Deck 14: Contractual Capacity

Question 1

In a contract to sell necessaries to a minor, these goods and services are limited to medical care, food, and shelter.

Answer 1

False

Question 2

In general, a minor may only disaffirm a contract after he has reached the age of majority.

Answer 2

False

Question 3

All states agree that a minor who has fraudulently misrepresented her age when entering into a contract has no power to disaffirm the contract.

Answer 3

False

Question 4

Contractual incapacity excuses a minor from an obligation to pay for necessaries.

Question 5

Jessica at the age of 15 entered into a contract to sell five acres of land to her uncle.She may disaffirm this contract at any time before reaching her majority.

Question 6

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.

Question 7

If a person with a mental condition that impairs her ability to act in a reasonable manner enters a contract that is grossly unfair, the contract is voidable.

Question 8

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

Question 9

Natalie, age 17, rented a power washer and while using the machine, she negligently damaged it beyond repair.Under the majority view, the rental company can successfully sue Natalie for damages on a tort theory of negligence since it is well settled that minors are liable for their torts.

Question 10

Everyone is regarded as having contractual capacity unless the law, for public policy reasons, holds that the individual lacks such capacity.

Question 11

If Carrie, age 14, contracted to buy a fur coat by mail, the coat manufacturer would not have to send it since the contract was void.

Question 12

Mel, who is age 17 but looks older than 18, makes a contract to buy a car from Maisie, who is the age of majority.Maisie finds out Mel's age.Maisie may avoid the contract even if Mel did not misrepresent his age.

Question 13

Contracts of a ward may be ratified by his guardian during the period of guardianship.

Question 14

The doctrine of necessaries applies in the same way to minors and mental incompetents.

Question 15

In general, if a minor lies about her age in order to induce the seller to contract with her, she cannot disaffirm that contract.

Question 16

At common law, a minor was a person who was under the age of twenty-one years.

Question 17

Some states prescribe by statute a time period, usually one year, in which a person who reached the age of majority may still disaffirm contracts made while a minor.

Question 18

Seventeen-year-old Teresa wants to disaffirm her student loan agreements.In most states, she may do so.

Question 19

The contracts of a person who is adjudicated insane and placed in care of a guardian are void.

Question 20

Sally goes away to college at 17, lives on her own and pays her own rent and electric bills.If she makes a contract to buy a television set, in most jurisdictions, she may assert her minority status and set aside the contract.

Question 21

A disaffirmance must come either during a minor's minority or within a reasonable time after he reaches majority.

Question 22

If a minor sells property that the buyer then resells to a good faith purchaser for value and the minor then disaffirms the sales contract, under both the traditional view and the UCC, the minor can recover the property from the good faith purchaser for value since the minor has the power of avoidance and both purchasers had only voidable title.

Question 23

The minority of states require that the minor, when effecting a disaffirmance of the contract, pay at least a reasonable amount for the use of the property or the amount by which the property depreciated while in the hands of a minor.

Question 24

Intoxicated persons are liable in quasi-contract for necessaries furnished during their incapacity.

Question 25

A minor can ratify part of a contract and disaffirm another part of it.

Question 26

Courts treat contracts of incompetents and intoxicated persons essentially the same, except they are stricter with intoxicated persons because of the voluntary nature of intoxication.

Question 27

If a person is unable to understand the nature and effect of entering into a contract, he or she can avoid it.

Question 28

Only a minority of courts hold that, upon disaffirmance, a minor must return any property he has received from the other party to the contract.

Question 29

Ratification does not need to be express; it may be implied from conduct.

Question 30

If Marie, a minor, disaffirms the purchase of her new car that she has recently wrecked, in most jurisdictions she need only return the damaged vehicle to validly disaffirm the contract.

Question 31

A mental condition that impairs a person's ability to act in a reasonable manner is one type of mental incompetence.

Question 32

A binding promise or agreement requires that the parties to the agreement have contractual capacity.

Question 33

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

Question 34

Sixteen-year-old Todd's parents provide adequate food, lodging, and clothing for him, but he sees a sweater he wants and purchases it.In all states, the sweater is considered a necessary since it is an item of clothing.

Question 35

Michael is 17 years old and earns extra money by repairing cars.Nathan, who is 21, brings his car to Michael for repairs, and Michael ruins the brake system of the car because of his inexperience.If Nathan sues Michael for negligence in performing the auto repair contract, in most states Michael will have no liability, because the tort of negligence and the auto repair contract are connected.

Question 36

In some states, minors are liable for contracts involving bank accounts and student loans and cannot avoid these contracts even though they can avoid other types of contracts.

Question 37

All furniture, television sets, and appliances purchased by a minor for her apartment would be considered necessaries.

Question 38

Disaffirmance must be express.

Question 39

An automobile will never be considered be a necessary item for a minor.

Question 40

Ratification of a contract, once effected, is final and cannot be withdrawn.

Question 41

Which of the following is least likely to be classified as a necessary for which a minor will be held liable on a contract?

A)A television.
B)School supplies.
C)Clothing.
D)An automobile.

