Exam 8: Capacity, Legality, and Enforceability

A deceived person must have a justifiable reason for relying on a misrepresentation.

Brasilia, a real estate broker licensed only in Connecticut, con?cludes a land sale in Delaware. She can

Barb, a real estate agent, is showing John a house. She tells him that this is a house where "his family can live happily ever after." John buys the house, but his wife does not like it. John

Multi Investments, Inc., offers to buy Nano Toy Corporation. On May 1, Nano provides copies of its financial statements for the pre?vious year, showing an inventory of $10 million. On May 15, Nano discovers that the previous year's inventory is overstated by $5 million, but does not inform Multi. On June 1, Multi, relying on the fi?nancial statements, buys Nano. On June 10, the buyer discovers the inven?tory over?statement. Can Multi succeed in a suit against Nano for fraud?

Beth is a minor. She buys a set of sessions with a personal trainer, and a water bottle and some weights from a fitness store. Later, Beth decides that she does not want the water bottle or weights. In most states, Beth

A minor may enter into a contract for the sale of alcoholic beverages if the other contractual party is an adult.

In general, if a contract is illegal, a court will not enforce it.

Wild Rides Theme Park owes money to both RollercoasterRepair, Inc. and Hot Dog Harry. RollercoasterRepair orally agrees to assume Wild Rides's debt to Hot Dog Harry to prevent Hot Dog Harry from filing suit against Wild Rides. This contract is enforceable by

A false statement by an expert to a naive buyer usually will entitle the buyer to rescind or reform a contract.

Kathleen sells Richard a racehorse for $1,000. Both Kathleen and Richard think that the horse is too slow to win any races. Richard then enters the horse in a race, and it wins easily. He enters it in more races, and the horse soon wins more than $1 million. Kathleen tries to rescind the contract to sell the horse, claiming that it was worth more than $1,000. A court will

When a minor disaffirms a contract, he or she cannot keep whatever he or she has received as a result of the contract without paying for it.

A covenant not to compete is never enforceable.