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STUDENT _______________________________________ CLASS _______________________ DATE _________
LESSONȱ10—1ȱQUIZȱ
LegalȱConceptsȱ
Directions:ȱFillȱinȱtheȱblank(s)ȱwithȱtheȱmostȱappropriateȱtermȱorȱphraseȱtoȱcompleteȱ
theȱsentence.ȱ
ȱȱ Answersȱ
ȱȱȱ1.ȱContractsȱtoȱcommitȱa(n)ȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ_ȱareȱunenforceable.
ȱȱ1._______ȱ
ȱȱȱ2.ȱPartiesȱtoȱanȱillegalȱagreementȱoftenȱareȱnotȱȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱ_,ȱwhichȱ
meansȱ“ofȱequalȱguilt.”ȱ
ȱ
ȱ2._______ȱ
ȱȱȱ3.ȱȱ Theȱpracticeȱofȱlendingȱmoneyȱatȱaȱhigherȱrateȱthanȱtheȱstate’sȱ
maximumȱallowableȱrateȱisȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ_.ȱ
ȱ3._______ȱ
ȱȱȱ4.ȱȱ Toȱpreserveȱcompetitionȱȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ_ȱhaveȱbeenȱenactedȱatȱtheȱ
federalȱandȱstateȱlevels.ȱ
ȱ4._______ȱ
ȱȱȱ5.ȱPeopleȱwhoȱborrowȱmoneyȱforȱwhichȱnoȱexactȱinterestȱrateȱisȱ
statedȱwillȱbeȱchargedȱtheȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ_.ȱ
ȱ5._______ȱ
ȱȱȱ6.ȱA(n)ȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ_ȱisȱaȱbetȱonȱtheȱuncertainȱoutcomeȱofȱanȱevent.ȱȱ6._______ȱ
ȱȱȱ7.ȱStateȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ_ȱprohibitȱsalesȱofȱworthlessȱstocksȱandȱbonds.ȱȱ7._______ȱ
ȱȱȱ8.ȱȱ Theȱactȱofȱrefrainingȱfromȱinformingȱonȱanȱallegedȱcrimeȱforȱ
moneyȱorȱotherȱconsiderationȱisȱcalledȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ_ȱaȱcrime.ȱ
ȱ8._______ȱ
ȱȱȱ9.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ_ȱisȱaȱformȱofȱbettingȱinȱwhichȱthoseȱwhoȱbetȱonȱtheȱ
winnerȱshareȱtheȱtotalȱprize.ȱȱ
ȱ9._______ȱ
ȱ10.ȱȱ Personsȱengagedȱinȱtradesȱmustȱobtainȱa(n)ȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ_.ȱ10.______ȱ
ȱ11.ȱA(n)ȱ
ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ_ȱ
isȱissuedȱtoȱraiseȱrevenueȱratherȱthanȱtoȱprotectȱ
theȱpublic.ȱ
11.______ȱ
ȱ12.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱoccursȱwhenȱcompetingȱfirmsȱagreeȱonȱtheȱsameȱpriceȱ
toȱbeȱchargedȱforȱcertainȱproductsȱorȱservices.ȱ
12.______ȱ
ȱ13.ȱAȱpersonȱwhoȱdoesȱnotȱknowȱaȱcontractȱisȱillegalȱisȱ
_____?______.ȱ
13.______ȱ
ȱ14.ȱA(n)ȱ_____?______ȱcontractȱisȱaȱgrosslyȱunfairȱthatȱtheȱpartiesȱtoȱ
itȱunderȱordinaryȱcircumstancesȱwouldȱnotȱaccept.ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ
14.______ȱ
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2-72 Chapter 10 Legal Purpose and Proper Form
LegalȱApplicationȱ
15.ȱSeanȱsawȱhisȱfriendȱTylerȱstealȱanȱexpensiveȱjacketȱfromȱaȱclothingȱstore.ȱSeveralȱ
