Ch. 13: Illegal Bargains

Question 1

Regulatory License

Answer 1

Requirement to protect the public interest.

Question 2

Revenue License

Answer 2

Measure to raise money.

Question 3

Usury Statute

Answer 3

A law establishing a maximum rate of permissible interest for which a lender and borrower of money may contract

Question 4

Blue Laws

Answer 4

Prohibition of certain types of commercial activity on Sunday.

Question 5

Restraint of Trade

Answer 5

Any contract or agreement that eliminates or tends to eliminate competition or otherwise obstructs trade or commerce.

Question 6

Covenant Not to Compete

Answer 6

An agreement to refrain from entering into a competing trade, profession, or business.

Question 7

Unconscionable

Answer 7

Unfair or unduly harsh.

Question 8

Procedural Unconscionability

Answer 8

Unfair or irregular bargaining.

Question 9

Adhesion Contract

Answer 9

Between a large retailer and a consumer, in which the weaker party has no realistic choice or opportunity to bargain.

Question 10

General Rule

Answer 10

The courts will not enforce agreements declared illegal by statute

Question 11

Licensing Statutes

Answer 11

Require formal authorization to engage in certain trades, professions, or businesses

Question 12

Gambling Statutes

Answer 12

Prohibit wagers, which are agreements that one party will win and the other party will lose depending upon the outcome of an event in which their only interest is the gain or loss

Question 13

Common Law Restraint of Trade

Answer 13

Unreasonable restraints of trade are not enforceable

Question 14

Sale of a Business

Answer 14

The promise by the seller of a business not to compete in that particular business in a reasonable geographic area for a reasonable period of time is enforceable

Question 15

Employment Contracts

Answer 15

An employment contract prohibiting an employee from competing with his employer for a reasonable period following termination is enforceable provided the restriction is necessary to protect legitimate interests of the employer

Question 16

Exculpatory Clauses

Answer 16

The courts generally disapprove of contractual provisions excusing a party from liability for her own tortious conduct

Question 17

Substantive Unconscionability

Answer 17

Oppressive or grossly unfair contractual terms

Question 18

Tortious Conduct

Answer 18

An agreement that requires a person to commit a tort is unenforceable

Question 19

Corrupting Public Officials

Answer 19

Agreements that corrupt public officials are not enforceable

Question 20

Exceptions

Answer 20

Permit one party to recover payments

Question 21

Examples of Exceptions

Answer 21

Party Withdrawing Before Performance; Party Protected by Statute; Party Not Equally at Fault; Excusable Ignorance; Partial Illegality; Restitution