bus law chapter 12

Kevin and Mike make a bet on a boxing match. Mike has the match fixed so that he wins the bet. Kevin sues Mike for breach of contract. What will be the outcome? a. Kevin will prevail; this is an example of substantive unconscionability b. Because this is an illegal contract, it is considered void. The court will not aid Kevin, regardless of the fault involved c. The court will consider this an adhesion contract and find in favor of Kevin d. The judge will likely order reformation of the contract

Because this is an illegal contact, it is considered void. The court will not aid Kevin, regardless of the fault involved

Which is the following is a contract contrary to statute? a. Contract to commit a crime b. Unconscionable contract c. Covenant not to compete d. Contract in restraint of trade

Contract to commit a crime

Lilly is contacted by telephone from an individual seeking investors to purchase 8-liner gaming machines that will be placed in bars around the country. She is told that the investment is perfectly legal, so she invests $5,000. She contracts with a broker to invest the last of her pension funds in the stock market. The year goes badly, and she loses $50,000. She is too ill to return to work and will be penniless if she cannot avoid the contract. Which of the following applies? a. She can avoid the contract because stock market transactions are against public policy b. She can appeal to her governor for clemency c. She has no legal recourse d. She can avoid the contract based on the general gambling rule

She has no legal recourse

Bob owns a local consulting business and wants his employees to sign a covenant not to compete. Which of the following situations would be considered reasonable for a covenant not to compete? a. The covenant prevents the employees from working for any client or vendor with whom the consulting business has a relationship b. Employees cannot work for any other business consultant in the U.S c. The covenant not to compete is in effect for 10 years d. The employees cannot start a competing consulting business in the same city for one year

The employees cannot start a competing consulting business in the same city for one year

Jerome is hired by a manufacturing company that requires him to sign an employment contract. The contract states that the company will not be liable for any injuries Jerome sustains on the job, regardless of whether the injury is caused by the company's negligence. Which of the following is true? a. This part of the contract is unenforceable due to the unconscionable exculpatory clause b. This contract is enforceable because Jerome is a member of a protected class c. This contract will likely be reformed by a judge d. This contract is an example of procedural unconscionability

The part of the contract is unenforceable due to the unconscionable exculpatory clause Exculpatory clause - a contract clause that releases a party from liability for wrongful acts

Brandt and Jenni create a Web site to sell raffle tickets for $1 for a chance to win their house. They sell 250,000 lottery tickets. Andy buys a ticket and wins. Brandt and Jenni then change their minds and decide to not give Andy their house. If Andy sues Brandt and Jenni, the court: a. will find that the contract is voidable, and that Brandt and Jenni have a right to disaffirm the contract b. will enforce the contract, but only if they sold enough raffle tickets to equal the fair market value of their house c. will find that the contract is illegal and will not enforce it d. will enforce the contract and require Brandt and Jenni to transfer their house to Andy

Will find that the contact is illegal and will not enforce it

Which of the following types of contracts is not among the types of contracts and clauses that are often held to be contrary to public policy? a. A commercial contract b. An unconscionable contract c. A contract in restraint of trade d. An exculpatory clause

a commercial contract

All of the following are examples of contracts contrary to public policy except: a. a contract that prohibits marriage b. a contract to commit an immoral act c. a contract to sell property one does not own d. a contract to sell a child

a contract to sell property one does not own

Blue sky laws, which allows certain people to enforce a contract that is in violation of a statue, are enacted to protect: a. lenders b. employers c. investors d. flight attendants

investors

An adhesion contract: a. is a type of usury b. will contain an exculpatory clause c. is a type of unconscionable contract d. is also known as an employment contract

is a type of unconscionable contract

A doctor makes an agreement with a charitable organization to turn over her unused medicine samples to them for shipment to people in need in developing countries. After the agreement is made, a law is passed making this drug transaction illegal. The contract: a. will likely be reformed by the court b. is unconscionable c. is discharged by law d. is still valid because it was made before the law was passed

is discharged by law

Jason enters into an insurance contract with SafeWest Insurance Co. in order to insure his home and personal property in Oklahoma. Unbeknownst to Jason, the insurance contract violates an Oklahoma state statute that regulates the sale of insurance. Soon after, his home is damaged by fire and Jason files a claim with SafeWest. SafeWest refuses to pay on the insurance claim. The contract: a. is enforceable because Jason is a member of a protected class that permits enforcement of a contract in violation of a statute b. is enforceable because the contract violates only one Oklahoma state statute c. is unenforceable because the insurance contract is usurious and is thus illegal d. is unenforceable because the insurance contract violates Oklahoma state law and is thus illegal

is enforceable because Jason is a member of a protected class that permits enforcement of a contract in violation of a statute

In the case of an illegal contract: a. a plaintiff who suffers a loss can usually recover for performance b. neither party may recover for performance under any circumstances c. there are circumstances in which one party may sue another for breach d. ignorance of the facts does not work in a plaintiff's favor

there are circumstances in which one party may sue another for breach

William, a 27-year-old with a third-grade reading level, buys a used 32" LCD flat-screen TV from a local pawn shop for $1,750. Because he has limited funds as a welfare recipient, the pawn shop agrees to finance the purchase with a 42% interest rate and a $100 monthly payment. William makes five payments and then stops on the advice of a friend. A court would find that the contract is: a. valid b. voidable c. void d. unconscionable

unconscionable -a contract or clause that is so unfair that it is rendered void

Jackson enters into a contract with Celia. Knowing that Celia is new to the country and only has a basic grasp of English, Jackson writes the contract with inflated language and complicated legal jargon. When Celia fails to uphold her part of the contract, Jackson sues for breach. The court will find the contract: a. enforceable regardless of fairness b. unenforceable for substantive unconscionability c. unenforceable for procedural unconscionability d. executory and therefore unenforceable

unenforceable for procedural ununconscionability PROCEDURAL = has to do with how a term becomes part of a contract SUBSTANTIVE describes contracts or portions of contracts that are oppressively harsh

A contract involving the services of an unlicensed physician would likely be: a. unenforceable, because the purpose of the license is to protect the public from unauthorized practitioners b. enforceable, because the purpose of the license is to raise government revenues c. unenforceable, because the purpose of the license is to raise government revenues d. enforceable, because the purpose of the license is to protect the public from unauthorized practitioners

unenforceable, because the purpose of the license is to protect the public from unauthorized practitioners

Charging an interest rate that exceeds the maximum rate set by state statute, and is thus illegal is called: a. exculpatory b. gambling c. usury d. restraint on trade

usury

Town Trust grants Marcia a loan at 20 percent interest. The state maximum interest rate is 8 percent. This is: a. usury b. a contract in restraint of trade c. substantively unconscionable d. exculpatory

usury

A covenant not to compete in the sales of an ongoing business is: a. illegal b. void c. voidable d. valid

valid

An illegal contract is: a. valid b. voidable c. enforceable d. void

void

Adam files a lawsuit against Larry, a landowner on whose property Adam was injured. Larry believes that Greg is a lawyer and hires Greg to defend him in the lawsuit. Greg is not a lawyer, so the contract between Larry and Greg: a. will not be enforced b. will be enforced despite Greg's winning or losing c. will be enforced only if greg wins d. will be enforced unless Greg loses the case

will not be enforced