weeksȱlater,ȱSeanȱthreatenedȱtoȱtellȱtheȱpoliceȱaboutȱtheȱtheftȱifȱTylerȱwouldȱnotȱ
giveȱhimȱ$60ȱtoȱbuyȱaȱticketȱtoȱaȱprofessionalȱfootballȱgame.ȱIsȱthisȱaȱvalidȱ
agreement?ȱWhyȱorȱwhyȱnot?ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
16.ȱSallyȱShoemakerȱisȱaȱnewȱhomeȱownerȱinȱaȱsoutheasternȱstate.ȱSheȱisȱseekingȱ
insuranceȱthatȱwillȱcoverȱherȱhomeȱinȱcaseȱofȱhurricaneȱorȱtornadoȱdamage.ȱSafeȱ
Sally’sȱhomeȱisȱdamagedȱthreeȱmonthsȱafterȱsheȱpaysȱtheȱfairȱmarketȱvalueȱforȱ
theȱinsuranceȱpremium.ȱUnfortunately,ȱtheȱgovernorȱdoesȱnotȱdeclareȱherȱ
countyȱasȱpartȱofȱaȱdisasterȱarea.ȱIsȱtheȱinsuranceȱcontractȱunconscionable?ȱȱ
Explainȱyourȱanswer.ȱ
Chapter 10 Legal Purpose and Proper Form 2-73
STUDENT _______________________________________ CLASS _______________________ DATE _________
LESSONȱ10—1ȱPRACTICEȱACTIVITYȱ
Readȱtheȱfollowingȱcasesȱandȱanswerȱtheȱquestionsȱaboutȱthem.ȱAttachȱaȱpageȱifȱadditionalȱ
spaceȱisȱneededȱforȱanswers.ȱ
ȱ
1.ȱMillerȱandȱRadikopfȱhadȱanȱagreementȱtoȱsellȱIrishȱSweepstakeȱtickets.ȱInȱ
exchangeȱforȱsellingȱtheȱtickets,ȱtheyȱreceivedȱtwoȱfreeȱticketsȱforȱeveryȱ20ȱthatȱ
agreementȱwasȱunenforceable.ȱMillerȱcounteredȱthatȱthereȱwasȱnothingȱillegalȱ
aboutȱreceivingȱtheȱwinningsȱofȱaȱlottery.ȱWillȱMillerȱbeȱableȱtoȱgetȱhisȱshareȱofȱ
theȱmoneyȱfromȱRadikopf?ȱExplain.ȱ[Millerȱv.ȱRadikopf,ȱ214ȱN.W.ȱ2dȱ897ȱ(Mich.ȱ
1974)]ȱ
ȱ
ȱ
ȱ
ȱ
2.ȱGomezȱworkedȱforȱTAMMS,ȱaȱprivateȱcompanyȱthatȱhelpedȱhospitalsȱrecoverȱ
moneyȱfromȱtheȱgovernmentȱforȱmedicalȱservicesȱprovidedȱtoȱpatientsȱwhoȱ
couldȱnotȱpay.ȱTAMMSȱhadȱdevelopedȱitsȱownȱsetȱofȱforms,ȱsoftware,ȱ
procedures,ȱandȱexpertiseȱoverȱtheȱyears.ȱAccessȱandȱuseȱofȱtheseȱitemsȱwouldȱ
giveȱanȱadvantageȱtoȱitsȱcompetitors.ȱTAMMSȱmadeȱeachȱemployeeȱsignȱanȱ
planningȱtoȱexpandȱintoȱinȱtheȱfuture.ȱTAMMSȱsuedȱGomezȱforȱviolatingȱtheȱ
restrictiveȱcovenant.ȱGomezȱclaimedȱtheȱcovenantȱwasȱunenforceableȱbecauseȱitȱ
wasȱtooȱbroad,ȱi.e.,ȱitȱdidȱnotȱdefineȱ“futureȱmarkets.”ȱWillȱtheȱrestrictiveȱ
covenantȱcauseȱGomezȱtoȱbeȱliableȱifȱheȱopensȱhisȱbusiness?ȱExplain.ȱ[Gomezȱv.ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
LESSONȱ10—1ȱRETEACHȱ
Directions:ȱUnscrambleȱtheȱlettersȱfollowingȱeachȱquestionȱandȱwriteȱtheȱanswerȱinȱ
theȱblankȱprovided.ȱAnswersȱmayȱconsistȱofȱmoreȱthanȱoneȱword.ȱ
ȱȱ Answersȱ
ȱȱ1.ȱWhatȱisȱaȱgrosslyȱunfairȱcontractȱsaidȱtoȱbe?ȱ
1.________________ȱ
ȱȱ2.ȱWhatȱkindȱofȱcontractȱhasȱnoȱseparationȱbetweenȱlegalȱ
2.________________ȱ
ȱȱ3.
Lawsȱenactedȱatȱtheȱfederalȱlevelȱtoȱpreserveȱ
3.________________ȱ
ȱȱ4.
