Mann_BLRB 9_TB_Ch13

Business Law and the Regulation of Business

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Chapter 13—Illegal Bargains TRUE/FALSE 1. An agreement for an illegal substance will be enforced by the courts if all other elements of the con- tract are present. ANS: F MSC: AACSB Analytic 2. Bargains are illegal if they violate a crime or tort but not if they are merely against public policy. ANS: F MSC: AACSB Analytic 3. Maximum rates of interest that are permitted under usury statutes are uniform from state to state. ANS: F MSC: AACSB Analytic 4. Specific lender usury statutes rather than the general usury statute generally apply to real estate mort- gages and small consumer loans. ANS: T MSC: AACSB Analytic 5. A covenant not to compete is a type of restraint of trade that courts today will enforce under certain circumstances. ANS: T MSC: AACSB Analytic 6. An exculpatory clause attempts to excuse one from liability for her own tortious conduct. ANS: T MSC: AACSB Analytic 7. The Code and the Restatement both contain definitions of what constitutes "unconscionable" conduct. ANS: F MSC: AACSB Analytic 8. A bargain by a candidate for public office to make a certain appointment following the election is leg- al. ANS: F MSC: AACSB Analytic 9. An agreement to pay a public officer something extra for performing his official duty is enforceable. ANS: F MSC: AACSB Analytic 10. The courts readily enforce a covenant not to compete during the period of employment. ANS: T MSC: AACSB Analytic 11. Where a stipulation in restraint of trade is part of the sale of a business, it may be valid if the restraint is within reasonable limitations to protect the business's goodwill. ANS: T MSC: AACSB Analytic
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12. Many states impose no limit on the rate of interest that may be charged on loans to corporations. ANS: T MSC: AACSB Analytic 13. American courts generally will enforce a gambling agreement. ANS: F MSC: AACSB Analytic 14. Bill is currently enrolled in law school, expects to graduate and take the bar exam in order to be able to practice law. Before Bill becomes a lawyer, he promises to represent his friend, Tom, in a breach of contract action if Tom will pay him 25% of the settlement. Bill negotiates and the case settles for $50,000. Tom refuses to pay Bill. Bill then graduates and attempts to sue Tom. Bill has a legal right to enforce the agreement. ANS: F MSC: AACSB Analytic 15. Sam, a student, promises to act as a guide on a fishing trip for a group of visiting dignitaries. The dig- nitaries agree to pay him $200 for his services. Sam guides them, but when they discover that Sam does not have a fishing license, they refuse to pay him. The agreement is an illegal one, which is not enforceable. ANS: F MSC: AACSB Analytic 16. Oswald applied for a loan from Pointe Lenders. Pointe’s reasonable cost of checking Oswald’s credit will be considered as part of the financing charge when determining whether Pointe’s rate of interest exceeds that allowable under the usury statute. ANS: F
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Mann_BLRB 9_TB_Ch13 - Chapter 13-Illegal Bargains...

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