Question 1

An adhesion contract is a contract drafted by one party and presented to another on a take-it-or-leave-it basis.

Accepted Answer

A) True 
 B)False

Question 2

Andy knows nothing about horses. Peter, an expert horse trainer, knows that a certain horse has no talent and is not likely to win any competitions. Peter convinces Andy to buy the horse for $500,000 by assuring him that it has great talent. The horse turns out to have no talent and never wins any competitions. Andy can most likely recover damages based on

Accepted Answer

A)  fraud. 
B)  mistake. 
C)  undue influence. 
D)  duress. 
A)  fraud. 
B)  mistake. 
C)  undue influence. 
D)  duress.

Question 3

Eli, a minor, buys an automobile insurance policy from Faithful Insurance Company and pays a $1,000 pre?mi?um. If Eli can disaffirm the contract, he can most likely recover

Accepted Answer

A)  $500. 
B)  $1,000. 
C)  $1,500. 
D)  nothing. 
A)  $500. 
B)  $1,000. 
C)  $1,500. 
D)  nothing.

Question 4

Misrepresentation can occur through conduct.

Accepted Answer

A) True 
 B)False

Question 5

A person who enters into a contract when he or she is intoxicated can void the contract if he or she did not comprehend the legal consequences.

Accepted Answer

A) True 
 B)False

Question 6

In general, minors are personally liable for their contracts.

Accepted Answer

A) True 
 B)False

Question 7

A prenuptial agreement must be in writing to be enforceable.

Accepted Answer

A) True 
 B)False

Question 8

Chris, a minor, signs a contract to purchase alcoholic beverages for Dine & Drink, his parents' restaurant. The contract is

Accepted Answer

A)  valid but may be disaffirmed. 
B)  valid but may not be disaffirmed. 
C)  void as a matter of law. 
D)  void unless it is also signed by Edie, the manager of Dine & Drink. 
A)  valid but may be disaffirmed. 
B)  valid but may not be disaffirmed. 
C)  void as a matter of law. 
D)  void unless it is also signed by Edie, the manager of Dine & Drink.

Question 9

A mistake in value will rarely enable a party to a contract to avoid the contract.

Accepted Answer

A) True 
 B)False

Question 10

Parents who sign a contract made by their minor child with an adult have the same option to disaffirm as the child.

Accepted Answer

A) True 
 B)False

Question 11

An exculpatory clause in an employment contract is not enforceable if it removes the employer's potential liability for injuries to employees.

Accepted Answer

A) True 
 B)False

Question 12

Colleen is intoxicated, but still mentally capable of understanding the consequences of her actions when she signs a contract to sell the rights to her latest phone app design to Addie. The contract is

Accepted Answer

A)  enforceable only if Colleen does not attempt to disaffirm it. 
B)  enforceable even if Colleen attempts to disaffirm it. 
C)  unenforceable if Addie attempts to disaffirm it. 
D)  enforceable only if Addie does not attempt to disaffirm it. 
A)  enforceable only if Colleen does not attempt to disaffirm it. 
B)  enforceable even if Colleen attempts to disaffirm it. 
C)  unenforceable if Addie attempts to disaffirm it. 
D)  enforceable only if Addie does not attempt to disaffirm it.

Question 13

Best Products, Inc., hires Cole to develop and implement an e-commerce strategy for marketing Best's products. Cole signs a contract that in?cludes a clause prohibiting him from competing with Best during and af?ter the employment. Before the strategy is implemented, Cole resigns from Best's employ and opens a business to compete with Best. In Best's suit against Cole, what is the most important factor the court should consider in determining whether Cole should be allowed to compete with Best?

Accepted Answer

In determining whether Cole may compete

Question 14

Dixie May enters into a contract to buy one hundred pounds of pecans from Margaret. The contract must be in writing if the pecans cost

Accepted Answer

A)  $100. 
B)  $150. 
C)  $250. 
D)  $500. 
A)  $100. 
B)  $150. 
C)  $250. 
D)  $500.

Question 15

Katie buys a car when she is seventeen. When she is twenty-five, Katie tries to disaffirm the contract and recover all her car payments. A court will likely find that the contract was

Accepted Answer

A)  ratified and Katie cannot recover her payments. 
B)  not ratified and Katie can recover her payments. 
C)  not a valid contract because Katie was a minor when she entered into it and she can recover her payments. 
D)  ratified, but Katie can still recover her payments because she was a minor when she entered into the contract. 
A)  ratified and Katie cannot recover her payments. 
B)  not ratified and Katie can recover her payments. 
C)  not a valid contract because Katie was a minor when she entered into it and she can recover her payments. 
D)  ratified, but Katie can still recover her payments because she was a minor when she entered into the contract.

