Chapter 4 - Federal Business Law

Question 1

Sherman Antitrust Act

Answer 1

Sherman Antitrust act of 1890 was the first federal law outlawing practices considered harmful to consumers, such as monopolies.
First step but not robust enough and difficult to enforce.

Question 2

Clayton Antitrust Act

Answer 2

Clayton antitrust act of 1914 was passed to enhance the Sherman Antitrust Act by prohibiting specific anti competitive practices.
Bans mergers and acquisitions as well as price discrimination that lessens competition and creates a monopoly.

Question 3

Illinois Consumer Fraud and Deceptive Business Practices Act

Answer 3

Addresses unethical or bad business practices

Question 4

Affiliated Business Arrangement

Answer 4

is a situation where a person in a position to refer settlement services - or an associate of that person - has either an affiliate relationship with or direct or beneficial ownership interest of more than 1% in a provider of settlement services and who then refers business to that provider

Question 5

Kickback for referrals

Answer 5

Under RESPA - It prohibits giving or accepting a fee, kickback or anything of value in exchange for referrals of settlement service business.

Question 6

RESPA

Answer 6

Real Estate Settlement Procedures Act - Passing in 1974 protects consumers by disclosing actual closing costs in a timely manner.

Question 7

Tie-In Arrangement

Answer 7

Anti Trust Violation
If a real estate broker requires the consumer, as a condition of a transaction, to use or not use a particular service or product.

Question 8

Anti Trust

Answer 8

Anti trust is a business activity that attempts to monopolize, contract or conspire (or any of these things together) in a way that negatively impacts anothers ability to do business.

Question 9

Group Boycotting

Answer 9

Anti Trust Violation
involves a claim that 2 or more real estate firms have agreed to refuse to cooperate, or to cooperate on less favorable terms with a third firm.
Purpose of boycotting is to explicitly or implicitly to eliminate the firm as a competitor

Question 10

Market Allocation

Answer 10

Anti trust violation
Two or more brokers who conspire to divide their customers in any way are guilty of violating antitrust laws against market allocation.
Any restraint on trade is illegal.

Question 11

Price Fixing

Answer 11

Anti trust violation
Means that two or more real estate firms may not agree on the commission rate they will charge.
Can’t mention commission rates among competitor’s
No standard commission rates exist it is always negotiable.