Question 1

An exculpatory clause is one that prevents the employees of an organization from engaging in a similar business or occupation within a specified geographic area.

Accepted Answer

A) True 
 B)False  False

Question 2

________ set an upper limit on the interest rate that can be charged on certain types of loans.

Accepted Answer

A)  Federal banking reforms 
B)  State usury laws 
C)  Congressional committees 
D)  Chambers of commerce 
A)  Federal banking reforms 
B)  State usury laws 
C)  Congressional committees 
D)  Chambers of commerce B

Question 3

When Sheila is 16 years old (a minor),she enters into a contract to purchase an automobile costing $20,000 from Brian,a competent adult.Brian asks for verification of her age,and Sheila promptly provides him a fake driving license in which her age is misrepresented.Brian delivers ownership of the automobile to Sheila after he receives the payment of $20,000.Subsequently,before Sheila reaches the age of 18 (the age of majority),she is involved in an automobile accident caused by her own negligence.The automobile sustains $7,000 worth of damage in the accident (the automobile is now only worth $13,000).If Sheila disaffirms the contract and returns the damaged vehicle to Brian,he has to pay her ________.

Accepted Answer

A)  $20,000 
B)  $10,000 
C)  $7,000 
D)  $13,000 
A)  $20,000 
B)  $10,000 
C)  $7,000 
D)  $13,000 D

Question 4

A situation in which both parties are equally at fault in an illegal contract is termed "emancipation."

Accepted Answer

A) True 
 B)False

Question 5

A licensing statute enacted to protect the public is called a(n)________ licensing statute.

Accepted Answer

A)  regulatory 
B)  contracting 
C)  revenue-raising 
D)  accounting 
A)  regulatory 
B)  contracting 
C)  revenue-raising 
D)  accounting

Question 6

A situation in which both parties are equally at fault in an illegal contract is termed ________.

Accepted Answer

A)  suo moto 
B)  in pari delicto 
C)  corpus juris 
D)  habeus corpus 
A)  suo moto 
B)  in pari delicto 
C)  corpus juris 
D)  habeus corpus

Question 7

When Sheila is 16 years old (a minor),she enters into a contract to purchase an automobile costing $20,000 from Brian,a competent adult.Brian,who believes that Sheila is an adult,does not ask for verification of her age,and delivers ownership of the automobile to Sheila after he receives her payment of $20,000.Subsequently,before Sheila reaches the age of 18 (the age of majority),she is involved in an automobile accident caused by her own negligence.The automobile sustains $7,000 worth of damage in the accident (the automobile is now only worth $13,000).If Sheila disaffirms the contract and returns the damaged vehicle to Brian,he has to pay her ________.

Accepted Answer

A)  $20,000 
B)  $10,000 
C)  $7,000 
D)  $13,000 
A)  $20,000 
B)  $10,000 
C)  $7,000 
D)  $13,000

Question 8

Which of the following elements has to be proved for a contract to be deemed unconscionable?

Accepted Answer

A)  that the weaker party did not enter the contract under duress 
B)  that the parties had equal bargaining power 
C)  that the dominant party justly used its bargaining power 
D)  that the adhering party had no reasonable alternative 
A)  that the weaker party did not enter the contract under duress 
B)  that the parties had equal bargaining power 
C)  that the dominant party justly used its bargaining power 
D)  that the adhering party had no reasonable alternative

Question 9

In order for a minor to be bound by a contract with an adult after he becomes an adult himself,he must ________.

Accepted Answer

A)  disaffirm the contract before reaching the age of majority 
B)  complete his or her contractual duties of restitution and restoration 
C)  ratify the contract after reaching the age of majority 
D)  place the adult in status quo till reaching the age of maturity 
A)  disaffirm the contract before reaching the age of majority 
B)  complete his or her contractual duties of restitution and restoration 
C)  ratify the contract after reaching the age of majority 
D)  place the adult in status quo till reaching the age of maturity

Question 10

What is the significance of the age of majority in relation to legal contracts?

Accepted Answer

A)  People below the age of majority can directly enter into lawful contracts. 
B)  Mentally incompetent persons need to achieve the age of majority in order to enter into a legal contract. 
C)  It is the age above which people of capacity can enter into a legal contract. 
D)  Minors who have entered the age of majority require his or her parents or guardian's consent to enter into a legal contract with adults. 
A)  People below the age of majority can directly enter into lawful contracts. 
B)  Mentally incompetent persons need to achieve the age of majority in order to enter into a legal contract. 
C)  It is the age above which people of capacity can enter into a legal contract. 
D)  Minors who have entered the age of majority require his or her parents or guardian's consent to enter into a legal contract with adults.

Question 11

An exculpatory clause can be used in situations involving intentional torts.

Accepted Answer

A) True 
 B)False

Question 12

The term ________ refers to a doctrine that states that the courts will refuse to enforce or rescind an unlawful contract and will leave the parties where it finds them.

Accepted Answer

A)  disaffirmance 
B)  exculpatory clause 
C)  emancipation 
D)  effect of illegality 
A)  disaffirmance 
B)  exculpatory clause 
C)  emancipation 
D)  effect of illegality

Question 13

Usury laws set a(n)________.

