Deck 11: Capacity and Legality

Question 1

Even today,a few states limit the ability of married women to enter into certain kinds of contracts.

Answer 1

True
Explanation: Historically,people with limited or no capacity included married women.Today,married women have been removed from the category of those lacking contractual capacity,although in a few states their capacity to enter into certain kinds of contracts is still limited.

Question 2

In most states,parents are liable for the torts of their minor children.

Answer 2

False
Explanation: In most states,parents are not liable for the torts of their minor children; minors are liable for their own personal torts.

Question 3

A written agreement for the sale of illegal subject matter is void under contract law.

Answer 3

True
Explanation: When a contract is overturned due to being contrary to law,the contract is frequently declared void,as if it never existed.

Question 4

Once a person reaches the age of majority,he or she may no longer ratify contracts made as a minor.

Question 5

A contract of an intoxicated person for necessaries will be enforced for the manufacturer's suggested retail price of the necessaries.

Question 6

Today,in all but three states,a minor is defined as a person under the age of 21.

Question 7

Disaffirmance by a minor must occur by his or her twenty-first birthday.

Question 8

In pari delicto means "comparable taste."

Question 9

According to the traditional rule,if Sam,a minor,purchased a television from an electronics shop with a $100 down payment on a one-year credit contract and accidentally damaged it a week after he took it home,he could return the television to the store in its damaged condition and tell the owner he was rescinding the contract.Sam would then be entitled to the return of his $100 down payment and would owe no further obligation to the store.

Question 10

In order to have legal capacity to contract,a person must have at least a high school education.

Question 11

If a person's mental deficiencies have resulted in his being adjudicated insane and a guardian has been appointed for him,any contract he enters into is voidable at his election.

Question 12

A covenant not to compete can be an agreement involving the sale of an ongoing business or noncompetition in employment.

Question 13

No formalities are required to disaffirm a contract; the minor need only manifest an intention to rescind the contract,either by words or by actions.

Question 14

As a general rule,most states follow the Restatement of Contracts,which provides that contracts of an intoxicated person are void.

Question 15

Ratification of a contract may be either express or implied.

Question 16

Sabbath laws are also referred to as red laws,relating to the practice of Catholic cardinals wearing red to signify the blood of Christ.

Question 17

Making regular payments under a contract after reaching the age of majority most likely constitutes implied ratification of the agreement.With implied ratification,however,the contract is still voidable at the election of the former minor,assuming he or she disaffirms the contract within a reasonable time after ratifying it.

Question 18

Emancipation occurs when a minor's parents or legal guardians give up their right to exercise legal control over the minor.

Question 19

All exculpatory clauses are illegal as a matter of law.

Question 20

As a general rule,parents are liable for contracts entered into by their minor children.

Question 21

Which of the following occurs when a minor's parents or legal guardians give up their right to exercise legal control over the minor?

A)Ratification
B)Disaffirmance
C)Emancipation
D)Subrogation
E)Reaffirmance

Question 22

Which of the following occurs when a person reaches the age of majority and states,either orally or in writing,that he or she intends to be bound by the contact entered into as a minor?

A)Implied ratification
B)Express ratification
C)Express novation
D)Implied novation
E)Disaffirmance

Question 23

In order to disaffirm a contract,a minor must ________.

A)petition the court
B)express in writing the intention to disaffirm
C)express an intention by words or actions
D)have his parents confirm in writing their consent to the disaffirmance
E)select a portion of the contract to disaffirm,because a minor cannot disaffirm an entire contract

Question 24

Historically,which of the following people were considered as having limited or no capacity to contract?

A)Minors and single women over 16
B)Insane persons,single women,and minors
C)Single women over 18 and insane persons
D)Minors and insane persons
E)Minors,insane persons,and married women

Question 25

What is the legal significance in most states when a minor misrepresents his or her age?

A)That if a competent party relies on a misrepresentation in good faith,the minor gives up the right to disaffirm the agreement.
B)That the minor must restore the competent party to that party's pre-contract position before obtaining the disaffirmance.
C)That the minor may disaffirm the contract,but the competent party has the right to sue the minor in tort and recover damages for fraud.
D)That misrepresentation does not affect the minor's right to disaffirm the contract.
E)That misrepresentation results in the minor receiving a return of only the monetary consideration (if any)he or she paid to the other contracting party.

Question 26

In most cases,when a minor marries,she or he is considered ________.

A)emancipated
B)subrogated
C)subjugated
D)disaffirmed
E)either emancipated or subrogated,depending on the details of the marital arrangement

Question 27

When must a disaffirmance of a contract based on minority occur?

