CH14 Business Law by Beatty Samuelson Abril 8th Edition

Question 1

CH14 A gambling contract is illegal unless …

Answer 1

it is a type of wagering specifically authorized by the state.

Human and social consequences of gambling and on the ethics of judicial enforcement of gambling debts.

P 345

Question 2

CH14 Morality is a significant par of …

Answer 2

Contract legality.

P 345

Question 3

CH 345 What does Void mean?

Answer 3

The court will not intercede to assist either party to an illegal agreement, even if its refusal leaves one party shortchanged.

P 345

Question 4

CH14 In insuring another person’s life: Anyone taking out a policy on the life of another must have …

Answer 4

an insurable interest in that person.

P 346

Question 5

CH14 Name some common insurable interests. ( 3 )

Answer 5

Family connections, creditor-debtor status and business association.

No insurable interest, no contract.

Otherwise, it represents a form of gambling.

P 346

Question 6

CH14 When a licensing requirement is designed to protect the public, any contract made by an unlicensed worker is

Answer 6

unenforceable.

P 346

Question 7

CH14 When is a contract made my an unlicensed person generally enforceable?

Answer 7

When a licensing requirement is designed merely to raise money for the state and a contract is made by an unlicensed person.

The if you forget to pay the licensing fee the contract is still enforceable.

P 347

Question 8

CH14 Can a contractor collect what is due him if he made an agreement with a customer and started work before he had his license in hand?

Answer 8

No. He must have the license in hand.

P 347

Question 9

CH14 What are usury laws?

Answer 9

Usuary laws prohibit charging excess interest on loans.

P 348

Question 10

Ch14 When national banks issue a credit card, they can use what rate?

What state has no limits on interest rates?

Answer 10

The credit issuer can use the rate of their state.

Utah.

P 348

Question 11

CH14 What are credit card companies often allowed to do? ( 4 )

Answer 11

Bind consumers to agreements they never signed.
Bind consumers to agreements they never received.
Agreements are subject to change without notice.
Make consumers subject to laws of a state that they do not reside in.

P 349

Question 12

CH14 For many states, an interest rate is not usurious as long as …

Answer 12

the parties agree upon any rate of interest.

P 349

Question 13

CH14 The state of New York requires what relationship in regards to the state that the credit is using to establish the interest rate?

Answer 13

Unless the chosen state has no substantial relationship to the parties.

P 349

Question 14

CH14 A noncompete agreement must be what to be valid?

Answer 14

It must be a part of a larger agreement.

If the agreement is not ancillary to a legitimate bargain, it is void.

P 351

Question 15

CH14 When is a non-compete agreement enforceable?

Answer 15

When it is ancillary to the same of a business and is reasonable in time, geographic area and scope of activity.

P 351

Question 16

CH14 What 5 standards must a non-compete meet to be enforceable, except in states that have conflicting laws?

Answer 16

Reasonably necessary for the employer.

Provide reasonable time limit.

Reasonable geographic limit.

Not harsh or oppressive to the employee.

Not contrary to public policy.

Additionally facts such as type of work, industry, and restrictions impose.

P 352

Question 17

CH14 When are non-compete agreements that are not ancillary to the sale of a business or employment enforceable?

Answer 17

Never.

P 353

Question 18

CH14 When a non-compete agreement is ancillary to the sale of a business, when is it enforceable?

Answer 18

If reasonable in time, geography and scope of activity.

P 353

Question 19

CH14 When a non-compete agreement is ancillary to employment, when is it more likely to be enforceable?

Answer 19

More likely to be enforced if:

Trade secrets or confidential information.

Customer lists exist that are protected.

Limited time and geographical scope.

Terms essential to protect the employer’s business.

P 353

Question 20

CH14 When a non-compete agreement is ancillary to employment, when is it less likely to be enforceable?

Answer 20

Employee who already had the skills.

Customer lists can be gotten from public sources.

Excessive time or geographic scope.

Unduly harsh terms or contrary to public interest.

P 353

Question 21

CH14 What is an exculpatory clause?