Whatȱkindȱofȱcontractȱhasȱaȱseparationȱbetweenȱlegalȱ
4.________________ȱ
ȱȱ5.ȱWhatȱsetȱofȱlawsȱgovernsȱtheȱsaleȱofȱgoods?ȱmroifnuȱ
5.________________ȱ
ȱȱ6.ȱWhatȱisȱtheȱlicenseȱissuedȱtoȱensureȱthatȱpeopleȱinȱ
certainȱoccupationsȱcanȱperformȱadequatelyȱȱ
6.________________ȱ
ȱȱ7.ȱWhatȱisȱtheȱstateȱofȱnotȱknowingȱthatȱaȱcontractȱisȱ
7.________________ȱ
ȱȱ9.ȱWhatȱpracticeȱinjuresȱcompetitionȱifȱcompetitorsȱdivideȱ
9.________________ȱ
10.ȱWhatȱisȱtheȱkindȱofȱbettingȱwhereȱthoseȱwhoȱbetȱshareȱ
10.ȱ_______________ȱ
11.ȱWhatȱisȱtheȱlendingȱofȱmoneyȱatȱaȱhigherȱrateȱthanȱtheȱ
11._______________ȱ
12.ȱWhatȱisȱtheȱlicenseȱusedȱtoȱraiseȱmoney?ȱeevnuerȱ12._______________ȱ
14.ȱWhatȱisȱtheȱactȱofȱrefrainingȱfromȱinformingȱtheȱpoliceȱ
14._______________ȱ
15.ȱWhatȱisȱtheȱpracticeȱofȱagreeingȱonȱtheȱsameȱpriceȱbyȱ
15.______________ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
LESSONȱ10—1ȱENRICHMENT
Someȱcontractsȱareȱmadeȱillegalȱdueȱtoȱspecificȱstateȱstatutes.ȱMostȱstatesȱeitherȱ
forbidȱorȱregulateȱgambling.ȱLikewise,ȱnearlyȱallȱstatesȱprovideȱthat,ȱwithȱcertainȱ
exception,ȱlendersȱofȱmoneyȱmayȱnotȱchargeȱmoreȱthanȱaȱspecifiedȱmaximumȱrateȱofȱ
interest.ȱResearchȱtheȱlawsȱonȱgamblingȱandȱinterestȱratesȱinȱyourȱstateȱtoȱanswerȱ
theȱfollowingȱquestions.ȱ
ȱ
1.ȱWhatȱtypesȱofȱgamblingȱareȱpermittedȱunderȱregulatedȱconditionsȱinȱyourȱstate?ȱ
PariȬmutuelȱbetting?ȱStateȬrunȱlotteries?ȱBingo?ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
2.ȱWhatȱisȱtheȱpenaltyȱinȱyourȱstateȱforȱaȱlenderȱwhoȱchargesȱmoreȱthanȱtheȱ
specifiedȱmaximumȱrateȱofȱinterest?ȱWhatȱisȱtheȱmaximumȱinterestȱrateȱinȱyourȱ
state?ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
3.ȱWhatȱisȱtheȱlegalȱrateȱofȱinterestȱinȱyourȱstate?ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
4.ȱDoesȱyourȱstateȱpermitȱlicensedȱloanȱcompaniesȱandȱpawnbrokersȱtoȱchargeȱaȱ
smallȱloanȱrateȱofȱinterest?ȱIfȱso,ȱwhatȱisȱtheȱinterestȱrateȱandȱwhatȱisȱtheȱ
maximumȱamountȱforȱtheȱloan?ȱ
2-76 Chapter 10 Legal Purpose and Proper Form
STUDENT _______________________________________ CLASS _______________________ DATE _________
LESSONȱ10—2ȱQUIZȱ
LegalȱConceptsȱ
Directions:ȱPlaceȱaȱTȱforȱTrueȱorȱanȱFȱforȱFalseȱinȱtheȱAnswersȱcolumnȱtoȱshowȱ
whetherȱeachȱofȱtheȱfollowingȱstatementsȱisȱtrueȱorȱfalse.ȱ
ȱȱ Answersȱ
ȱȱ1.ȱAȱcontractȱforȱtheȱsaleȱofȱgoodsȱsellingȱforȱ$400ȱmustȱbeȱinȱwriting.ȱ1._____ȱ
ȱȱ2.ȱInȱmostȱstates,ȱoralȱleasesȱforȱoneȱyearȱorȱlessȱareȱenforceable. 2.ȱ_____ȱ
ȱȱ3.ȱCourtsȱwillȱenforceȱanȱoralȱcontractȱifȱtheȱbuyerȱsimplyȱmakesȱ
partialȱorȱfullȱpaymentȱforȱtheȱland.ȱ
3.ȱ_____ȱ
ȱȱ4.
ȱ
Courtsȱwillȱenforceȱaȱcontractȱthatȱrequiresȱmoreȱthanȱoneȱyearȱtoȱ
completeȱifȱthereȱisȱaȱsignedȱwriting.ȱ
4.ȱ_____ȱ
ȱȱ5.ȱTheȱStatuteȱofȱFraudsȱrequiresȱaȱwritingȱforȱaȱpromiseȱtoȱanswerȱ
forȱtheȱdebtȱofȱanotherȱperson.ȱ
5.ȱ_____ȱ
ȱȱ6.ȱAȱcollateralȱpromiseȱmustȱbeȱinȱwritingȱtoȱbeȱenforceable.ȱ6.ȱ_____ȱ
ȱȱ7.ȱParolȱevidenceȱisȱadmissibleȱtoȱclarifyȱunclearȱpartsȱofȱtheȱwrittenȱ
agreement.ȱ
7.ȱ_____ȱ
ȱȱ8.ȱTheȱStatuteȱofȱFraudsȱrequiresȱaȱwrittenȱcontractȱtoȱindicateȱonlyȱ
theȱquantityȱofȱgoodsȱandȱtheȱfactȱthatȱaȱcontractȱhasȱbeenȱcreated.ȱ
8.ȱ_____ȱ
ȱȱ9.ȱIfȱaȱcontractȱisȱrequiredȱtoȱbeȱinȱwriting,ȱitȱisȱsaidȱtoȱbeȱ
unconscionable.ȱ
9.ȱ_____ȱ
10.ȱTheȱsignatureȱonȱaȱcontractȱmayȱbeȱwritten,ȱstamped,ȱengravedȱorȱ
printed.ȱ
10.ȱ_____ȱ
11.ȱTheȱthreeȱelementsȱofȱaȱlotteryȱareȱprize,ȱchance,ȱandȱ
consideration.ȱ
11.ȱ_____ȱ
12.ȱIfȱthereȱisȱaȱconflictȱbetweenȱtheȱtypesetȱprintȱandȱsomethingȱtypedȱ
orȱhandwritten,ȱtheȱtypesetȱprintȱdeterminesȱtheȱcontract’sȱ
meaningȱ
12.ȱ_____ȱ
13.ȱIfȱanȱamountȱofȱmoneyȱisȱwrittenȱinȱwordsȱandȱasȱaȱnumeral,ȱtheȱ
numeralȱalwaysȱprevails.ȱ
13.ȱ_____ȱ
14.