A)Before or within a reasonable time of the minor's reaching the age of majority
B)Within thirty days of the minor's reaching the age of majority
C)Within sixty days of the minor's reaching the age of majority
D)Within ninety days of the minor's reaching the age of majority
E)Within one year of the minor's reaching the age of majority

Question 28

Which of the following is an element of a legally binding contract?

A)Inquiry
B)Acknowledgement
C)Capacity
D)Knowledge
E)Affirmance

Question 29

A person who has legal ________ to contract is one who has the mental ability to understand his or her rights and obligations under a contract.

A)affirmance
B)capacity
C)ratification
D)construction
E)assent

Question 30

Which of the following is an incorrect statement regarding contracts for necessaries entered into by minors?

A)A minor cannot disaffirm contracts for necessaries.
B)A minor can disaffirm a contract for necessaries,but the minor will still be held liable for the reasonable value of the necessary.
C)A contract for a necessary is a contract that supplies the minor with the basic necessities of life.
D)The purpose of the limitation on the minor's right to disaffirm contracts for necessaries is to ensure that minors are able to obtain the basic necessities of life when their parents will not provide them.
E)Whether something is considered a necessary is related to whether the minor's parents are willing to provide the item in question for the minor.

Question 31

As a general rule,most states will not allow a minor to disaffirm contracts for which of the following?

A)Life insurance
B)Health insurance
C)Psychological counseling
D)Life insurance,health insurance,and psychological counseling
E)Health insurance and psychological counseling,but a minor does have the right to disaffirm a contract for life insurance,because life insurance premiums have a disparate impact (actuarially)on minors

Question 32

Which of the following is true regarding the obligation of a minor on disaffirmance?

A)In all states,a minor must return any consideration in his control,but he or she is entitled to a full refund of any purchase price regardless of the condition of the consideration when returned.
B)In all states,a minor is entitled to a full refund without returning consideration.
C)In all states,a minor must return any consideration in his control,must make restitution,and must pay for any loss in value of the collateral.
D)In all states,a minor only receives a return of one-half of the minor's investment.
E)The obligations of a minor on disaffirmance vary from state to state.

Question 33

Which of the following is a correct statement regarding how Chinese law treats contracts entered into by minors?

A)Because parents are considered responsible for their children's actions,parents are held responsible for any contracts entered into by their minor children.
B)Minors are held responsible only for contracts involving necessities.
C)Minors are not held responsible for any contracts,and contracting with a minor is illegal,subjecting the adult contracting party to a term of imprisonment.
D)Children between ten and eighteen are deemed competent for entering into certain contracts,appropriate to each child's mental state.
E)Children are held responsible only for contracts involving educational expenses.

Question 34

A contract that supplies the minor with the basic needs such as food,clothing,and shelter is called ________.

A)a unilateral contract
B)an implied contract
C)a contract for a necessary
D)a ratification
E)a contract of adhesion

Question 35

Because their contracts are ________,minors have the right,until a reasonable time after reaching the age of majority,to ________,or avoid,their contracts.

A)void; disaffirm
B)void; affirm
C)void; rescind
D)voidable; disaffirm
E)voidable; remand

Question 36

A minor may be given full legal capacity to enter into contracts when he or she becomes ________.

A)emancipated
B)aware
C)sentient
D)employed full-time
E)employed at least part-time

Question 37

What is the purpose of the minor's right to disaffirm contracts?

A)To reduce the judicial caseload for breach of contract actions
B)To allow minors a windfall in terms of keeping property without paying for it
C)To punish adults who contract with minors
D)To give minors superior bargaining power in negotiating contracts
E)To protect the minor from competent parties that might otherwise take advantage of the minor

Question 38

In most states,a minor is someone under the age of ________.

A)21
B)18
C)19
D)23
E)25

Question 39

A person may have either no capacity,and therefore any attempted contract is ________,or limited capacity,resulting in ________ contracts.

A)void; voidable
B)voidable; void
C)conditional; unconditional
D)unconditional; conditional
E)informal; formal

Question 40

Which of the following is some sort of mental or physical defect that prevents a person from being able to enter into a legally binding contract?

A)Undue influence
B)Subjugation
C)Duress
D)Incapacity
E)Insubordination

Question 41

Which of the following is a correct statement regarding the remedy available for an unenforceable agreement?

