CHAPTER 10
Legal Purpose
MULTIPLE-CHOICE QUESTIONS
Circle the letter of the best answer.
1. Usury laws provide protection in a contract that is
a. for the loan of money.
b. for the sale of merchandise on credit.
c. to be performed on a Sunday.
d. for the restraint of trade.
2. A statute that requires a person to obtain a license to practice a certain trade or profession without having to show competence in that trade or profession is a
a. criminal statute.
b. usury statute.
c. prohibiting statute.
d. revenue-raising statute.
3. An example of a licensing statute is one that
a. requires an attorney to have a permit to practice law.
b. prevents usury.
c. restricts business activity on Sundays.
d. reasonably restricts trade.
4. Aaron bet Davis that a certain candidate would win the presidential election. Aaron’s candidate won the election, but Davis refused to pay the bet. In most states, Aaron could not enforce the agreement legally because
a. a gambling agreement is illegal and void.
b. the agreement involves usury.
c. the bet was not in writing.
d. Aaron and Davis are both professional gamblers.
5. If an agreement is partially legal and partially illegal, the
a. entire agreement is void in all cases.
b. legal part of the agreement may be enforced if it can be separated from the illegal part.
c. legal part of the agreement is never enforceable.
d. parties to the agreement may choose to enforce the part of the agreement that is beneficial to both of them.
6. If both parties know that an agreement is illegal, a court probably will
a. enforce the agreement.
b. refuse to hear the case.
c. allow the agreement to be ratified.
d. permit each party to recover any consideration given.
7. Charging interest in excess of the legal rate is considered
a. a restraint of trade.
b. enforceable.
c. usury.
d. stare decisis.
8. An example of an agreement that ordinarily would be classified as illegal is one that
a. is entered into on a weekday after regular business hours.
b. is in reasonable restraint of trade.
c. involves usury.
d. is between an adult and a minor.
9. A person whose main livelihood is gambling (gaming) is classified as a
a. professional gambler.
b. semiprofessional gambler.
c. casual gambler.
d. public gambler.
10. An agreement that is in unreasonable restraint of trade is
a. enforceable.
b. void.
c. voidable.
d. valid.
11. Billings and Durrick, competing distributors, made an agreement whereby Billings promised not to sell his goods in a specified area and Durrick promised not to sell his goods in another specified area. They made this agreement to keep prices high by eliminating competition. This arrangement is
a. legal because it reasonably restrains trade in order to control prices.
b. legal because a binding contract was made willingly by both parties.
c. illegal because it unreasonably restrains trade by controlling prices and territories.
d. illegal because agreements that allow manufacturers to set prices are void under the UCC.
12. Maile agrees to sell his retail men’s shop in Cleveland to Lunger. Lunger wants a clause restricting competition by Maile included in the contract. Which of the following restrictive clauses would be enforceable?
a. never to engage in a similar business in Cleveland
b. not to engage in a similar business in Ohio for the next two years
c. not to engage in any type of business anywhere in Cleveland for the next year
d. not to engage in a men’s shop business within a radius of one mile for the next year
13. Which of the following actions is opposed to public policy?
a. an offer to pay money to a witness to testify falsely in court
b. an offer to pay a contractor extra money to speed up a job he already is legally bound to do
c. an offer to pay money to neighbors to attend your birthday party
d. an offer to pay a lawyer to represent your civic group at a legislative session on a bill seeking tax reduction
14. Slater, believing that his daughter was about to marry and leave him, offered to pay her $10,000 if she would promise never to marry. The daughter promised and accepted the $10,000. One year later, she married. Slater sued for breach of contract. A court probably would rule that Slater is entitled to
a. recover nothing.
b. recover the $10,000.
c. recover the $10,000 plus interest.
d. annul the marriage on the basis of fraud.
15. Which of the following agreements ordinarily would be considered illegal?
a. an agreement between two people that one would pay the other $20 depending on the outcome of a football game
b. a contract made by a married woman who is a minor
c. a lobbying agreement
d. none of these
16. An agreement to rob a bank is an example of a
a. quasi contract.
b. voidable contract.
c. void contract.
d. contract implied in law.
17. Exculpatory clauses are
a. quasi in nature.
b. generally considered to be contrary to public policy.
c. valid in all cases.
d. legal when they involve the lending of money.
18. When a clause in a non-compete contract is too restrictive, most courts generally
a. enforce it as it is written.
b. enforce it as it is written but agree to evaluate the clause over a period of three years.
c. enforce it as it is written but agree to evaluate the clause over a period of twenty years.
d. throw it out but enforce the remainder of the agreement.
19. An agreement that is grossly unfair or harsh may be declared void by a court as being
a. impossible.
b. unconscionable.
c. in violation of a state statute.
d. in violation of the blue laws.
20. Which of the following businesses would not be able to enforce an exculpatory clause under most circumstances?
a. hospitals.
b. common carriers.
c. public utilities.
d. all of these.