LEB 320F - Unit 3 Exam Questions with
100% Correct Answers | Latest Update
When is a contract illegal? - ✔✔-Contrary to that state's statutes
-contrary to the public policy of that state's public policy, as defined by its
courts
Licensing Statutes - ✔✔all states have licensing statutes, requiring the
persons who engage in certain professions, taxes, or businesses to be
licensed
Can an unlicensed person recover for services rendered under contract? -
✔✔-Most courts take the view that if a statute is regulatory (purpose being
that it protects the general public against unqualified persons) then the
contract is ILLEGAL and the recovery is DENIED
-HOWEVER... If the statute is felt to be merely revenue raising, recovery is
allowed
Contracts in restraint of Trade - ✔✔many contracts that unreasonably
restrain trade or competition in interstate commerce are in violation of one
or more federal antitrust statutes (example: Sherman Clayton Acts)
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, Covenants Not to Compete (non competition agreements) - ✔✔agreements
in which one party promises not to compete with another
Lawful IF conditions are met:
-ancillary nature
-legitimate business interest that warrants temporary protection from
competition
-must be reasonably necessary to protect the promisee's legitimate interest
Ancillary Requirement - ✔✔one that is a subsidiary or auxiliary part of a
larger agreement
Contract for calling Sale of Business - ✔✔1) contract contains a promise by
the seller of the business not to engage in the same type of business within
a prescribed geographical area for a certain length of time after the sale
2) The interest to be protected (when a business is sold) relates to the
goodwill of the business - If seller is to violate promise, purchaser of the
business is entitled to an injunction against him
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
100% Correct Answers | Latest Update
When is a contract illegal? - ✔✔-Contrary to that state's statutes
-contrary to the public policy of that state's public policy, as defined by its
courts
Licensing Statutes - ✔✔all states have licensing statutes, requiring the
persons who engage in certain professions, taxes, or businesses to be
licensed
Can an unlicensed person recover for services rendered under contract? -
✔✔-Most courts take the view that if a statute is regulatory (purpose being
that it protects the general public against unqualified persons) then the
contract is ILLEGAL and the recovery is DENIED
-HOWEVER... If the statute is felt to be merely revenue raising, recovery is
allowed
Contracts in restraint of Trade - ✔✔many contracts that unreasonably
restrain trade or competition in interstate commerce are in violation of one
or more federal antitrust statutes (example: Sherman Clayton Acts)
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, Covenants Not to Compete (non competition agreements) - ✔✔agreements
in which one party promises not to compete with another
Lawful IF conditions are met:
-ancillary nature
-legitimate business interest that warrants temporary protection from
competition
-must be reasonably necessary to protect the promisee's legitimate interest
Ancillary Requirement - ✔✔one that is a subsidiary or auxiliary part of a
larger agreement
Contract for calling Sale of Business - ✔✔1) contract contains a promise by
the seller of the business not to engage in the same type of business within
a prescribed geographical area for a certain length of time after the sale
2) The interest to be protected (when a business is sold) relates to the
goodwill of the business - If seller is to violate promise, purchaser of the
business is entitled to an injunction against him
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