A)Only compensatory damages are available for an unenforceable agreement.
B)Only consequential damages are available for an unenforceable agreement.
C)No remedy is available for an unenforceable agreement.
D)Compensatory damages and punitive damages are available for an unenforceable agreement,depending on the circumstances of the case.
E)Compensatory damages,consequential damages,and punitive damages are available for an unenforceable agreement,depending on the circumstances of the case.

Question 42

The term ________ refers to the fact that an agreement is so unfair that it is void of conscience.

A)unreasonable
B)outrageous
C)unconscionable
D)unrealistic
E)unbelievable

Question 43

Which of the following refer(s)to laws that limit the types of business activities in which parties may legally engage on Sundays?

A)Sabbath laws only
B)Blue laws only
C)Red laws only
D)Sabbath and blue laws,but not red laws
E)Sabbath laws,blue laws,and red laws

Question 44

How many states regulate professional licenses?

A)50
B)49
C)45
D)30
E)25

Question 45

Bob is hired to do computer sales for an electronics store.He agrees that if he leaves his employment,he will not work for another computer store within twenty-five miles for a period of two years.This type of agreement is called a(n)________.

A)covenant not to compete
B)implied-in-law contract
C)quasi-contract
D)termination agreement
E)public policy agreement

Question 46

When contracts are against generally accepted public policy,these agreements are deemed ________.

A)quasi-contracts
B)voidable
C)implied
D)ratified
E)unenforceable

Question 47

Which of the following involves overly harsh or lopsided substance in an agreement?

A)Substantive unconscionability
B)Adhesion conscionability
C)Procedural unconscionability
D)Exculpatory clauses
E)An in pari delicto agreement

Question 48

Which of the following is the maximum interest rate permitted by law?

A)20%.
B)15%.
C)12%.
D)10%.
E)It varies,depending on the state involved.

Question 49

Which of the following is true regarding an agreement to commit a crime or a tort?

A)An agreement to commit a crime is enforceable,but an agreement to commit a tort is unenforceable.
B)An agreement to commit a tort is enforceable,but an agreement to commit a crime is unenforceable.
C)An agreement to commit a crime is unenforceable,and an agreement to commit a tort is unenforceable unless a business tort is involved,in which case the agreement is enforceable as an implied-in-fact contract.
D)An agreement to commit a crime is unenforceable except an agreement to commit a white-collar crime,which is enforceable as an implied-in-law contract; and an agreement to commit a tort is unenforceable unless a business tort is involved,in which case the agreement is enforceable as an implied-in-fact contract.
E)Both an agreement to commit a crime and an agreement to commit a tort are unenforceable.

Question 50

If a licensing statute is intended to protect the public's health,safety,and welfare,an agreement with an unlicensed professional is typically deemed ________.

A)executed
B)enforceable without a fine
C)illegal and unenforceable
D)enforceable,but with a fine imposed on the unlicensed professional
E)usurious but conditionally enforceable,depending on the circumstances of the case

Question 51

Which of the following occurs when a party gives a loan at an interest rate exceeding the legal maximum?

A)An implied-in-law contract
B)Interest prohibition
C)Principal reduction
D)Usury
E)Plenary

Question 52

A(n)________ contract is a contract created by a party to an agreement that is presented to the other party on a take-it-or-leave-it basis.

A)substantively unconscionable
B)adhesion
C)outrageous
D)procedurally unreasonable
E)unreasonable

Question 53

Guardians may be appointed for which of the following individuals?

A)Only those who have been adjudicated insane.
B)Only those who have been adjudicated habitual drunkards.
C)Only those whose judgment has been impaired because of a condition such as Alzheimer's.
D)Those who have been adjudicated insane or those whose judgment has been impaired because of a condition such as Alzheimer's,but not those who have been adjudicated habitual drunkards.
E)Those who have been adjudicated insane,those whose judgment has been impaired because of a condition such as Alzheimer's,and those who have been adjudicated habitual drunkards.

Question 54

A party who claims that he or she could not understand contractual terms because of tiny,hard-to-read print on the back of an agreement and the excessive use of legalese is referring to which of the following?

A)Substantive unconscionability
B)Adhesion conscionability
C)Procedural unconscionability
D)Commercial impracticability
E)An in pari delicto agreement

Question 55

Which of the following is true if a contract is disaffirmed on the basis of intoxication?

A)Each party to the contract must return the other to the condition he or she was in at the time the contract was entered into.
B)Only the intoxicated person must be returned to the condition he or she was in at the time the contract was entered into.
C)Any party other than the intoxicated person must be returned to the condition he or she was in at the time the contract was entered into.
D)So long as the contract was objectively fair,neither party must be returned to the condition he or she was in prior to the time the contract was entered into.
E)So long as the contract was subjectively fair in the opinion of the intoxicated party,neither party must be returned to the condition he or she was in prior to the time the contract was entered into.

