Chapter 13: Prepare & Apply

A __________ is an essential element for a promise or agreement to binding. An agreement without this is unenforceable and contrary to public policy.

• licensing statute

• past consideration

• legal objective

• All of these are correct.

Answer explanation

A legal objective is necessary for a promise or agreement to be binding. Without it, the agreement is unenforceable and against public policy, making 'legal objective' the correct choice.

__________ is when money is loaned at a higher rate of interest than the law allows.

• Lotteries

• In pari dilecto

• Usury

• Adhesion

Answer explanation

Usury refers to the practice of lending money at interest rates higher than legally permitted. This makes 'Usury' the correct answer, as it directly addresses the act of illegal lending practices.

A(n) __________ is a measure designed to raise money by requiring the purchase of a license.

• exculpatory clause

• revenue license

• regulatory license

• usury statute

Answer explanation

A revenue license is specifically designed to generate income for the government by requiring individuals or businesses to pay for the right to engage in certain activities, making it the correct choice for this question.

A noncompete agreement may be held invalid, the courts insist that the employer demonstrate that the restriction is __________ to protect the employer's legitimate interest without overly restricting the employee's ability to find another job.

• reasonable and necessary

• unconscionable

• exculpatory

• usurious

Answer explanation

A noncompete agreement must be shown to be reasonable and necessary to protect the employer's legitimate interests while not unduly hindering the employee's job opportunities, making this the correct choice.

__________ means contrary to the dictates of the conscience; unscrupulous or unprincipled; exceeding that which is reasonable or customary; inordinate, unjustifiable.

• Usury

• Unconscionable

• Exculpatory

• Illusory

Answer explanation

Unconscionable means acting against conscience, being unscrupulous or unprincipled, and exceeding reasonable limits. This aligns perfectly with the definition provided in the question.

Which of the following would generally be considered to be a regulatory licensing law?

• A statute requiring that doctors be licensed after finishing medical school.

• A statute requiring that salespeople be licensed, but not establishing any educational or training requirements.

• A statute requiring plumbers to be licensed, but not establishing any standards of competence.

• A statute that requires flag makers to register with the state before selling flags.

Answer explanation

A statute requiring that doctors be licensed after finishing medical school establishes both a licensing requirement and educational standards, making it a clear example of regulatory licensing law.

A buyer of a business may negotiate a __________ contract clause to keep the seller from running a competing business.

• covenant not to compete

• good faith

• contract in restraint of trade

• None of these are correct.

Answer explanation

A buyer may negotiate a covenant not to compete to prevent the seller from starting a competing business. This clause protects the buyer's investment and ensures the seller does not undermine the business post-sale.

The sole hospital in a city offers a standard patient care agreement. The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis. Such a contract is called:

• exculpatory.

• a usurious contract.

• an adhesion contract.

• an illegal restraint of trade.

Answer explanation

The contract described is a standard form offered on a take-it-or-leave-it basis, which characterizes it as an adhesion contract. This type of contract typically favors the party with greater bargaining power.

__________ is a set of oppressive or grossly unfair contract terms or exclusions.

• Procedural unconscionability

• An exculpatory clause

• Substantive unconscionability

• Tortious conduct

Answer explanation

Substantive unconscionability refers to contract terms that are oppressive or grossly unfair, making it the correct choice. Procedural unconscionability deals with the process of contract formation, not the terms themselves.

In a __________, the parties stipulate that one shall win and the other lose depending on the outcome of an event in which their only interest is the possibility of such gain or loss?

• monopoly

• usury

• wager

• All of these are correct.

Answer explanation

In a wager, parties agree that one will win and the other will lose based on an event, with their sole interest being the potential gain or loss. This definition aligns perfectly with the term 'wager', making it the correct choice.