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Exam 13: Illegal Bargains

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Question 21

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Who usually enters into employment contracts and what provision is commonly included regarding possible restraint of trade? Explain the purpose of such provisions.

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Salespeople, management personnel, and o...

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Question 22

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Claudia sells her highly successful hair salon to Carl. In the sales contract, Claudia agrees never to open a hair salon in the state. Which of the following best describes this contract clause?

A) Void as an illegal violation of a statute.
B) Valid as a reasonable restraint on trade.
C) Unenforceable as a violation of public policy.
D) Binding as fair protection.

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Question 23

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Many states impose no limit on the rate of interest that may be charged on loans to corporations.

An agreement to pay a public officer something extra for performing his official duty is enforceable.

Specific lender usury statutes rather than the general usury statute generally apply to real estate mortgages and small consumer loans.

A contract of adhesion:

American courts generally will enforce a gambling agreement.

In considering a covenant not to compete in an employment contract, the court in the case of Payroll Advance, Inc. v. Yates said in its opinion:

Bargains are illegal if they violate a crime or tort but not if they are merely against public policy.

Under which of the following circumstances would a court be unlikely to enforce the illegal contract?

a. State and local governments require licenses for certain businesses and professional activities. Explain the difference between a regulatory licensing statute and a licensing statute enacted to raise revenue. b. Explain the significance in contract law between a regulatory license and a revenue raising license. c. Give an example of each type of licensing statute.

Al, an accountant, has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sale contract, he agrees that he will refrain from practicing accounting anywhere within a 60-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home. In this case:

What is the legal effect of an agreement that is criminal, tortious, or otherwise contrary to public policy, and why does it have that effect?

A contract that requires a person to commit a tort will be enforced by the courts.

Archie bets his friend Jerry $100 that the Packers will win the next Super Bowl. This is an:

Divided Parcel (DP) includes the following on its mailing receipts: "We are not responsible for any damages to packages whether or not through the intentional or reckless fault or negligence of our employees. Send packages at your own risk." Mary reads this clause but sends her watch back to the manufacturer to be repaired anyway. The watch is destroyed when the DP driver uses the package for a ball and tosses it to his buddy. Mary is:

The Code and the Restatement both contain definitions of what constitutes "unconscionable" conduct.

Nanette wanted to purchase a new car and found one she liked at Minson Motors. Several important contractual terms were buried in the written agreement and some of the meaning of the contract was obscured by legal jargon. The contract involved:

Carl and Ron both work in road construction. They know that several jobs are going to be up for public bids, and agree between themselves that Carl will bid on one job and Ron will bid on the other, so that they both have work for the summer. When the bids are opened, Carl realizes that Ron has bid on both jobs. Ron is awarded both contracts. If Carl now wants to sue Ron for breach of contract:

The law does not provide a remedy for the breach of an unenforceable agreement.