Question 56

How many states engage in at least some regulation of gambling?

A)50
B)47
C)40
D)35
E)10

Question 57

A(n)________ occurs when a former minor does not specifically state that he affirms a contract entered into as a minor,but takes some action that is consistent with an intent to ratify the contract.

A)implied ratification
B)express ratification
C)express novation
D)implied novation
E)disaffirmance

Question 58

Which of the following is true regarding the ability of persons suffering from a mental illness to enter into a binding contract?

A)Persons suffering from a mental illness never have capacity to enter into a binding contract.
B)Persons suffering from a mental illness have full capacity to enter into a binding contract,so long as they do not present a danger to themselves or others.
C)Persons suffering from a mental illness have full capacity to enter into a binding contract,so long as they inform the other party that they are either in,or in the process of seeking,professional treatment.
D)Persons suffering from a mental illness may have full,limited,or no legal capacity to enter into a binding contract,depending on the nature and extent of their mental deficiency.
E)Persons who suffer from a mental illness always have full capacity to enter into a binding contract.

Question 59

If a legal contract is formed and the subject of the contract then becomes illegal under a new statute,the contract is ________.

A)discharged
B)enforceable
C)implied-in-law
D)executed
E)executory

Question 60

Which of the following are the two main purposes of professional licensing statutes?

A)To give the government an avenue by which to regulate specific industries and to temper the effectiveness of free enterprise.
B)To protect the public's health,safety,and welfare and to temper the effectiveness of free enterprise.
C)To give the government an avenue by which to regulate specific industries and to tax professionals.
D)To protect the public's health,safety,and welfare and to tax professionals.
E)To give the government an avenue by which to regulate specific industries and to protect the public's health,safety,and welfare.

Question 61

Cheap Motorcycle.Tony,a hateful,disgruntled business law professor,notices that Peter,a student who is past the age of majority,has bought a new motorcycle.Peter has struggled through school,is in his last semester,and needs to pass business law in order to graduate.Tony tells Peter that he would like to see Peter pass,and in the next sentence,Tony says that he wants to buy the motorcycle for $100,a price far below the value of the motorcycle.Peter asks if Tony is serious about the price,and Tony replies,"I have the power here!" Tony proceeds to draw up a contract for the sale of the motorcycle for $100 with lots of fine print by which he can sue Peter and recover any maintenance costs for the next five years.Seeing that he is at an advantage,Tony also throws into the deal that Peter will mow Tony's one-acre yard for $5 all summer long.After Tony tells Peter to either take the contract or leave it,Tony reluctantly signs.Which of the following is true regarding the yard mowing agreement?

A)It is enforceable.
B)It is not enforceable because it is unconscionable.
C)It is not enforceable because a professor and student are involved.
D)It is not enforceable unless it can be proven that Peter is over the age of twenty-five.
E)It is not enforceable unless Tony also signs a binding contract to pass Peter even if he makes terrible grades.

Question 62

Useless Friend.Charles,who is very gullible,is friends with Bobby.Bobby,who cannot be trusted,decides to try to bind Charles to a contract in Bobby's favor.Bobby has Charles sign a contract promising to wash Bobby's car once a week for a month for $80.The contract incorporated by reference terms on the back.The terms on the back were in very small print and required Charles for one year to cook dinner for Bobby,do his laundry,and clean his apartment.Bobby is also very angry with his former girlfriend,Tessa,and decides to start rumors that would constitute the tort of defamation,such as that she has a vile disease,cheated on tests,and stole from friends.Bobby wants to enlist the help of Charles but knows that Charles would be hesitant to assist in his endeavors.One evening,however,Charles drank too much beer and was clearly intoxicated - a fact apparent to Bobby.Bobby had him sign a contract agreeing to defame Tessa for $50.When he sobers up,Charles tells Bobby that he was drunk and that he has no intention of defaming Tessa,who also happens to be Charles's new girlfriend.He also finally takes a look at the contract involving work for Bobby and tells Bobby that the contract is outrageous and that he has no intentions of going through with any of it.Which of the following is true regarding Charles's claim that he had no obligation to defame Tessa?

A)Charles is correct in that he could not be legally obligated to commit defamation.
B)Charles is correct,but only if it can be proven that the defamation would cause Tessa money damages.
C)Charles is correct,but only if it can be proven that the defamation would cause Tessa actual injury.
D)Charles is correct,but only if it can be proven that the defamation is undeserved.
E)Charles is correct,but only if it can be proven that he had a prior relationship with Tessa.

