to Bruce.

unenforceable; illegal; cannot

Many states have statutes that prohibit a(n) _______ from enforcing contracts it enters into with citizens of the state.

unlicensed foreign corporation

A law which prohibits charging more than a stated amount of interest for the use of money is called a(n) ________ law.

usury

When an agreement calls for behavior that ______, the agreement is illegal

violates a statute