ȱ
Courtsȱcanȱdetermineȱwhichȱcontractȱclausesȱshouldȱprevailȱbyȱ
lookingȱatȱtheȱparties’ȱprincipalȱobjective.ȱ
14.ȱ_____ȱ
Chapter 10 Legal Purpose and Proper Form 2-77
2-78 Chapter 10 Legal Purpose and Proper Form
LegalȱApplicationsȱ
15.ȱDavidȱTekavecȱisȱaȱrecentȱhighȱschoolȱgraduateȱwhoȱwantsȱtoȱrentȱanȱapartmentȱ
forȱoneȱyear.ȱHeȱsignsȱaȱ$350ȬaȬmonthȱleaseȱwithȱHoward’sȱRental.ȱDavid’sȱ
fatherȱtellsȱHoward’sȱthatȱheȱwillȱmakeȱtheȱpaymentsȱifȱhisȱsonȱdefaultsȱonȱtheȱ
lease.ȱIsȱMr.ȱTekavec’sȱpromiseȱprimaryȱorȱcollateral?ȱDoesȱitȱfallȱunderȱtheȱmainȱ
purposeȱrule?ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
16.ȱLeȱNguyenȱorallyȱagreedȱwithȱaȱlocalȱlawnȱequipmentȱdealerȱtoȱpayȱ$750ȱforȱaȱ
newȱridingȱlawnmower.ȱWhenȱtheȱlawnmowerȱwasȱdelivered,ȱLeȱpaidȱtheȱfullȱ
$750.ȱIsȱthisȱcontractȱwithinȱtheȱStatuteȱofȱFrauds?ȱCouldȱLeȱdecideȱtoȱwithdrawȱ
fromȱthisȱagreementȱbecauseȱheȱdidȱnotȱsignȱaȱwrittenȱcontract?ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
17.ȱSupposeȱyouȱsignȱaȱcontractȱtoȱhaveȱyourȱhouseȱpaintedȱbyȱD&MȱPainting.ȱTheȱ
contractȱstatesȱthatȱD&MȱPaintingȱwillȱremoveȱtheȱoldȱpaint,ȱcleanȱtheȱsurfacesȱ
oneȱofȱthemȱspillsȱaȱgallonȱofȱredȱpaintȱonȱyourȱnewȱsidewalk.ȱTheȱpaintȱdriesȱ
andȱtheȱcompanyȱrefusesȱtoȱdoȱanythingȱaboutȱit.ȱCanȱyouȱholdȱD&MȱPaintingȱ
toȱitsȱpromiseȱtoȱcleanȱyourȱsidewalk?ȱWhyȱorȱwhyȱnot?ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
LESSONȱ10—2ȱPRACTICEȱACTIVITY
Readȱtheȱfollowingȱcasesȱandȱanswerȱtheȱquestionsȱaboutȱthem.ȱAttachȱaȱpageȱifȱadditionalȱ
spaceȱisȱneededȱforȱanswers.ȱ
ȱ
1.ȱPineȱTreeȱElectricȱCompanyȱisȱanȱelectricalȱcontractorȱwhoȱforȱyearsȱhadȱ
purchasedȱitsȱelectricalȱsuppliesȱfromȱtheȱGraybarȱElectricȱCompany,ȱanȱ
equipmentȱandȱpartsȱsupplier.ȱPineȱTreeȱranȱintoȱfinancialȱdifficulties,ȱandȱ
Graybarȱrefusedȱtoȱextendȱtoȱthemȱanyȱadditionalȱcreditȱtoȱpurchaseȱmoreȱ
GraybarȱthenȱdeliveredȱtheȱpartȱtoȱPineȱTree,ȱbutȱPineȱTreeȱdidȱnotȱpayȱforȱitȱ
andȱsubsequentlyȱdeclaredȱbankruptcy.ȱGraybarȱsuedȱSawyer,ȱbutȱSawyerȱ
raisedȱtheȱStatuteȱofȱFraudsȱasȱaȱdefense.ȱWillȱitȱwork?ȱExplain.ȱ[GraybarȱElectricȱ
ȱ
ȱ
ȱ
ȱ
ȱ
2.ȱSamuelȱCohodasȱorallyȱagreedȱtoȱsellȱhisȱlandȱtoȱHarryȱRussell.ȱAfterȱtheȱoralȱ
agreement,ȱCohodasȱsentȱaȱletterȱtoȱRussellȱthatȱincludedȱtheȱagreedȬuponȱprice,ȱ
forȱtheȱsaleȱofȱlandȱandȱhadȱtoȱbeȱinȱwriting,ȱandȱthatȱtheȱletterȱwasȱinsufficientȱ
toȱsatisfyȱtheȱStatuteȱofȱFrauds.ȱIsȱheȱcorrect?ȱExplain.ȱ[Cohodasȱv.ȱRussell,ȱ289ȱSo.ȱ
2dȱ55ȱ(Fla.ȱApp.ȱ1974)]ȱ