Question 63

Useless Friend.Charles,who is very gullible,is friends with Bobby.Bobby,who cannot be trusted,decides to try to bind Charles to a contract in Bobby's favor.Bobby has Charles sign a contract promising to wash Bobby's car once a week for a month for $80.The contract incorporated by reference terms on the back.The terms on the back were in very small print and required Charles for one year to cook dinner for Bobby,do his laundry,and clean his apartment.Bobby is also very angry with his former girlfriend,Tessa,and decides to start rumors that would constitute the tort of defamation,such as that she has a vile disease,cheated on tests,and stole from friends.Bobby wants to enlist the help of Charles but knows that Charles would be hesitant to assist in his endeavors.One evening,however,Charles drank too much beer and was clearly intoxicated - a fact apparent to Bobby.Bobby had him sign a contract agreeing to defame Tessa for $50.When he sobers up,Charles tells Bobby that he was drunk and that he has no intention of defaming Tessa,who also happens to be Charles' new girlfriend.He also finally takes a look at the contract involving work for Bobby and tells Bobby that the contract is outrageous and that he has no intentions of going through with any of it.Which of the following would be a possible defense to the contract as far as the harsh and lopsided requirements involving chores is concerned?

A)Substantive unconscionability
B)Unclear drafting
C)Procedural unconscionability
D)Outrageous wording
E)Adhesion conscionability

Question 64

Useless Friend.Charles,who is very gullible,is friends with Bobby.Bobby,who cannot be trusted,decides to try to bind Charles to a contract in Bobby's favor.Bobby has Charles sign a contract promising to wash Bobby's car once a week for a month for $80.The contract incorporated by reference terms on the back.The terms on the back were in very small print and required Charles for one year to cook dinner for Bobby,do his laundry,and clean his apartment.Bobby is also very angry with his former girlfriend,Tessa,and decides to start rumors that would constitute the tort of defamation,such as that she has a vile disease,cheated on tests,and stole from friends.Bobby wants to enlist the help of Charles but knows that Charles would be hesitant to assist in his endeavors.One evening,however,Charles drank too much beer and was clearly intoxicated - a fact apparent to Bobby.Bobby had him sign a contract agreeing to defame Tessa for $50.When he sobers up,Charles tells Bobby that he was drunk and that he has no intention of defaming Tessa,who also happens to be Charles's new girlfriend.He also finally takes a look at the contract involving work for Bobby and tells Bobby that the contract is outrageous and that he has no intentions of going through with any of it.Which of the following would be a possible defense to Bobby's contract involving chores based upon the small print on the back of the contract?

A)Substantive unconscionability
B)Unclear drafting
C)Procedural unconscionability
D)Outrageous wording
E)Adhesion conscionability

Question 65

A statement releasing one of the parties to an agreement from all liability,regardless of who is at fault or what the injury suffered is,would be referred to as a(n)________.

A)substantive agreement
B)adhesion agreement
C)in pari delicto agreement
D)exculpatory clause
E)res ipsa loquitur

Question 66

Irresponsible Teen.At age 17,in a state in which the age of majority is 18,Sally purchased a prom dress from Formal Stuff.She wore it to the prom and then attempted to return it to the store claiming that she was a minor and that she was entitled to a refund.The dress had clearly been worn and had a purple stain that Sally claimed was from grape juice.Additionally,a few days before she turned 18,Sally purchased a used car from Dings and Dents used cars.She had a deal whereby she paid $100 per month on the car.She drove the car and made payments for fourteen months after she turned 18.Then,she returned the car to Dings and Dents and told them that she wanted all her money back.Dings and Dents claimed the car was a necessity.Sally and her parents claimed that the parents were ready and willing to provide a car to Sally and that she only purchased the car from Dings and Dents because she liked that particular style and color.When purchases of the dress and car were made,the sellers knew that Sally was under the age of 18.In the dispute between Sally and the owner of Dings and Dents,which of the following is true regarding the defense of Sally and her parents that the car was a necessary?

A)The claim will have no effect because the law does not recognize the concept of necessaries when minors are involved.
B)Social status is always irrelevant in addressing a claim that an item was a necessary.
C)Whether or not parents would buy the item at issue is irrelevant in addressing a claim that an item was a necessary.
D)A minor may not disaffirm a contract for a necessary.
E)Even if a minor is allowed to disaffirm a contract for a necessary,the minor will still be held liable for the reasonable value of the necessary.

