Chapter 13: Illegal Bargains

Question 1

Violation of Statutes (Rule)

Answer 1

the courts will not enforce contracts where one or more of the parties break the law (gambling)

Question 2

Usury Statute

Answer 2

law establishing the maximum rate of permissible interest for which a lender and a borrower of money may contract — prevents lenders from imposing unreasonable interest rates

Question 3

Exculpatory Clauses

Answer 3

the courts will generally disapprove of clauses that seek to remove someone from liability for tortious conduct

Question 4

Tortious Conduct

Answer 4

an unenforceable agreement that requires a person to commit civil wrongs/harms

Question 5

Violations of Public Policy (rule)

Answer 5

unreasonable restraints of trade that are either too broad in scope or apply to an unreasonable geographic area are unenforceable

Question 6

Takeaway of Payroll Advance Inc. V Yates (2008)

Answer 6

Violations of Public Policy — noncompete clauses in employment agreements can only be enforced to protect the employer’s legitimate interest and only if reasonably limited in duration and geographic scope

Question 7

Sale of a business

Answer 7

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

Question 8

Employment Contracts

Answer 8

a noncompete clause is only enforceable for a reasonable period following termination and if the restriction is necessary to protect the legitimate interests of the employer