Question 42

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.Which of the following expresses the status of this situation?

A)Randy may recover the vehicle from Mr.Smith.
B)Randy may not recover the vehicle from Mr.Smith.
C)Randy may hold Steve liable in tort.
D)Randy may recover the reasonable value of the vehicle but not the vehicle itself.

Question 43

Robert Briscoe is 17 years old.He lies to Bouyers Auto in order to induce them to sell him a new pickup truck.Bouyers falls for this lie and sells him the pickup.Under the prevailing view, which of the following is correct?

A)Robert may disaffirm and get his money back.
B)Robert may not disaffirm since he lied.
C)Robert may only receive a portion of his money.
D)Robert will receive his money less depreciation.

Question 44

In the Zelnick v.Adams case, the Supreme Court of Virginia found:

A)the trial court correctly granted summary judgment, ruling the contingency fee agreement was not binding because Jonathan was a minor when the contract was executed.
B)the case must be remanded for further proceedings, including the taking of evidence on the issue of the factual determination of necessity under all of the circumstances.
C)when faced with a defense of infancy, a court has an initial duty to determine, as a matter of fact, whether the things supplied to the infant under a contract were in the general class of "necessaries."
D)Both (b) and (c).

Question 45

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?

A)Yes, the briefcase is not a necessary.
B)Yes, if Mark's father still has it.
C)No, her contract was with Mark and he cannot return goods he does not have.
D)No, if Mark's father bought it without knowing that Mary was a minor.

Question 46

The exercise of the power to avoid a contract is known as:

A)ratification.
B)disaffirmance.
C)ab initio.
D)restitution.

Question 47

Under the Uniform Commercial Code, when the minor has sold goods and the buyer has resold them to a good faith purchaser for value:

A)the minor can disaffirm and recover the property.
B)both the purchaser from the minor and the good faith purchaser for value acquire legal title.
C)the good faith purchaser for value acquires valid legal title.
D)the good faith purchaser for value receives a voidable title.

Question 48

Steve purchases a four-wheel drive truck from Belk Auto Sales.Steve is only 17 years of age.He wrecks the vehicle and attempts to disaffirm the contract and have Belk repay him all that he has paid.In the majority of jurisdictions, what would happen?

A)Steve would be out of luck.
B)Steve must have the truck repaired.
C)Steve will receive his money less the depreciation in value of the vehicle.
D)Steve may simply return the vehicle and get his money.

Question 49

Which of the following is untrue regarding the contracts of incompetent persons?

A)An incompetent person is liable for necessaries.
B)Unlike a minor, an incompetent person can never ratify a contract.
C)To avoid a contract, a person need not be permanently incompetent.
D)Under the cognitive ability test, a person is incompetent if he is unable to understand the nature and effect of his act.

Question 50

Percy, age 17, purchased a used mobile home from a mobile home dealer for $20,000.This price, however, is twice the reasonable value of that mobile home.One month later, Percy wishes to disaffirm the contract.If the mobile home is considered a necessary, then:

A)Percy can disaffirm the contract based on the wrongful act of the dealer.
B)Percy can disaffirm the contract because the minor can live in an apartment rather than a mobile home.
C)Percy must keep the mobile home but is only liable for the reasonable value of the mobile home.
D)Percy must keep the mobile home and abide by the original terms of the contract.

Question 51

In which of the following situations would a minor be unable to disaffirm a contract which he had made?

A)Upon restoring the consideration received in a situation involving a fully executed contract.
B)Where real property is involved, upon reaching the age of majority.
C)During the time of his minority or for a reasonable time thereafter.
D)Where the minor wishes to perform part of a contract and disaffirm another part of the same contract.

Question 52

Fay, age 17, ordered a pair of skis on the installment plan.She paid $20 every month until she turned 18, the age of majority.The next day, she sold them to Sharon and disaffirmed the contract.What result?

A)Fay is still liable since she had to disaffirm before her 18th birthday.
B)Fay is still liable because selling the skis amounted to a ratification.
C)Fay is still liable because she used the skis.
D)Fay is not liable because skis are not necessaries.

Question 53

Tim, who is a minor, enters into a contract with Violet, who is an adult.Which of the following is correct?

A)Violet may not disaffirm the contract.
B)Violet may disaffirm the contract at any time.
C)Violet may disaffirm the contract when Tim becomes an adult.
D)Tim may ratify the contract at any time during his minority.

Question 54

Which of the following is untrue regarding the contracts of intoxicated persons?

A)If an intoxicated person is unable to understand the nature and consequences of his act, then the contract is voidable.
B)The effect of intoxication is generally the same as that given to contracts that are voidable because of incompetency.
C)Slight intoxication will destroy one's contractual capacity.
D)To make a contract voidable, a person need not be so drunk that he is totally without reason or understanding.

Question 55

Fourteen-year-old Marsha bought $120 worth of video games and DVDs at a local store, using her own money.Her parents insisted that she return the items and get her money back.Which of the following is true?