Question 67

A(n)________ contract is one requiring complete performance by both parties,even if it appears as if the contract contains multiple parts.

A)adhesion
B)divisible
C)in pari delicto
D)indivisible
E)independent

Question 68

Which of the following was the result in Eric Lucier and Karen A.Haley v.Angela and James Williams,Cambridge Associates,LTD.,and Al Vasys,the case in the textbook involving a home inspection that allegedly failed to reveal a bad roof,in which some defendants moved for partial summary judgment seeking enforcement of a limitation of liability clause contained in the contract at issue?

A)That the limitation of liability clause would be upheld.
B)That the limitation of liability clause would be partially upheld.
C)That the limitation of liability clause would be enforced only if it could be established that the plaintiffs actually read the agreement prior to signing.
D)That the limitation of liability clause would not be enforced because it was usurious.
E)That based on the circumstances involved,the limitation of liability clause was unconscionable and would not be enforced.

Question 69

Beauty Shop Woes.When Janice went to work as a hair stylist in Rick's beauty shop,she entered into an agreement with Rick whereby if she left,she would not work for another beauty shop within 50 miles for 2 years.Rick trained Janice in several new techniques.After nine months,Janice was offered a great job down the street at a new beauty shop,quit Rick,and had a number of customers follow her down the street to her new job.Rick claimed that she had signed a contract and had no right to go to work at the new shop.Janice disagreed and told Rick that no judge in the country would enforce such an agreement.Janice told Rick that she was more worried about a customer,Treena,who was threatening to sue her because her hair turned green after Janice worked on it.Janice agreed that Treena's hair was damaged.Janice pointed out,however,that she told Treena that odd results could result from a dye attempt,and she required that Treena sign a contract releasing Janice from all liability before she did anything with Treena's hair.Treena,however,sued anyway.Which of the following is true regarding Janice's claim that no judge in the country would enforce such an agreement?

A)She is correct,because such agreements are considered in restraint of trade in every state.
B)She is incorrect,because such agreements are criminally illegal in every state.
C)She is incorrect,because while no court would approve a geographical restriction,some courts recognize time restrictions as being valid.
D)She is incorrect,because all courts approve such agreements so long as it can be shown the employee gained a benefit other than pay from the employment.
E)She is incorrect,because courts across the country vary in regard to the enforceability of such agreements.

Question 70

A(n)________ contract contains multiple parts that can each be performed separately.

A)in pari delicto
B)substantive
C)adhesion
D)executed
E)severable

Question 71

Cheap Motorcycle.Tony,a hateful,disgruntled business law professor,notices that Peter,a student who is past the age of majority,has bought a new motorcycle.Peter has struggled through school,is in his last semester,and needs to pass business law in order to graduate.Tony tells Peter that he would like to see Peter pass,and in the next sentence,Tony says that he wants to buy the motorcycle for $100,a price far below the value of the motorcycle.Peter asks if Tony is serious about the price,and Tony replies,"I have the power here!" Tony proceeds to draw up a contract for the sale of the motorcycle for $100 with lots of fine print by which he can sue Peter and recover any maintenance costs for the next five years.Seeing that he is at an advantage,Tony also throws into the deal that Peter will mow Tony's one-acre yard for $5 all summer long.After Tony tells Peter to either take the contract or leave it,Tony reluctantly signs.Which of the following is an appropriate term for the contract drawn up by Tony?

A)Adhesion
B)Implied-in-law
C)Illusory
D)In pari delicto
E)Exculpatory

Question 72

Beauty Shop Woes.When Janice went to work as a hair stylist in Rick's beauty shop,she entered into an agreement with Rick whereby if she left,she would not work for another beauty shop within 50 miles for 2 years.Rick trained Janice in several new techniques.After nine months,Janice was offered a great job down the street at a new beauty shop,quit Rick,and had a number of customers follow her down the street to her new job.Rick claimed that she had signed a contract and had no right to go to work at the new shop.Janice disagreed and told Rick that no judge in the country would enforce such an agreement.Janice told Rick that she was more worried about a customer,Treena,who was threatening to sue her because her hair turned green after Janice worked on it.Janice agreed that Treena's hair was damaged.Janice pointed out,however,that she told Treena that odd results could result from a dye attempt,and she required that Treena sign a contract releasing Janice from all liability before she did anything with Treena's hair.Treena,however,sued anyway.Which of the following is true regarding the enforceability of the clause providing that Treena not hold Janice liable for any bad results?