Accepted Answer

A)  lower limit on annual interest rates 
B)  upper limit on annual interest rates 
C)  lower limit on levels of intoxication 
D)  upper limit on levels of intoxication 
A)  lower limit on annual interest rates 
B)  upper limit on annual interest rates 
C)  lower limit on levels of intoxication 
D)  upper limit on levels of intoxication

Question 14

Preprinted forms whose terms the consumer cannot negotiate,and must sign in order to obtain a product or service are referred to as ________.

Accepted Answer

A)  contracts of adhesion 
B)  quasi-contracts 
C)  contracts in restraint of trade 
D)  voidable contracts 
A)  contracts of adhesion 
B)  quasi-contracts 
C)  contracts in restraint of trade 
D)  voidable contracts

Question 15

Which of the following is an example of a contract contrary to statutes by its very existence?

Accepted Answer

A)  a usurious loan contract 
B)  a contract between two minors 
C)  a contract where one party is insane but not adjudged insane 
D)  a contract of adhesion 
A)  a usurious loan contract 
B)  a contract between two minors 
C)  a contract where one party is insane but not adjudged insane 
D)  a contract of adhesion

Question 16

An innocent party may use the court system to sue for damages or to recover consideration paid under an illegal contract when he or she ________.

Accepted Answer

A)  withdrew from the contract immediately after the illegal act was performed 
B)  was as much at fault as any other party involved in the illegal contract 
C)  was justifiably aware of the law or fact that made the contract illegal 
D)  was induced to enter into an illegal contract by fraud, duress, or undue influence 
A)  withdrew from the contract immediately after the illegal act was performed 
B)  was as much at fault as any other party involved in the illegal contract 
C)  was justifiably aware of the law or fact that made the contract illegal 
D)  was induced to enter into an illegal contract by fraud, duress, or undue influence

Question 17

The act or process of a minor voluntarily leaving home and living apart from his or her parents is referred to as ratification.

Accepted Answer

A) True 
 B)False

Question 18

A(n)________ is a contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust.

Accepted Answer

A)  unconscionable contract 
B)  contract of adhesion 
C)  contract in restraint of trade 
D)  quasi-contract 
A)  unconscionable contract 
B)  contract of adhesion 
C)  contract in restraint of trade 
D)  quasi-contract

Question 19

Usury laws set a lower limit on the interest rate that can be charged on certain types of loans.

Accepted Answer

A) True 
 B)False

Question 20

The act or process of a minor voluntarily leaving home and living apart from his or her parents is referred to as ________.

Accepted Answer

A)  restitution 
B)  emancipation 
C)  restoration 
D)  adhesion 
A)  restitution 
B)  emancipation 
C)  restoration 
D)  adhesion

Exam 11: Capacity and Legality

An exculpatory clause is one that prevents the employees of an organization from engaging in a similar business or occupation within a specified geographic area.

________ set an upper limit on the interest rate that can be charged on certain types of loans.

A situation in which both parties are equally at fault in an illegal contract is termed "emancipation."

A licensing statute enacted to protect the public is called a(n)________ licensing statute.

A situation in which both parties are equally at fault in an illegal contract is termed ________.

Which of the following elements has to be proved for a contract to be deemed unconscionable?

In order for a minor to be bound by a contract with an adult after he becomes an adult himself,he must ________.

What is the significance of the age of majority in relation to legal contracts?

An exculpatory clause can be used in situations involving intentional torts.

The term ________ refers to a doctrine that states that the courts will refuse to enforce or rescind an unlawful contract and will leave the parties where it finds them.

Usury laws set a(n)________.

Preprinted forms whose terms the consumer cannot negotiate,and must sign in order to obtain a product or service are referred to as ________.

Which of the following is an example of a contract contrary to statutes by its very existence?

An innocent party may use the court system to sue for damages or to recover consideration paid under an illegal contract when he or she ________.

The act or process of a minor voluntarily leaving home and living apart from his or her parents is referred to as ratification.

A(n)________ is a contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust.

Usury laws set a lower limit on the interest rate that can be charged on certain types of loans.

The act or process of a minor voluntarily leaving home and living apart from his or her parents is referred to as ________.

Legal Heritage and the Digital Age

Constitutional Law for Business and E-commerce

Courts and Jurisdiction

Judicial Alternative Administrative and E-Dispute Resolution

Intentional Torts and Negligence

Criminal Law and Cyber Crimes

Intellectual Property and Cyber Piracy

Ethics and Social Responsibility of Business

Nature of Traditional and E-Contracts

Agreement and Consideration

Genuineness of Assent and Statute of Frauds

Third-Party Rights and Discharge

Breach of Contract and Remedies

Digital Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Warranties and Product Liability

Creation and Transfer of Negotiable Instruments

Holder in Due Course and Liability of Parties

Banking System and Electronic Financial Transactions

Credit, Real Property Financing, and Secured Transactions

Bankruptcy and Reorganization

Agency law

Small Business, Entrepreneurship, and Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Franchise and Special Forms of Business

Investor Protection, E-Securities, and Wall Street Reform

Antitrust Law and Unfair Trade Practices

Consumer Safety and Environmental Protection

Labor, Worker Protection, and Immigration Laws

Equal Opportunity in Employment

Personal Property, Bailment, and Insurance

Real Property, Landlord-Tenant Law, and Land Use Regulation

Family Law, Wills, and Trusts

Accountants' Duties and Liability

International and World Trade Law

Filters