Chapter 10 Legal Purpose and Proper Form 2-79
2-80 Chapter 10 Legal Purpose and Proper Form
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ10—2ȱRETEACHȱ
Directions:ȱȱWriteȱtheȱanswersȱtoȱQuestionsȱ1–10ȱonȱtheȱblanksȱprovided.ȱTheȱanswerȱ
toȱQuestionȱ11ȱshouldȱappearȱinȱtheȱverticalȱboxes.ȱ
ȱȱȱȱ ȱȱȱ ȱȱȱȱȱȱȱȱȱȱȱ11.ȱ
1.ȱȱ ȱ ȱȱȱȱ__ȱ__ȱȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱȱ
2.ȱȱ ȱ ȱȱȱȱȱ ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ
3.ȱȱ ȱ ȱȱȱȱ__ȱ__ȱȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ
4.ȱȱ ȱ ȱ ȱ __ȱ__ȱ__ȱȱ__ȱ__ȱ__ȱ
5.ȱȱ ȱ ȱȱȱȱ__ȱ__ȱȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ
6.ȱȱ ȱȱȱȱȱȱ ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱȱ ȱ
7.ȱȱ ȱ ȱ ȱ __ȱ__ȱ__ȱ__ȱȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ
8ȱ ȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ__ȱȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ
9.ȱȱ ȱ ȱȱȱ __ȱ__ȱȱ__ȱ__ȱ__ȱ__ȱ
10.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ__ȱȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ__ȱ
ȱ
ȱ
1.ȱWordsȱspokenȱpriorȱtoȱtheȱexecutionȱofȱtheȱfinalȱwritingȱorȱatȱtheȱtimeȱofȱsigningȱ
2.ȱTheȱmostȱdemandingȱStatuteȱofȱFraudsȱrequirementsȱareȱthatȱtheȱwritingȱmustȱ
containȱtheseȱinȱorderȱtoȱcreateȱaȱvalueȱoffer.ȱȱȱ
promiseȱservesȱtheȱpromisor’sȱownȱinterestȱ
9.ȱContractsȱthatȱareȱnotȱrequiredȱtoȱbeȱwrittenȱareȱsaidȱtoȱbeȱ________ȱtheȱStatuteȱ
ofȱFraudsȱ
10.ȱLawȱcodeȱthatȱrequiresȱwrittenȱcontractsȱtoȱstateȱtheȱquantityȱofȱgoodsȱbeingȱ
soldȱandȱtheȱfactȱthatȱaȱcontractȱhasȱbeenȱformedȱ
11.ȱItemȱthatȱmayȱnotȱbeȱtransferredȱwithoutȱaȱwrittenȱcontractȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ10—2ȱENRICHMENTȱ
Asȱyouȱlearnedȱinȱthisȱlesson,ȱaȱwrittenȱcontractȱdoesȱnotȱrequireȱaȱspecialȱformȱtoȱ
satisfyȱtheȱStatuteȱofȱFrauds.ȱHowever,ȱunderȱtheȱcommonȱlaw,ȱdifferentȱstatesȱ
requireȱdifferentȱcontentȱstandards.ȱBecauseȱofȱtheȱUniformȱCommercialȱCode,ȱonȱ
theȱotherȱhand,ȱstatesȱareȱuniformȱinȱtheirȱtreatmentȱofȱtransactionsȱforȱtheȱsaleȱofȱ
goods.ȱAskȱaȱfriendȱorȱfamilyȱmemberȱtoȱshowȱyouȱaȱcopyȱofȱaȱwrittenȱcontractȱthatȱ
wouldȱbeȱenforcedȱunderȱtheȱcommonȱlaw,ȱsuchȱasȱforȱproperty,ȱrealȱestateȱorȱ
services,ȱandȱaȱcontractȱforȱgoodsȱwhichȱwouldȱbeȱgovernedȱunderȱtheȱUniformȱ
CommercialȱCode.ȱCompareȱtheȱcontractsȱandȱanswerȱtheȱfollowingȱquestions.ȱȱ
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1.ȱTheȱmostȱdemandingȱandȱcommonȱcontentȱstandardȱusedȱbyȱstatesȱisȱthatȱtheȱ
writingȱmustȱcontainȱallȱtheȱessentialȱtermsȱtoȱcreateȱaȱvalidȱoffer.ȱTheseȱtermsȱ
