Exam 10: Capacity and Legality: The Final Elements

Carl is tall and looks like he is 21 years old. Carl lies about his age to purchase a home entertainment system for $1,000. In most states, Carl may disaffirm his purchase.

Melody agrees to "sell" title of all of her assets to her cousin, Erin, for $1.00. The reason Melody sold her possessions was to hide them from creditors. The transfer of assets is a valid exercise of Melody's ownership rights.

Which of the following is a rule recognized by the Restatement of Contracts?

Under the law, capacity is considered a rebuttable presumption.

If a minor makes a contract for necessaries, he or she will be liable for the fair value of those necessaries.

Susan, aged 16, owns a rare violin. Eric knows Susan is 16 and contracts with Susan that she will sell him the violin for $1,000 with delivery to take place when Susan is an adult. When Susan seeks to disaffirm this contract, Erin asserts that since delivery is to occur after Susan becomes an adult, she may not disaffirm. Analyze the case.

Suds, Inc., a local self-service laundry, has a large sign on the inside wall reading: "NOT RESPONSIBLE FOR ANY DAMAGE TO OR LOSS OF CLOTHING." Georgia puts her damp clothes in a drier and within three minutes, the clothes are burning due to an excessively hot drier. Suds had failed to perform maintenance on the drier according to the manufacturer's instructions. Discuss in detail Georgia's ability to recover from Suds for her burnt clothing.

Irene buys Shawn's second hand furniture, and they sign a contract on a Sunday. However, the contract mentions that Irene will collect the furniture on Tuesday and will pay the consideration to Shawn at that time. Analyze the legality of the contract, considering that the state where Irene and Shawn live is not very restrictive about prohibiting all business activity on Sundays.

A person's contractual obligations may be voidable if that person suffers from a mental impairment that prevents him or her from acting in a reasonable manner.

After betting $4 million on the outcome of a professional baseball game, Jake wants to make sure that he does not lose his money. He enters an agreement with a team's starting pitcher. The pitcher agrees to throw "fat" home run balls to the other team's batters in exchange for $75,000 from Jake. The pitcher gives up 10 home runs in the first three innings and his team loses the game. Jake refuses to pay him the $75,000 they agreed upon in the contract. If the pitcher sues Jake for breach of contract, which of the following is most likely to be the court's ruling?

The willingness of an emancipated minor to abide by contractual obligations is:

Nondisclosure agreements are usually needed to protect trade secrets.

Gail buys a car at the age of 17 and makes regular monthly payments until six months after her 18^th birthday, when the car is totaled in a wreck. Gail wants to disaffirm the car purchase. The age of adulthood in Gail's state is 18. Discuss.

Reed needed expensive medical treatment for the injuries he suffered in a fire that ravaged his home. Lacking medical insurance and unable to obtain a bank loan, Reed turned to Lance, a local person known for his gambling prowess. Lance offered Reed $15,000 if Reed would repay him $23,000 in 36 monthly installments of $521 each. According to the laws in Reed's state, the maximum amount of annual interest that can be charged on loans is 20%. Explain whether Lancet's loan was legal.

Assume a minor enters a contract and misrepresents his age and later defrauds the other party. In some states, the other party can sue the minor under tort law, rather than contract law.

Ron, aged 20 years and 4 months, purchases a car from Slim's Auto Sales for $2,000. However, Ron returns the car to Slim Auto Sales telling them he does not feel this is the right car for him and that he wants his money back. At the time of disaffirmance, Ron was 21, the age at which he is considered an adult in his jurisdiction. Will this disaffirmance be enforceable in the court of law?

When both parties to an illegal agreement are equally wrong in the knowledge of the operation and effect of their contract, they have formed a(n) ____________ contract.

All lawn maintenance businesses must pay the state a $200 annual license fee with no other legal regulations. ABC Yards, Inc. fails to pay the license fee. Which of the following is true in case ABC Yards has failed to acquire a license because of the failure to pay the $200?

A criminal statute that is obscure may be struck down by the court as void for vagueness.

A minor may not disaffirm a contract to sell land after becoming an adult.