Chapter Six - Legality

Question 1

Severable

Answer 1

Remainder of agreement can be enforced without unenforceable provision contained in the agreement

Question 2

Blue-penciling

Answer 2

Court edits parts of a contract

Question 3

In Pari Delicto

Answer 3

The parties are equally at fault

Question 4

Malum Per Se

Answer 4

Inherently bad

Question 5

Malum Prohibitum

Answer 5

Not inherently bad; less serious

Question 6

Usurious Contract

Answer 6

Charges an illegal rate of interest on a loan

Question 7

Consumer Loan

Answer 7

Loan for personal or family purposes

Question 8

Confession of Judgment

Answer 8

A clause that permits immediate entry of judgment without notice or an opportunity to present defenses

Question 9

Insurable Interest

Answer 9

Legitimate financial interest in a person

Question 10

Pyramid Scheme

Answer 10

Multilevel arrangement in which money is made by recruiting new people

Question 11

Blue Law

Answer 11

Prohibits certain transaction on Sundays; also called a Sunday statute

Question 12

Sunday Statute

Answer 12

Prohibits certain transactions on Sundays; also called Blue Law

Question 13

Slander

Answer 13

False statements that hurt the reputation of another

Question 14

Contrary to Public Policy

Answer 14

Not good for society

Question 15

Exculpatory Clause

Answer 15

Provision that attempts to excuse a party from liability for that party’s torts

Question 16

Tortious

Answer 16

Constituting a tort

Question 17

Arm’s-length Transaction

Answer 17

Relationship where parties have equal power to negotiate terms

Question 18

Hold Harmless Clause

Answer 18

One party agrees to compensate the other for loses arising from the contract; also called indemnification clause

Question 19

Indemnification Clause

Answer 19

One party agrees to compensate the other for loses arising from the contract; also called hold harmless clause

Question 20

Covenant Not to Compare

Answer 20

Provision under which party agrees to refrain from engaging in specified business activities (“noncompete”)