East Mississippi Community College ECON 2123 Chapter 16-LEGALITY AND PUBLIC POLICY TRUE/FALSE 1)An agreement is illegal when either its formation or performance is a crime or a tort, or it is contrary to public policy

East Mississippi Community College

ECON 2123

Chapter 16-LEGALITY AND PUBLIC POLICY

TRUE/FALSE

1)An agreement is illegal when either its formation or performance is a crime or a tort, or it is contrary to public policy.

2. Where a court recognizes an agreement to be illegal, a lawsuit based on that agreement may be dismissed by the court even if neither plaintiff nor defendant raised the issue of illegality.

3. It generally is incorrect to use the phrase "illegal contract" because, if an agreement is illegal, the courts do not recognize it as a contract and the agreement is void.

4. If a contract appears to be legal on its face, it will be enforceable even if it was entered into for an illegal purpose.

5. Even if part of a contract is illegal, the court may enforce a divisible, legal part of the contract.

6. If a contract can be interpreted in two ways, one legal and the other illegal, the court will assume that the legal meaning was intended unless the contrary is clearly indicated.

7. An agreement that calls for the commission of a civil wrong is illegal and void.

8. In every contract there exists an expressed covenant of good faith and fair dealing.

9. A provision in a contract that gives what the court believes is too much of an advantage over a buyer may be held void as unconscionable.

10. Ordinarily, a court will not consider whether a contract is fair or unfair.

11. Companywide standardized form contracts imposed on a “take-it-or-leave it” basis by a party with superior bargaining strength are called contracts of collusion.

12. Unconscionability and fraud are synonymous terms.

13. Unconscionability is determined in the light of the circumstances existing at the time that the contract was made.

14. The social consequences of a contract are important in determining the contract's validity.

15. Courts are quick to invalidate contracts on the ground that they are contrary to public policy because such contracts are so offensive to society.

16. Legislation commonly requires that an installment-sale contract specify the cash price, down payment, finance charges, and insurance costs.

17. An unlicensed doctor can sue a patient for the doctor's fee if the patient in fact recovered because of the doctor's care.

18. An unlicensed insurance broker who cannot personally recover a fee because of the absence of a license can effectively circumvent the statutory requirements by having a friend who is a licensed broker bill for the services and collect the payment for him.

19. To stabilize the industry, manufacturers of the same or similar products may agree that each will market its product in a specified geographic area of the country and will not market its product in the territory assigned to other manufacturers.

20. Agreements not to compete are always void.

21. A noncompetition covenant may be held invalid because of vagueness concerning the duration and geographic area of the restriction.