978-0538496902 Chapter 10

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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

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

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

2-72 Chapter 10 Legal Purpose and Proper Form

LegalȱApplicationȱ

15.ȱSeanȱsawȱhisȱfriendȱTylerȱstealȱanȱexpensiveȱjacketȱfromȱaȱclothingȱstore.ȱSeveralȱ

weeksȱlater,ȱSeanȱthreatenedȱtoȱtellȱtheȱpoliceȱaboutȱtheȱtheftȱifȱTylerȱwouldȱnotȱ

giveȱhimȱ$60ȱtoȱbuyȱaȱticketȱtoȱaȱprofessionalȱfootballȱgame.ȱIsȱthisȱaȱvalidȱ

agreement?ȱWhyȱorȱwhyȱnot?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

1.ȱMillerȱandȱRadikopfȱhadȱanȱagreementȱtoȱsellȱIrishȱSweepstakeȱtickets.ȱInȱ

exchangeȱforȱsellingȱtheȱtickets,ȱtheyȱreceivedȱtwoȱfreeȱticketsȱforȱeveryȱ20ȱthatȱ

agreementȱwasȱunenforceable.ȱMillerȱcounteredȱthatȱthereȱwasȱnothingȱillegalȱ

aboutȱreceivingȱtheȱwinningsȱofȱaȱlottery.ȱWillȱMillerȱbeȱableȱtoȱgetȱhisȱshareȱofȱ

theȱmoneyȱfromȱRadikopf?ȱExplain.ȱ[Millerȱv.ȱRadikopf,ȱ214ȱN.W.ȱ2dȱ897ȱ(Mich.ȱ

1974)]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

1.ȱWhatȱtypesȱofȱgamblingȱareȱpermittedȱunderȱregulatedȱconditionsȱinȱyourȱstate?ȱ

PariȬmutuelȱbetting?ȱStateȬrunȱlotteries?ȱBingo?ȱ

2.ȱWhatȱisȱtheȱpenaltyȱinȱyourȱstateȱforȱaȱlenderȱwhoȱchargesȱmoreȱthanȱtheȱ

specifiedȱmaximumȱrateȱofȱinterest?ȱWhatȱisȱtheȱmaximumȱinterestȱrateȱinȱyourȱ

state?ȱ

3.ȱWhatȱisȱtheȱlegalȱrateȱofȱinterestȱinȱyourȱstate?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.

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.

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

16.ȱLeȱNguyenȱorallyȱagreedȱwithȱaȱlocalȱlawnȱequipmentȱdealerȱtoȱpayȱ$750ȱforȱaȱ

newȱridingȱlawnmower.ȱWhenȱtheȱlawnmowerȱwasȱdelivered,ȱLeȱpaidȱtheȱfullȱ

$750.ȱIsȱthisȱcontractȱwithinȱtheȱStatuteȱofȱFrauds?ȱCouldȱLeȱdecideȱtoȱwithdrawȱ

fromȱthisȱagreementȱbecauseȱheȱdidȱnotȱsignȱaȱwrittenȱcontract?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

1.ȱPineȱTreeȱElectricȱCompanyȱisȱanȱelectricalȱcontractorȱwhoȱforȱyearsȱhadȱ

purchasedȱitsȱelectricalȱsuppliesȱfromȱtheȱGraybarȱElectricȱCompany,ȱanȱ

equipmentȱandȱpartsȱsupplier.ȱPineȱTreeȱranȱintoȱfinancialȱdifficulties,ȱandȱ

Graybarȱrefusedȱtoȱextendȱtoȱthemȱanyȱadditionalȱcreditȱtoȱpurchaseȱmoreȱ

GraybarȱthenȱdeliveredȱtheȱpartȱtoȱPineȱTree,ȱbutȱPineȱTreeȱdidȱnotȱpayȱforȱitȱ

andȱsubsequentlyȱdeclaredȱbankruptcy.ȱGraybarȱsuedȱSawyer,ȱbutȱSawyerȱ

raisedȱtheȱStatuteȱofȱFraudsȱasȱaȱdefense.ȱWillȱitȱwork?ȱExplain.ȱ[GraybarȱElectricȱ