A)Such clauses are enforced so long as no duress was applied.
B)Such clauses are never enforced.
C)Such clauses are always enforced so long as the complaining party had the capacity to contract.
D)Such clauses are enforced unless a person sustains a physical injury,and hair damage would not qualify as a physical injury.
E)Such clauses might be enforced if the contract involves private businesses providing nonessential services.

Question 73

Beauty Shop Woes.When Janice went to work as a hair stylist in Rick's beauty shop,she entered into an agreement with Rick whereby if she left,she would not work for another beauty shop within 50 miles for 2 years.Rick trained Janice in several new techniques.After nine months,Janice was offered a great job down the street at a new beauty shop,quit Rick,and had a number of customers follow her down the street to her new job.Rick claimed that she had signed a contract and had no right to go to work at the new shop.Janice disagreed and told Rick that no judge in the country would enforce such an agreement.Janice told Rick that she was more worried about a customer,Treena,who was threatening to sue her because her hair turned green after Janice worked on it.Janice agreed that Treena's hair was damaged.Janice pointed out,however,that she told Treena that odd results could result from a dye attempt,and she required that Treena sign a contract releasing Janice from all liability before she did anything with Treena's hair.Treena,however,sued anyway.What type of clause did Janice have Treena sign to the effect that she would not hold Janice liable for any bad results?

A)Adhesion
B)Exculpatory
C)Procedural
D)Substantive
E)Malfeasance

Question 74

Discuss the views applied in determining the obligations of a minor to the other contracting party on disaffirmance of a contract,which view you support,and why.

Question 75

Irresponsible Teen.At age 17,in a state in which the age of majority is 18,Sally purchased a prom dress from Formal Stuff.She wore it to the prom and then attempted to return it to the store claiming that she was a minor and that she was entitled to a refund.The dress had clearly been worn and had a purple stain that Sally claimed was from grape juice.Additionally,a few days before she turned 18,Sally purchased a used car from Dings and Dents used cars.She had a deal whereby she paid $100 per month on the car.She drove the car and made payments for fourteen months after she turned 18.Then,she returned the car to Dings and Dents and told them that she wanted all her money back.Dings and Dents claimed the car was a necessity.Sally and her parents claimed that the parents were ready and willing to provide a car to Sally and that she only purchased the car from Dings and Dents because she liked that particular style and color.When purchases of the dress and car were made,the sellers knew that Sally was under the age of 18.In the dispute between Sally and the owner of Dings and Dents,which of the following is true regarding any claim that Sally affirmed the contract?

A)So long as,after reaching the age of majority,Sally did not state orally or in writing that she intended to be bound by the contract,then she did not commit the type of express ratification required for her to be bound.
B)Sally may have impliedly ratified the contract by making payments for so long after she turned 18.
C)An implied ratification occurs when parents agree to accept the debt entered into by a minor.
D)If Sally caused any damage whatsoever to the car,she was said to have impliedly ratified the contract.
E)Sally was required to expressly ratify the contract before she could be bound to it so long as no damage was done; however,if she did any damage to the car,as a matter of law,she is said to have expressly ratified it.

Question 76

Irresponsible Teen.At age 17,in a state in which the age of majority is 18,Sally purchased a prom dress from Formal Stuff.She wore it to the prom and then attempted to return it to the store claiming that she was a minor and that she was entitled to a refund.The dress had clearly been worn and had a purple stain that Sally claimed was from grape juice.Additionally,a few days before she turned 18,Sally purchased a used car from Dings and Dents used cars.She had a deal whereby she paid $100 per month on the car.She drove the car and made payments for fourteen months after she turned 18.Then,she returned the car to Dings and Dents and told them that she wanted all her money back.Dings and Dents claimed the car was a necessity.Sally and her parents claimed that the parents were ready and willing to provide a car to Sally and that she only purchased the car from Dings and Dents because she liked that particular style and color.When purchases of the dress and car were made,the sellers knew that Sally was under the age of 18.Which of the following is true regarding Sally's attempt to return the damaged dress?

A)In all states,Sally has the right to keep the dress and get a refund.
B)In all states,Sally must return the dress but she has a right to a full refund.
C)Regardless of what she does with the dress,Sally has no right to a refund in any state.
D)In some states,Sally would have an obligation of restitution to the store.
E)In all states,Sally would have an obligation of restitution to the store.

Question 77

Polly decides to go snow skiing at a ski facility owned by Bill.Bill requires that all the skiers sign an agreement containing a release providing that even if the ski facility is negligent and that negligence results in injury,the skier agrees not to hold the ski facility liable.While on one of the steepest slopes Polly fell,breaking her leg.She complains that she was not adequately warned of conditions on the slope and sues Bill.Polly's position is that the release is not enforceable.What is the release Polly signed called,and what is Bill's best argument?

