TJ_Comp 20_TB_Ch16

TJ_Comp 20_TB_Ch16 - Chapter 16LEGALITY AND PUBLIC POLICY...

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Chapter 16—LEGALITY AND PUBLIC POLICY TRUE/FALSE 1. An agreement is illegal when either its formation or performance is a crime or a tort, or it is contrary to public policy. ANS: T MSC: AACSB Analytic 2. Where a court recognizes an agreement to be illegal, a lawsuit based on that agreement may be dis- missed by the court even if neither plaintiff nor defendant raised the issue of illegality. ANS: T MSC: AACSB Analytic 3. It generally is incorrect to use the phrase "illegal contract" because, if an agreement is illegal, the courts do not recognize it as a contract and the agreement is void. ANS: T MSC: AACSB Analytic 4. When a law forbids the issuance of securities or notes by certain classes of corporations, a person who has purchased them may not recover the money paid. ANS: F MSC: AACSB Analytic 5. Even if part of a contract is illegal, the court may enforce a divisible, legal part of the contract. ANS: T MSC: AACSB Analytic 6. If a contract can be interpreted in two ways, one legal and the other illegal, the court will assume that the legal meaning was intended unless the contrary is clearly indicated. ANS: T MSC: AACSB Analytic 7. A contract is not in itself unlawful if one of the parties intends to make unlawful use of the subject matter of the contract, a fact known by the other contracting party. ANS: T MSC: AACSB Analytic 8. An agreement to sell hammers and screwdrivers to a buyer who intends to use them as burglar's tools is void if the intention of the buyer is known to the seller. ANS: F MSC: AACSB Analytic 9. In the case of merchant sellers, good faith is defined as "honesty in fact and the observance of reason- able commercial standards of fair dealing in the trade." ANS: T MSC: AACSB Analytic 10. Ordinarily, a court will not consider whether a contract is fair or unfair. ANS: T MSC: AACSB Analytic
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11. Under the UCC, a particular clause relating to a consumer credit sale can be considered void if such a provision is unconscionable. ANS: T MSC: AACSB Analytic 12. Unconscionability and fraud are synonymous terms. ANS: F MSC: AACSB Analytic 13. Unconscionability is determined in the light of the circumstances existing at the time that the contract was made. ANS: T MSC: AACSB Analytic 14. The social consequences of a contract are important in determining the contract's validity. ANS: T MSC: AACSB Analytic 15. Courts are quick to invalidate contracts on the ground that they are contrary to public policy because such contracts are so offensive to society. ANS: F MSC: AACSB Analytic 16. Legislation commonly requires that an installment-sale contract specify the cash price, down payment, finance charges, and insurance costs. ANS: T MSC: AACSB Analytic 17. An unlicensed doctor can sue a patient for the doctor's fee if the patient in fact recovered because of the doctor's care. ANS: F
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This note was uploaded on 02/22/2012 for the course BUS BUS212 taught by Professor Manney during the Spring '12 term at FSU.

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TJ_Comp 20_TB_Ch16 - Chapter 16LEGALITY AND PUBLIC POLICY...

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