usuallyȱincludeȱnamesȱofȱtheȱparties,ȱaȱdescriptionȱofȱtheȱsubjectȱmatter,ȱprice,ȱ
quantity,ȱotherȱessentialȱterms,ȱandȱsignature.ȱDoesȱyourȱcontractȱforȱrealȱestate,ȱ
property,ȱorȱservicesȱcontainȱallȱofȱthisȱinformation?ȱ
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2.ȱIfȱyourȱcontractȱcontainsȱ“otherȱessentialȱterms,”ȱwhatȱareȱthey?ȱ(examples:ȱtimeȱ
orȱmethodȱofȱdelivery,ȱtermsȱofȱpayment,ȱmethodsȱofȱfinancing,ȱdateȱforȱtransferȱ
ofȱpossession,ȱaȱlegalȱdescriptionȱifȱtheȱcontractȱappliesȱtoȱrealty)ȱ
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3.ȱResearchȱtheȱstatuteȱinȱyourȱstateȱregardingȱcontentȱstandardsȱforȱwrittenȱ
contracts.ȱDoȱtheȱstatuteȱstandardsȱdifferȱfromȱtheȱmostȱdemandingȱstandardsȱ
listedȱinȱexerciseȱ1?ȱ
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4.ȱUnderȱtheȱUCC,ȱtheȱwritingȱmustȱindicateȱonlyȱtheȱquantityȱofȱgoodsȱandȱthatȱaȱ
contractȱhasȱbeenȱcreatedȱbetweenȱtheȱparties.ȱDoesȱyourȱcontractȱforȱgoodsȱ
followȱtheseȱstandards?ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
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CHAPTERȱ10ȱTESTȱ
SECTION I—IDENTIFY LEGAL TERMS
Directions:ȱPlaceȱaȱTȱforȱTrueȱorȱanȱFȱforȱFalseȱinȱtheȱAnswersȱcolumnȱtoȱshowȱ
whetherȱeachȱofȱtheȱfollowingȱstatementsȱisȱtrueȱorȱfalse.ȱ
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ȱȱ Answersȱ
ȱȱ1.ȱȱ Agreementsȱtoȱcommitȱfeloniesȱareȱnotȱillegal.ȱ1._______ȱ
ȱȱ2.ȱȱ
ȱInȱmostȱstates,ȱlendersȱofȱmoneyȱmayȱnotȱchargeȱmoreȱthanȱaȱ
specifiedȱmaximumȱrateȱofȱinterest.
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2._______ȱ
ȱȱ3.ȱȱ Allȱstatesȱsettingȱtheȱsameȱsetȱrateȱofȱinterestȱwouldȱbeȱconsideredȱ
usuriousȱandȱillegal.ȱ
3._______ȱ
ȱȱ4.ȱȱSmallȱloanȱratesȱofȱinterestȱtypicallyȱexceedȱtheȱusuriousȱrates,ȱyetȱ
theyȱareȱlegal.ȱ
4._______ȱ
ȱȱ5.ȱȱCompoundingȱaȱcrimeȱmeansȱcommittingȱtwoȱorȱmoreȱdistinctȱ
crimesȱagainstȱtheȱvictim,ȱsuchȱasȱrobbery,ȱbattery,ȱandȱ
kidnapping.ȱȱ
5._______ȱ
ȱȱ6.ȱȱ Anȱoralȱagreementȱtoȱsellȱaȱhouseȱisȱboundȱbyȱtheȱdownȱpaymentȱ
ofȱtheȱbuyer.ȱȱ
6._______ȱ
ȱȱ7.ȱValidȱcontractsȱmayȱbeȱoral,ȱwritten,ȱimpliedȱfromȱconduct,ȱorȱ
someȱcombinationȱofȱtheseȱunlessȱotherwiseȱrequiredȱbyȱlaw.ȱ
7._______ȱ
ȱȱ8.ȱȱ AȱcontractȱisȱsaidȱtoȱbeȱwithinȱtheȱStatuteȱofȱFraudsȱifȱitȱisȱrequiredȱ
toȱbeȱinȱwriting.ȱ
8._______ȱ
ȱȱ9.ȱAnȱexecutoryȱcontractȱinȱviolationȱofȱtheȱStatuteȱofȱFraudsȱisȱanȱ
illegalȱcontract.ȱ
9._______ȱ
10.ȱȱAȱquasiȬcontractȱexistsȱwhenȱsomeȱelementȱofȱanȱenforceableȱ