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

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

1.ȱTheȱmostȱdemandingȱandȱcommonȱcontentȱstandardȱusedȱbyȱstatesȱisȱthatȱtheȱ

writingȱmustȱcontainȱallȱtheȱessentialȱtermsȱtoȱcreateȱaȱvalidȱoffer.ȱTheseȱtermsȱ

usuallyȱincludeȱnamesȱofȱtheȱparties,ȱaȱdescriptionȱofȱtheȱsubjectȱmatter,ȱprice,ȱ

quantity,ȱotherȱessentialȱterms,ȱandȱsignature.ȱDoesȱyourȱcontractȱforȱrealȱestate,ȱ

property,ȱorȱservicesȱcontainȱallȱofȱthisȱinformation?ȱ

2.ȱIfȱyourȱcontractȱcontainsȱ“otherȱessentialȱterms,”ȱwhatȱareȱthey?ȱ(examples:ȱtimeȱ

orȱmethodȱofȱdelivery,ȱtermsȱofȱpayment,ȱmethodsȱofȱfinancing,ȱdateȱforȱtransferȱ

ofȱpossession,ȱaȱlegalȱdescriptionȱifȱtheȱcontractȱappliesȱtoȱrealty)ȱ

3.ȱResearchȱtheȱstatuteȱinȱyourȱstateȱregardingȱcontentȱstandardsȱforȱwrittenȱ

contracts.ȱDoȱtheȱstatuteȱstandardsȱdifferȱfromȱtheȱmostȱdemandingȱstandardsȱ

listedȱinȱexerciseȱ1?ȱ

4.ȱUnderȱtheȱUCC,ȱtheȱwritingȱmustȱindicateȱonlyȱtheȱquantityȱofȱgoodsȱandȱthatȱaȱ

contractȱhasȱbeenȱcreatedȱbetweenȱtheȱparties.ȱDoesȱyourȱcontractȱforȱgoodsȱ

followȱtheseȱstandards?ȱ

STUDENT _______________________________________ CLASS _______________________ DATE _________

CHAPTERȱ10ȱTESTȱ

SECTION I—IDENTIFY LEGAL TERMS

Directions:ȱPlaceȱaȱTȱforȱTrueȱorȱanȱFȱforȱFalseȱinȱtheȱAnswersȱcolumnȱtoȱshowȱ

whetherȱeachȱofȱtheȱfollowingȱstatementsȱisȱtrueȱorȱfalse.ȱ

ȱȱ Answersȱ

ȱȱ1.ȱȱ Agreementsȱtoȱcommitȱfeloniesȱareȱnotȱillegal.ȱ1._______ȱ

ȱȱ2.ȱȱ

ȱInȱmostȱstates,ȱlendersȱofȱmoneyȱmayȱnotȱchargeȱmoreȱthanȱaȱ

specifiedȱmaximumȱrateȱofȱinterest.

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

22.ȱGeorgeȱwasȱdoingȱsomeȱextensiveȱlandscapingȱandȱneededȱaboutȱthreeȱacresȱofȱ

Pete’sȱpropertyȱtoȱcompletelyȱfinishȱtheȱproject.ȱPeteȱagreedȱtoȱsellȱGeorgeȱthatȱ

propertyȱwasȱstillȱhis.ȱCanȱGeorgeȱgetȱtitleȱtoȱtheȱlandȱinȱquestion?ȱIfȱheȱdoesȱnotȱ

getȱtitle,ȱcanȱheȱrecoverȱhisȱexpensesȱforȱtheȱworkȱheȱhasȱdoneȱonȱitȱorȱwillȱheȱ

haveȱtoȱpayȱdamagesȱforȱalteringȱit?ȱ

ANSWERS

Lessonȱ10—1ȱ

Quiz

16.ȱAȱcourtȱmayȱfindȱtheȱcontractȱunconscionableȱifȱSallyȱcanȱproveȱasȱgrosslyȱunfairȱ

theȱtermȱstatingȱthatȱtheȱhurricaneȱdamageȱwillȱnotȱbeȱcoveredȱbyȱthisȱpolicyȱ

Practice Activity

1.ȱNo,ȱMillerȱwon’tȱbeȱableȱtoȱrecoverȱfromȱRadikopf.ȱTheȱIrishȱSweepstakesȱisȱ

gambling,ȱandȱinȱtheirȱstate,ȱgamblingȱhadȱbeenȱdeemedȱtoȱbeȱagainstȱpublicȱ

2.ȱNo,ȱGomezȱwillȱnotȱbeȱliableȱforȱbreachȱofȱtheȱrestrictiveȱcovenant.ȱInȱorderȱtoȱbeȱ

effective,ȱtheȱrestrictiveȱcovenantȱmust,ȱamongȱotherȱthings,ȱlimitȱtheȱ

geographicalȱareaȱtoȱwhichȱitȱapplies.ȱItȱisȱnotȱtheȱintentȱofȱtheseȱlawsȱtoȱprohibitȱ

Chapter 10 Legal Purpose and Proper Form

2-86

Reteach

8.ȱblueȬskyȱ

Enrichment Activity

Lessonȱ10—2ȱ

Quiz

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

SECTION I

10.ȱTȱ

SECTION II

11.ȱcȱ

SECTION III

22.ȱNo.ȱPete’sȱsilenceȱduringȱtheȱexecutionȱofȱtheȱoralȱagreementȱimpliesȱacceptance.ȱ