A)If there is a conflict, the store's return policy will override Marsha's right of disaffirmation.
B)In most jurisdictions, Marsha may get her money back only if she has not opened or damaged the merchandise in any way.
C)In a majority of jurisdictions, Marsha may get her money back even if she cannot return the merchandise.
D)In most jurisdictions, Marsha may get some of her money back but she must pay the reasonable value of the goods if that differs from the contract price.

Question 56

Anna is 88 years old and under the legal guardianship of her daughter.One day Anna receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy.The contract is:

A)valid.
B)voidable.
C)void.
D)unenforceable.

Question 57

Wanda at age 17 purchased an expensive sound system from Music World.If Wanda wishes to ratify this contract, Wanda:

A)must reach the age of majority and ratify the contract as a whole.
B)may do so by express notification at any time before reaching the age of majority.
C)may at any time keep the stereo but avoid any remaining debt owed on the stereo.
D)may do so at any time by express or implied action before or after reaching the age of majority.

Question 58

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, and she now wishes to cancel the order.Cheryl:

A)must pay $500 for the dress because the dress was specially ordered for Cheryl.
B)must pay $500 for the dress because clothing is classified as a necessary.
C)may disaffirm this executory contract because, while clothing in general is classified as a necessary, a new prom formal would probably not be classified as a necessary.
D)must accept the dress and pay the reasonable value of the dress.

Question 59

Maureen is taking a prescribed medication which makes her drowsy and inattentive.Any contracts she makes:

A)would be voidable if, when she makes them, she is unable to comprehend the subject, nature, and consequences of the contracts.
B)would be void.
C)would be void only if the medication impaired her ability to act in a reasonable and rational way.
D)would be unaffected as long as she took the medication exactly as prescribed by her doctor.

Question 60

Joanne, a minor, sold her laptop computer to Bruce, an adult.Bruce then sold the laptop to Anna, also an adult, who had no knowledge of the fact that the original owner was a minor.Under the Uniform Commercial Code, Joanne may:

A)avoid her contract with Bruce and recover her laptop.
B)not avoid her contract with Bruce and may not recover her laptop.
C)register with the UCC filing department and require that if Anna sells the laptop she must give Joanne the rights of first refusal.
D)None of the above.

Question 61

Discuss the effect of a court's declaring someone incompetent and appointing a guardian.

Question 62

What is the doctrine of liability for a tort connected with a contract?

Question 63

In the First State Bank of Sinai v.Hyland case, the Supreme Court of South Dakota held:

A)Mervin's obligation on a promissory note was void due to his alcohol-related incapacity.
B)Mervin ratified his voidable contract by conduct, making it a fully valid legal obligation.
C)the alcohol intoxication of a party to a contract does not affect the contract's enforceability.
D)Mervin could only use express language to ratify a contract formed while he was incapacitated by alcohol use.

Question 64

In Berg v.Traylor, the court stated that:

A)Craig was not entitled to disaffirm the agreement in question.
B)while no specific language is required to communicate an intent to disaffirm, express notice to the other party is necessary.
C)disaffirmance of an agreement by a minor does not operate to terminate the contractual obligations of the parent who signed the agreement.
D)None of the above.

Question 65

Discuss a minor's duty to a seller upon disaffirmance of a contract for the sale of goods.

Question 66

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

Question 67

The case of In Re The Score Board, Inc.involved the issue of:

A)a minor's liability for misrepresentation of age.
B)whether an incompetent person's contracts are void or voidable.
C)ratification of a contract upon attaining majority.
D)liability for necessaries.

Question 68

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.

Question 69

Trina, while 17, purchases a laptop computer.Discuss the implications of her actions as to whether she can disaffirm the contract of purchase if she: (a) tries to sell the computer one year later; (b) continues to use the computer for eighteen months; or (c) has not yet made all of the payments when she turns 18, but continues to make monthly payments.

Question 70

Donald, a minor, makes a contract with Albert, an adult, to buy a motorcycle.One week later, Donald has his eighteenth birthday and shortly thereafter tells Albert he will pick up the motorcycle the next week.In this case:

A)Donald has expressly ratified the contract.
B)the contract must be renegotiated, because Donald was a minor when it was made.
C)Donald can change his mind and avoid the contract, because it was made when he was a minor.
D)the contract is void ab initio, because Donald was a minor at the time it was made.

Question 71

Discuss the concept of ratification and the ways in which a minor may ratify a contract.Give an example.

Question 72

What are the two tests for mental competency?

Question 73

Harold, a minor, decided to trade his 1985 truck on a new 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.

Question 74

When a minor falsely advises the other party that he is of the age of majority and based upon that misrepresentation, the other party acting in good faith enters into a contract with the minor:

A)the minor has lost his right to disaffirm the contract because of the misrepresentation.
B)the adult party can recover damages from the minor in tort.
C)the minor is required to restore the other party to the position occupied before the making of the contract.
D)There is no uniform rule.States differ, and depending upon the state, any of the above could be correct.

Question 75

Compare the liability of an intoxicated person to that of a person who is mentally ill.How are their situations similar? How are they different with regard to contractual capacity?