contractȱhasȱunjustlyȱenrichedȱoneȱofȱtheȱpartiesȱinȱexcessȱofȱfourȱ
timesȱitsȱworth.ȱ
10._______ȱ
2-82 Chapter 10 Legal Purpose and Proper Form
SECTION II—THINK CRITICALLY ABOUT LEGAL CONCEPTS
Directions:ȱInȱtheȱAnswersȱcolumnȱatȱtheȱrightȱofȱeachȱstatement,ȱwriteȱtheȱletterȱthatȱ
representsȱtheȱword,ȱorȱgroupȱofȱwords,ȱthatȱcorrectlyȱcompletesȱtheȱstatement.ȱ
ȱȱ Answersȱ
ȱ11.ȱAȱcontractȱmadeȱillegalȱbyȱspecificȱstatuteȱmightȱinvolveȱ(a)ȱ
discrimination,ȱȱ(b)ȱusury,ȱ(c)ȱbothȱaȱandȱb,ȱ(d)ȱnoneȱofȱtheseȱ
11.ȱ_____ȱ
ȱ12.ȱIllegalȱlotteriesȱinvolveȱ(a)ȱpayingȱtoȱplay,ȱluck,ȱandȱaȱprize,ȱ(b)ȱ
entryȱfee,ȱskill,ȱandȱaȱprize,ȱȱ(c)ȱdownȱpayment,ȱrisk,ȱandȱaȱ
guaranteedȱaward,ȱ(d)ȱnoneȱofȱtheseȱ
12.ȱ_____ȱ
ȱ13.ȱȱSomeȱlegalizedȱformsȱofȱgamblingȱmightȱincludeȱ(a)ȱsportsȱ
wagering,ȱ(b)ȱstateȱlotteries,ȱ(c)ȱofficeȱpools,ȱ(d)ȱnoneȱofȱtheseȱ
13.ȱ_____ȱ
ȱ14.ȱSomeȱagreementsȱthatȱdelayȱorȱpreventȱjusticeȱmightȱincludeȱ(a)ȱ
compoundingȱaȱcrime,ȱ(b)ȱbribingȱjurors,ȱ(c)ȱbothȱaȱandȱb,ȱ(d)ȱnoneȱ
ofȱtheseȱ
14.ȱ_____ȱ
ȱ15.ȱWhichȱofȱtheȱfollowingȱwouldȱnotȱbeȱanȱagreementȱthatȱwouldȱ
restrainȱtradeȱunreasonably?ȱ(a)ȱallocationȱofȱmarkets,ȱ(b)ȱbidȱ
rigging,ȱ(c)ȱpriceȱfixing,ȱ(d)ȱfranchisingȱ
15.ȱ_____ȱ
ȱ16.ȱAsȱanȱincentiveȱtoȱstopȱillegalȱacts,ȱrestitutionȱisȱavailableȱ(a)ȱtoȱaȱ
partyȱifȱtheyȱrescindȱbeforeȱtheȱillegalȱactȱoccurs,ȱ(b)ȱforȱtheȱlegalȱ
partȱofȱeveryȱcontract,ȱ(c)ȱforȱunperformedȱillegalȱacts,ȱ(d)ȱallȱofȱ
theseȱ
16.ȱ_____ȱ
ȱ17.ȱOnceȱaȱcourtȱhasȱfoundȱthatȱaȱcontractȱorȱaȱtermȱofȱaȱcontractȱisȱ
unconscionable,ȱitȱcanȱ(a)ȱrefuseȱtoȱenforceȱtheȱcontract,ȱ(b)ȱenforceȱ
theȱlegalȱpartȱandȱrefuseȱtoȱenforceȱtheȱillegalȱpart,ȱ(c)ȱmodifyȱtheȱ
termsȱtoȱmakeȱitȱfair,ȱ(d)ȱallȱofȱtheseȱ
17.ȱ_____ȱ
ȱ18.ȱCourtsȱmayȱenforceȱallȱorȱpartȱofȱanȱillegalȱagreementȱandȱmayȱ
grantȱreliefȱtoȱoneȱofȱtheȱpartiesȱwhenȱ(a)ȱtheȱcontractȱisȱdivisibleȱ
intoȱlegalȱandȱillegalȱparts,ȱ(b)ȱtheȱpartiesȱareȱnotȱequallyȱ
blameworthy,ȱ(c)ȱtheȱagreementȱcanȱbeȱmodifiedȱtoȱmakeȱitȱfair,ȱ(d)ȱ
allȱofȱtheseȱ
18.ȱ_____ȱ
ȱ19.ȱProfessionalsȱsuchȱasȱphysicians,ȱteachers,ȱlawyers,ȱandȱ
pharmacistsȱmustȱhaveȱ(a)ȱaȱfederalȱlicense,ȱ(b)ȱaȱcompetencyȱ
license,ȱ(c)ȱaȱrevenueȱlicense,ȱ(d)ȱallȱofȱtheseȱ
19.ȱ_____ȱ
ȱ20.ȱTheȱpracticeȱofȱcompetitorsȱdividingȱmarketsȱbetweenȱthemselvesȱisȱ
knownȱasȱ(a)ȱbidȱrigging,ȱ(b)ȱagreementsȱnotȱtoȱcomplete,ȱ(c)ȱpriceȱ
fixing,ȱ(d)ȱallocationȱofȱmarketsȱ
20.ȱ_____ȱ
Chapter 10 Legal Purpose and Proper Form 2-83
2-84 Chapter 10 Legal Purpose and Proper Form
SECTION III—APPLY LEGAL PRACTICES