Question 78

Beauty Shop Woes.When Janice went to work as a hair stylist in Rick's beauty shop,she entered into an agreement with Rick whereby if she left,she would not work for another beauty shop within 50 miles for 2 years.Rick trained Janice in several new techniques.After nine months,Janice was offered a great job down the street at a new beauty shop,quit Rick,and had a number of customers follow her down the street to her new job.Rick claimed that she had signed a contract and had no right to go to work at the new shop.Janice disagreed and told Rick that no judge in the country would enforce such an agreement.Janice told Rick that she was more worried about a customer,Treena,who was threatening to sue her because her hair turned green after Janice worked on it.Janice agreed that Treena's hair was damaged.Janice pointed out,however,that she told Treena that odd results could result from a dye attempt,and she required that Treena sign a contract releasing Janice from all liability before she did anything with Treena's hair.Treena,however,sued anyway.The agreement Rick and Janice entered into is referred to as which of the following?

A)A competition agreement
B)A prohibited competition agreement
C)A covenant not to misappropriate
D)A policy agreement
E)A covenant not to compete

Question 79

Useless Friend.Charles,who is very gullible,is friends with Bobby.Bobby,who cannot be trusted,decides to try to bind Charles to a contract in Bobby's favor.Bobby has Charles sign a contract promising to wash Bobby's car once a week for a month for $80.The contract incorporated by reference terms on the back.The terms on the back were in very small print and required Charles for one year to cook dinner for Bobby,do his laundry,and clean his apartment.Bobby is also very angry with his former girlfriend,Tessa,and decides to start rumors,that would constitute the tort of defamation,such as that she has a vile disease,cheated on tests,and stole from friends.Bobby wants to enlist the help of Charles but knows that Charles would be hesitant to assist in his endeavors.One evening,however,Charles drank too much beer and was clearly intoxicated - a fact apparent to Bobby.Bobby had him sign a contract agreeing to defame Tessa for $50.When he sobers up,Charles tells Bobby that he was drunk and that he has no intention of defaming Tessa,who also happens to be Charles's new girlfriend.He also finally takes a look at the contract involving work for Bobby and tells Bobby that the contract is outrageous and that he has no intentions of going through with any of it.Which of the following is true under the Restatement of Contracts,Section 16,regarding Charles's claim that he should be able to avoid the contract involving Tessa because he was intoxicated?

A)Contracts of an intoxicated person are voidable by the intoxicant if the other party had reason to know that because of the intoxicated person's condition,that person was unable to understand the nature and consequences of the transaction or was unable to act in a reasonable manner in relation to the transaction.
B)Contracts of an intoxicated person are void if the other party had reason to know that because of the intoxicated person's condition,that person was unable to understand the nature and consequences of the transaction or was unable to act in a reasonable manner in relation to the transaction.
C)Contracts of an intoxicated person are enforceable because a person should be bound by his or her actions.
D)Contracts of an intoxicated person are void only if it can be proven that the other party was involved in encouraging the abuse of alcohol by the intoxicated person.
E)Contracts of an intoxicated person are voidable by the intoxicant only if it can be proven that the other party was involved in encouraging the abuse of alcohol by the intoxicated person.

Question 80

Cheap Motorcycle.Tony,a hateful,disgruntled business law professor,notices that Peter,a student who is past the age of majority,has bought a new motorcycle.Peter has struggled through school,is in his last semester,and needs to pass business law in order to graduate.Tony tells Peter that he would like to see Peter pass,and in the next sentence,Tony says that he wants to buy the motorcycle for $100,a price far below the value of the motorcycle.Peter asks if Tony is serious about the price,and Tony replies,"I have the power here!" Tony proceeds to draw up a contract for the sale of the motorcycle for $100 with lots of fine print by which he can sue Peter and recover any maintenance costs for the next five years.Seeing that he is at an advantage,Tony also throws into the deal that Peter will mow Tony's one-acre yard for $5 all summer long.After Tony tells Peter to either take the contract or leave it,Tony reluctantly signs.Which of the following is true if Peter seeks to rescind the contractual agreement to sell the motorcycle?

A)Peter may rescind the agreement based on fraud.
B)Peter may rescind the agreement based on unconscionability.
C)Peter may rescind the agreement based on mistake.
D)Peter may rescind the agreement based on fraud,unconscionability,and mistake.
E)Peter may rescind the agreement based on fraud or unconscionability,but not mistake.