Exam 14: Contractual Capacity

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Cheryl, age 16, ordered a new dress to wear to the school prom. She has contracted to pay $500 when the dress arrives. Before the dress arrives, Cheryl decides that the dress is too expensive. If she now wishes to cancel the order, Cheryl:

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Question 1

Correct Answer:

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Mary, age 17, sold Mark, age 22, the briefcase she got for graduation. Mark's father liked it and bought it from him. If Mary decides to disaffirm the contract, will Mark's father have to return the briefcase to her?

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Question 2

Correct Answer:

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What are the ways in which a minor may ratify a contract? What are the ways in which a minor may disaffirm a contract? What is the effect of a minor misrepresenting age in order to enter into a contract?

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Question 3

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Ratification may be express, implied from conduct, or may be through the failure to make a timely disaffirmance. Ratification makes the contract binding from the beginning. Ratification, once effected, is final and cannot be withdrawn. The minor can ratify the contract only as a whole, both as to burdens and benefits. A minor's contract is voidable at his option; he thus has the power to avoid liability. He may exercise his power to disaffirm a contract through words or conduct showing an intention not to abide by it. By the prevailing view in this country, the minor who misrepresented his
age may disaffirm the contract. Some states, however, prohibit disaffirmance if a minor misrepresents her age and the adult, in good faith, reasonably relied on the misrepresentation. Other states not following the majority rule either (a) require the minor to restore the other party to the position she occupied before making the
contract, or (b) allow the defrauded party to recover damages against the minor in tort.

A person under guardianship by court order has no contractual capacity.

(True/False)

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Question 4

Persons who lack mental capacity at the time they enter into a contract may avoid liability under the agreement.

(True/False)

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Question 5

Sixteen-year-old Trevor has run out of money while on a trip away from home. Mr. & Mrs. Height provide Trevor with food, a place to sleep, and bus fare home in exchange for Trevor's promise to send them $200 when he gets home. Is Trevor's promise enforceable?

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Question 6

Harold, a minor, decided to trade his 1985 truck on a new, late-model car at the local dealership. One week after driving the new car, Harold decides that he cannot afford the payments. Harold now wishes to disaffirm his purchase and get his old truck back. The dealer informs Harold that the truck has been sold. Can Harold get the old truck back and disaffirm his contract with the dealer? Explain.

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Question 7

Disaffirmance may be express, but it may not be implied.

(True/False)

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Question 8

Michael, a minor, rents a car to attend the senior prom at his high school. He signs an agreement stating that he will not take the car more than 100 miles from the rental agency. At 2:00 a. True a.m., after he has had a few beers, his friends talk him into driving 200 miles to Chicago for the weekend. On the way, the car is involved in a minor traffic accident that damages the vehicle. In most courts, because the tort of negligence is related to the rental contract for the vehicle, Michael has no liability to the rental agency. b. False

(True/False)

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Question 9

A contract by which of the following is void?

(Multiple Choice)

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Question 10

An incompetent person who lacks understanding of a contract and its consequences can avoid it even if the other party had no reason to know of the incompetent's mental condition.

(True/False)

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Question 11

Emancipated minors have no ability to avoid contracts based upon their minority.

(True/False)

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Question 12

Lydia makes a contract to purchase a used car on her seventeenth birthday. Six months later, her ratification of the contract can be effectively implied by her continuing payments.

(True/False)

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Question 13

Gerard, an adult, contracts with Communiserve to purchase, in installments over a period of five years, a very large quantity of services that he will probably never need. Although Gerard understands what he is doing when he enters the contract, he has a mental condition that impairs his ability to act in a reasonable and rational way. Under the Restatement:

(Multiple Choice)

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Question 14

Cheryl is a 17-year-old high school student who was elected homecoming queen and does part-time modeling to earn money for college. She has an important interview with a modeling agency and wants to make a good impression, so she withdraws $5,000 from her savings and buys a designer outfit and a fur coat for the interview. A week later, she returns the coat to the department store and says she would like her money back. The store is reluctant to take the items. What are Cheryl's rights? Explain your answer, citing relevant law.

(Essay)

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Question 15

Ratification makes a contract void from the beginning.

(True/False)

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Question 16

Randy, a minor, buys a new four-wheel drive truck from the Jones Dealership. Randy sells this truck to his cousin, Steve, who is an adult. Steve conveys this vehicle to Arthur Smith. Arthur does not personally know Steve or Randy. Randy may:

(Multiple Choice)

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Question 17

By the majority view, a minor need only return any property he has received from the other party if the minor wishes to disaffirm the contract. He has no duty to return the property in the same condition in which he received it.

(True/False)

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Question 18

Seventeen-year-old Teresa wants to disaffirm her student loan agreements. Most states will not allow her to avoid such contracts.

(True/False)

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Question 19

An intoxicated person must have been so intoxicated as to have been unable to understand the consequences of his actions or have been unable to act in a reasonable manner in order to avoid a contract.

(True/False)

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Question 20

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Exam 14: Contractual Capacity

Cheryl, age 16, ordered a new dress to wear to the school prom. She has contracted to pay $500 when the dress arrives. Before the dress arrives, Cheryl decides that the dress is too expensive. If she now wishes to cancel the order, Cheryl:

Mary, age 17, sold Mark, age 22, the briefcase she got for graduation. Mark's father liked it and bought it from him. If Mary decides to disaffirm the contract, will Mark's father have to return the briefcase to her?

What are the ways in which a minor may ratify a contract? What are the ways in which a minor may disaffirm a contract? What is the effect of a minor misrepresenting age in order to enter into a contract?

A person under guardianship by court order has no contractual capacity.

Persons who lack mental capacity at the time they enter into a contract may avoid liability under the agreement.

Sixteen-year-old Trevor has run out of money while on a trip away from home. Mr. & Mrs. Height provide Trevor with food, a place to sleep, and bus fare home in exchange for Trevor's promise to send them $200 when he gets home. Is Trevor's promise enforceable?

Disaffirmance may be express, but it may not be implied.

A contract by which of the following is void?

An incompetent person who lacks understanding of a contract and its consequences can avoid it even if the other party had no reason to know of the incompetent's mental condition.

Emancipated minors have no ability to avoid contracts based upon their minority.

Lydia makes a contract to purchase a used car on her seventeenth birthday. Six months later, her ratification of the contract can be effectively implied by her continuing payments.

Ratification makes a contract void from the beginning.

Randy, a minor, buys a new four-wheel drive truck from the Jones Dealership. Randy sells this truck to his cousin, Steve, who is an adult. Steve conveys this vehicle to Arthur Smith. Arthur does not personally know Steve or Randy. Randy may:

By the majority view, a minor need only return any property he has received from the other party if the minor wishes to disaffirm the contract. He has no duty to return the property in the same condition in which he received it.

Seventeen-year-old Teresa wants to disaffirm her student loan agreements. Most states will not allow her to avoid such contracts.

An intoxicated person must have been so intoxicated as to have been unable to understand the consequences of his actions or have been unable to act in a reasonable manner in order to avoid a contract.

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