21.ȱBonnie’sȱparentsȱpromisedȱtoȱpayȱforȱherȱflightȱhomeȱtoȱattendȱtheȱfuneralȱofȱherȱ
argumentȱandȱherȱparentsȱorderedȱherȱoutȱofȱtheȱhouseȱandȱrefusedȱtoȱpayȱforȱ
herȱticket.ȱWasȱthereȱaȱvalidȱagreement?ȱWhatȱaboutȱaȱprimaryȱpromise?ȱ
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22.ȱGeorgeȱwasȱdoingȱsomeȱextensiveȱlandscapingȱandȱneededȱaboutȱthreeȱacresȱofȱ
Pete’sȱpropertyȱtoȱcompletelyȱfinishȱtheȱproject.ȱPeteȱagreedȱtoȱsellȱGeorgeȱthatȱ
propertyȱwasȱstillȱhis.ȱCanȱGeorgeȱgetȱtitleȱtoȱtheȱlandȱinȱquestion?ȱIfȱheȱdoesȱnotȱ
getȱtitle,ȱcanȱheȱrecoverȱhisȱexpensesȱforȱtheȱworkȱheȱhasȱdoneȱonȱitȱorȱwillȱheȱ
haveȱtoȱpayȱdamagesȱforȱalteringȱit?ȱ
ANSWERS
Lessonȱ10—1ȱ
Quiz
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16.ȱAȱcourtȱmayȱfindȱtheȱcontractȱunconscionableȱifȱSallyȱcanȱproveȱasȱgrosslyȱunfairȱ
theȱtermȱstatingȱthatȱtheȱhurricaneȱdamageȱwillȱnotȱbeȱcoveredȱbyȱthisȱpolicyȱ
Practice Activity
1.ȱNo,ȱMillerȱwon’tȱbeȱableȱtoȱrecoverȱfromȱRadikopf.ȱTheȱIrishȱSweepstakesȱisȱ
gambling,ȱandȱinȱtheirȱstate,ȱgamblingȱhadȱbeenȱdeemedȱtoȱbeȱagainstȱpublicȱ
ȱ
2.ȱNo,ȱGomezȱwillȱnotȱbeȱliableȱforȱbreachȱofȱtheȱrestrictiveȱcovenant.ȱInȱorderȱtoȱbeȱ
effective,ȱtheȱrestrictiveȱcovenantȱmust,ȱamongȱotherȱthings,ȱlimitȱtheȱ
geographicalȱareaȱtoȱwhichȱitȱapplies.ȱItȱisȱnotȱtheȱintentȱofȱtheseȱlawsȱtoȱprohibitȱ
Chapter 10 Legal Purpose and Proper Form
2-86
Reteach
8.ȱblueȬskyȱ
Enrichment Activity
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Lessonȱ10—2ȱ
Quiz
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15.ȱMr.ȱTekavec’sȱpromiseȱisȱaȱcollateralȱone.ȱThisȱpromiseȱdoesȱnotȱfallȱunderȱtheȱ
16.ȱThisȱcontractȱisȱwithinȱtheȱStatuteȱofȱFraudsȱbecauseȱitȱinvolvesȱmoreȱthanȱ$500.ȱ
17.ȱNo.ȱTheȱparolȱevidenceȱruleȱwillȱprohibitȱintroductionȱofȱtheȱoralȱstatementȱ
Chapter 10 Legal Purpose and Proper Form 2-87
Practice Activity
1.ȱNo,ȱtheȱStatuteȱofȱFraudsȱdefenseȱwillȱnotȱwork.ȱTheȱcourtȱfoundȱthatȱunderȱ
normalȱcircumstancesȱaȱsuretyȱagreementȱisȱrequiredȱtoȱbeȱinȱwriting.ȱHowever,ȱ
2.ȱYes,ȱCohodasȱisȱcorrect.ȱTheȱletterȱisȱinsufficientȱtoȱmeetȱtheȱStatuteȱofȱFraudsȱ
requirementsȱforȱaȱwritingȱevidencingȱaȱsaleȱofȱland.ȱWhenȱitȱcomesȱtoȱmattersȱ
ofȱland,ȱStatuteȱofȱFraudsȱrequirementsȱareȱaȱbitȱmoreȱstrict,ȱsinceȱlandȱisȱsuchȱaȱ
Reteach
6.ȱStatuteȱofȱFraudsȱ
Enrichment Activity
ANSWERS TO TEST QUESTIONS
ȱ
SECTION I
10.ȱTȱ
SECTION II
11.ȱcȱ
SECTION III
22.ȱNo.ȱPete’sȱsilenceȱduringȱtheȱexecutionȱofȱtheȱoralȱagreementȱimpliesȱacceptance.ȱ
