Question

38. A contract with an illegal principal objective is typically which of the following?
Answers:
A. Affirmed
B. Disaffirmed
C. Void
D. Voidable

39. Exceptions to the general rule that illegal contracts are void include which of the following?
Answers:
A. Divisible contracts
B. Ignorance of special regulation
C. Rescission before any illegal acts
D. All of the above.

40. Which of the following contracts are void?
Answers:
Contracts to commit crimes
Contracts to commit torts
Contracts violating codes of ethics
Both A and B

41. States make exceptions to anti-wagering statutes for which of the following?
Answers:
A. Government-run lotteries
B. Risk-shifting agreements
C. Speculative bargains
D. All of the above.

Answer 1

Answer: C

A contract with an illegal principal objective is typically Void. For example, contract between drug dealers and buyers is void because the terms are illegal. Such an agreement is one that the court will not enforce and neither party can go to court to enforce the contract.

Other option explanations:

The innocent party must choose either to treat the contract as terminated or continuing, where a repudiatory breach of contract occurs. Affirmation can occur only if the innocent party is aware of the breach and of his right to choose between terminating and affirming the contract. If the innocent party affirms a contract, then the affirmation is irrevocable.

Disaffirmed law means to deny or repudiate. This term is often used in contract law to refer to the power of a minor to deny responsibility for a contract.

Unlike a void contract, a Voidable contract is a valid contract which may be either affirmed or rejected at the discretion of one of the parties. One party to the contract is bound at most. The contract becomes void if the unbound party rejects the contract.

The difference between the two is that a void contract cannot be performed under the law, while a voidable contract can still be performed.