Answer 21

An exculpatory clause attempts to release you from liability in the event of injury to another party.

P 355

Question 22

CH14 When are exculpatory clauses generally unenforceable?

Answer 22

When it attempts to exclude an intentional tort or gross negligence.

When the affected activity is in the public interest, such as medical, public transportation or other essential service.

When the parties have greatly unequal bargaining power.

The clause must be clearly written and readily visible to be enforceable.

P 355

Question 23

CH14 What is bailment?

What do you call the person who is giving up possession?

What do you call the person who is accepting possession?

Answer 23

Bailment means giving up possession and control of personal property to another person.

The person giving up possession is the bailor.

The person accepting possession is the bailee.

P 356

Question 24

CH14 What is an unconscionable contract?

Answer 24

An unconscionable contract is one that a court refuses to enforce because of fundamental unfairness.

… such as no man in his senses and not under delusion would make on the one hand and as no honest and fair man would accept on the other.

P 357

Question 25

CH14 What is the test of an unconscionable contract?

Answer 25

The test is whether the terms of so extreme as to appear unconscionable according to the mores and business practices of the time and place. Unconscionability has generally been recognized to include absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. Did each party to the contract, considering education, have a reasonable opportunity to understand the terms of the contract or were the important terms hidden in a maze of fine print and minimized by deceptive sales practices? P 357

Question 26

CH14 What two elements must plaintiffs prove in regards to unconscionability?

Answer 26

Procedural unconscionability - oppression or unfair surprise. Stronger forces unfavorable contract on weaker one. Substantive unconscionability - refers to contract terms that are overly harsh or unfairly one-sided. P 358

Question 27

CH14 What is an adhesion contract?

Answer 27

An adhesion contract is a standard form contract prepared by one party and given to the other on a take it or leave it basis. These are generally enforced but are subject to greater scrutiny and unconscionability challenges. P 358

Question 28

CH14 The UCC, Unconscionability and Sales Law - when applied to the sale of goods, What are the courts tending to find?

Answer 28

The UCC Code explicitly adopts unconscionability as a reason to reject a contract. The unconscionability section has proven to be influential in other cases as well and courts today are more receptive than they were 100 years ago to a contract defense of fundamental unfairness. The UCC says two things: that the seller can insist that the buyer return the purchase price, but also says that any unconscionable provision is unenforceable. P 359

Question 29

CH 14 It is not enough that you bargain effectively and obtain a contract that gives you exactly what you want. You must also:

Answer 29

You must also be sure the contract is legal. P 359

Question 30

CH14 What is wagering?

Answer 30

A purely speculative contract - whether for gambling or insurance - is likely to be unenforceable. P 359

Question 31

CH14 What is licensing?

Answer 31

When a licensing statute is designed to protect the public, a contract by an unlicensed plaintiff is generally unenforceable. When such a statute is designed merely to raise revenue, a contract by an unlicensed plaintiff is generally enforceable. P 360

Question 32

CH14 What is usuary?

Answer 32

Excessive interest is generally unenforceable and may be fatal to the entire debt. Credit card debt is often exempt from usuary laws. P 360

Question 33

CH14 What is a non-compete clause with the sale of a business?

Answer 33

A non-compete clause in the sale of a business must be limited to a reasonable time, geographic area and scope of activity. P 360

Question 34

CH14 What is a non-compete clause associated with employment?

Answer 34

In an employment contract, non-compete agreements are enforceable only if they are: reasonably necessary for the protection of the employer, have a reasonable time limit, provide a reasonable geographical limit, are not harsh or oppressive and are not contrary to public policy. P 361

Question 35

CH14 What is Procedural Unconscionability?

Answer 35

Oppression and surprise may create an unconscionable bargain. An adhesion contract is especially suspect when it is imposed by a corporation on a consumer or small company. Under the UCC, a limit ion of liability is less likely to be unconscionable when both parties are sophisticated corporations. P 361

Question 36

CH14 What is Substantive Unconscionability?

Answer 36

When contract terms are unfairly one-sided at the time of contracting, the contract may be substantively unconscionable. P 361