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Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12
“Gambling is the child of avarice, the
brother of iniquity, and the father of
mischief.”
George Washington,
United States President
12
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Wagers
• Investments
• Insurance
 Licensing Statutes
 Usury
These types of contracts will be discussed
further on the next slides.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 A gambling contract is illegal unless it is
specifically authorized by state statute.
 In some cases, wagers have been
disguised as “investments” where the
gambler places a bet on the price of
stock, but never actually buys the stock.
 Someone taking out a policy on the life
of another must have an insurable
interest in that person -- or else it
becomes a “wager” on their life.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12



When a licensing requirement protects the
public, any contract made by an unlicensed
worker is unenforceable.
When a licensing requirement is designed
merely to raise revenue, a contract made by
an unlicensed person is generally enforceable.
Usury laws prohibit charging excess interest
on loans.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12
 Restraint of Trade
 Exculpatory Clauses
 Bailment Cases
 Unconscionable Contracts
 Adhesion Contracts
These types of contracts will be discussed
further on the next slides.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12
 To be valid, an agreement not to compete
must be ancillary to a legitimate bargain.
 Sale of a Business
• When a noncompete agreement is ancillary to the
sale of a business, it is enforceable if reasonable in
time, geographic area, and scope of activity.
 Employment
• A noncompete clause in an employment contract is
enforceable when it protects trade secrets,
confidential information or customer lists developed
over a long period of time.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12
Part of a contract that attempts to release you from
liability for injury to another party.
 Generally enforceable when
• the affected activity is in the public interest,
such as medical care, public transportation, or
some essential service.
 Generally unenforceable when
• it attempts to exclude an intentional tort or
gross negligence.
• the parties have generally unequal bargaining
power.
• it is not clearly written and readily visible.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12

Bailment means giving possession and
control of personal property to another
person.
 The person giving up possession is the
bailor, and the one accepting
possession is the bailee.
12
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 An unconscionable contract is one that
a court refuses to enforce because of
fundamental unfairness.
 The two factors that most often led a
court to find unconscionability were:
• oppression -- meaning that one party used
its superior power to force a contract on the
weaker party; and
• surprise --meaning that the weaker party
did not fully understand the consequences
of its agreement.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12
 Adhesion contracts are standard form
contracts prepared by one party and
given to the other on a “take it or leave
it” basis.
 They are generally enforced when the
two parties are of equal power, but
when the parties are unequal, the
contract may be ruled unconscionable.
12
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.