LEB 320F Unit 8 Exam Questions
with Answers 100% Pass
What would render a contract illegal? - CORRECT ANSWER-if it is contrary to
that state's statutes, contrary to the public policy of that state, or any contract
calling for the commission of a crime
What are some examples of contracts contrary to statute? - CORRECT
ANSWER-wagering agreements, usury, and some licensing agreements
What is a state-sponsored wagering contract? Why are companies able to do this
sometimes too? - CORRECT ANSWER-Lottery; a scheme that does not require a
purchase of goods by the participant is not a lottery because consideration is
lacking. That is why so many contests state "no purchase necessary."
What is an exempted wagering contract? - CORRECT ANSWER-"friendly bets"
(those defined as not producing substantial sources of income), and some lotteries
operated by religious or charitable organizations
Explain insurance contracts. When are they legal? What kind of contracts are they?
- CORRECT ANSWER-risk-shifting contracts - contracts whose performance is
dependent upon an element of chance. An insurance policy is simply a contract by
,which an existing risk is shifted to an insurance company for a consideration paid
by the own .
Only legal if insured person has an "insurable interest" in the home prior to taking
out the policy
When is recovery allowed for unlicensed practitioners? - CORRECT ANSWER-
Most courts take the view in such instances that if the statute is regulatory—its
purpose being the protection of the general public against unqualified persons—
then the contract is illegal and recovery is denied. On the other hand, if the statute
is felt to be merely revenue raising, recovery is allowed
What is usury? - CORRECT ANSWER-Charging interest in excess of the
permitted rate constitutes usury
What loans often receive higher interest rates than are generally allowed? -
CORRECT ANSWER-most states put no limit on the rate of interest that can be
charged on loans made to corporations
What is an examples of a contract contrary to public policy? - CORRECT
ANSWER-Contracts in Restraint of Trade
What is a contract in restraint of trade? - CORRECT ANSWER-unreasonably
restrain trade or competition in interstate commerce.
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, What's an example of a legal restriction on trade? Under what conditions is it legal?
- CORRECT ANSWER-"noncompetes", though they restrict trade, are not illegal
and are lawful if certain conditions are met: (1) The agreement must be of an
"ancillary" nature. (2) The promisee must have a legitimate business interest that
warrants temporary protection from competition. (3) The agreement must be
reasonable in its scope so that it does not limit competition more than is
reasonably necessary
Systems and Software Inc. v. Barnes - premise - CORRECT ANSWER-SSI hired
Barnes. Barnes signed a noncompetition agreement that prohibited him—during
his employment and for six months thereafter—from becoming associated with
any business that competes with SSI
Barnes left his position with SSI and started a partnership called Spirit
Technologies Consulting Group, which, like SSI, provides customer-information-
systems software and service to municipalities and utilities nationwide
SSI sued Barnes and requested an injunction to enforce the parties'
noncompetition agreement. The trial court held for SSI and granted an injunction
that prohibited Barnes from working as a consultant or otherwise with Utility
Solutions or any other direct competitor of SSI. Barnes appealed.
Systems and Software Inc. v. Barnes - outcome - CORRECT ANSWER-the trial
court found that SSI had a legitimate protectable interest, and the evidence
supports the court's finding. Affirmed.
with Answers 100% Pass
What would render a contract illegal? - CORRECT ANSWER-if it is contrary to
that state's statutes, contrary to the public policy of that state, or any contract
calling for the commission of a crime
What are some examples of contracts contrary to statute? - CORRECT
ANSWER-wagering agreements, usury, and some licensing agreements
What is a state-sponsored wagering contract? Why are companies able to do this
sometimes too? - CORRECT ANSWER-Lottery; a scheme that does not require a
purchase of goods by the participant is not a lottery because consideration is
lacking. That is why so many contests state "no purchase necessary."
What is an exempted wagering contract? - CORRECT ANSWER-"friendly bets"
(those defined as not producing substantial sources of income), and some lotteries
operated by religious or charitable organizations
Explain insurance contracts. When are they legal? What kind of contracts are they?
- CORRECT ANSWER-risk-shifting contracts - contracts whose performance is
dependent upon an element of chance. An insurance policy is simply a contract by
,which an existing risk is shifted to an insurance company for a consideration paid
by the own .
Only legal if insured person has an "insurable interest" in the home prior to taking
out the policy
When is recovery allowed for unlicensed practitioners? - CORRECT ANSWER-
Most courts take the view in such instances that if the statute is regulatory—its
purpose being the protection of the general public against unqualified persons—
then the contract is illegal and recovery is denied. On the other hand, if the statute
is felt to be merely revenue raising, recovery is allowed
What is usury? - CORRECT ANSWER-Charging interest in excess of the
permitted rate constitutes usury
What loans often receive higher interest rates than are generally allowed? -
CORRECT ANSWER-most states put no limit on the rate of interest that can be
charged on loans made to corporations
What is an examples of a contract contrary to public policy? - CORRECT
ANSWER-Contracts in Restraint of Trade
What is a contract in restraint of trade? - CORRECT ANSWER-unreasonably
restrain trade or competition in interstate commerce.
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED
, What's an example of a legal restriction on trade? Under what conditions is it legal?
- CORRECT ANSWER-"noncompetes", though they restrict trade, are not illegal
and are lawful if certain conditions are met: (1) The agreement must be of an
"ancillary" nature. (2) The promisee must have a legitimate business interest that
warrants temporary protection from competition. (3) The agreement must be
reasonable in its scope so that it does not limit competition more than is
reasonably necessary
Systems and Software Inc. v. Barnes - premise - CORRECT ANSWER-SSI hired
Barnes. Barnes signed a noncompetition agreement that prohibited him—during
his employment and for six months thereafter—from becoming associated with
any business that competes with SSI
Barnes left his position with SSI and started a partnership called Spirit
Technologies Consulting Group, which, like SSI, provides customer-information-
systems software and service to municipalities and utilities nationwide
SSI sued Barnes and requested an injunction to enforce the parties'
noncompetition agreement. The trial court held for SSI and granted an injunction
that prohibited Barnes from working as a consultant or otherwise with Utility
Solutions or any other direct competitor of SSI. Barnes appealed.
Systems and Software Inc. v. Barnes - outcome - CORRECT ANSWER-the trial
court found that SSI had a legitimate protectable interest, and the evidence
supports the court's finding. Affirmed.