Question 16

All forms of gambling are legal in all states.

Accepted Answer

A) True 
 B)False

Question 17

Richard is an adult. He enters into a contract to sell sixteen-year-old Jane his car for $3,000. The next day Richard recieves an offer of $4,000 for his car from twenty-year-old Bill. Richard

Accepted Answer

A)  cannot disaffirm his contract with Jane because he is an adult. 
B)  can disaffirm his contract with Jane because Bill is an adult and contracts with adults take precedence over contracts with minors. 
C)  cannot disaffirm his contract with Jane because she is a minor. 
D)  can disaffirm his contract with Jane because the contract has not been ratified. 
A)  cannot disaffirm his contract with Jane because he is an adult. 
B)  can disaffirm his contract with Jane because Bill is an adult and contracts with adults take precedence over contracts with minors. 
C)  cannot disaffirm his contract with Jane because she is a minor. 
D)  can disaffirm his contract with Jane because the contract has not been ratified.

Question 18

Gaye, a minor, signs a contract to buy a motorcycle from Hi-Valu Cycles by mis?representing her age as twenty-one. Gaye fails to make the pay?ments. Hi-Valu sues. Ordinarily, Gaye can

Accepted Answer

A)  not return the motorcycle nor avoid further liability. 
B)  not return the motorcycle but can avoid further liability. 
C)  return the motorcycle and avoid further liability. 
D)  return the motorcycle but cannot avoid further liability. 
A)  not return the motorcycle nor avoid further liability. 
B)  not return the motorcycle but can avoid further liability. 
C)  return the motorcycle and avoid further liability. 
D)  return the motorcycle but cannot avoid further liability.

Question 19

A unilateral mistake always gives the mistaken party a right to relief from the contract.

Accepted Answer

A) True 
 B)False

Question 20

Beau sells a car to Cody without disclosing that the odometer, which reads 40,000 miles, was disconnected 80,000 miles ago. Beau is liable for

Accepted Answer

A)  nothing. 
B)  fraud. 
C)  mistake. 
D)  undue influence. 
A)  nothing. 
B)  fraud. 
C)  mistake. 
D)  undue influence.

Exam 8: Capacity, Legality, and Enforceability

An adhesion contract is a contract drafted by one party and presented to another on a take-it-or-leave-it basis.

Eli, a minor, buys an automobile insurance policy from Faithful Insurance Company and pays a $1,000 pre?mi?um. If Eli can disaffirm the contract, he can most likely recover

Misrepresentation can occur through conduct.

A person who enters into a contract when he or she is intoxicated can void the contract if he or she did not comprehend the legal consequences.

In general, minors are personally liable for their contracts.

A prenuptial agreement must be in writing to be enforceable.

Chris, a minor, signs a contract to purchase alcoholic beverages for Dine & Drink, his parents' restaurant. The contract is

A mistake in value will rarely enable a party to a contract to avoid the contract.

Parents who sign a contract made by their minor child with an adult have the same option to disaffirm as the child.

An exculpatory clause in an employment contract is not enforceable if it removes the employer's potential liability for injuries to employees.

Colleen is intoxicated, but still mentally capable of understanding the consequences of her actions when she signs a contract to sell the rights to her latest phone app design to Addie. The contract is

Dixie May enters into a contract to buy one hundred pounds of pecans from Margaret. The contract must be in writing if the pecans cost

Katie buys a car when she is seventeen. When she is twenty-five, Katie tries to disaffirm the contract and recover all her car payments. A court will likely find that the contract was

All forms of gambling are legal in all states.

Richard is an adult. He enters into a contract to sell sixteen-year-old Jane his car for $3,000. The next day Richard recieves an offer of $4,000 for his car from twenty-year-old Bill. Richard

Gaye, a minor, signs a contract to buy a motorcycle from Hi-Valu Cycles by mis?representing her age as twenty-one. Gaye fails to make the pay?ments. Hi-Valu sues. Ordinarily, Gaye can

A unilateral mistake always gives the mistaken party a right to relief from the contract.

Beau sells a car to Cody without disclosing that the odometer, which reads 40,000 miles, was disconnected 80,000 miles ago. Beau is liable for

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