Deck 14: Capacity and Legality

Question 1

Contracts in restraint of trade usually positively affect the public policy that favors competition in the economy.

Answer 1

False

Question 2

It is easy to prove that an intoxicated person's judgment was so severely impaired that he or she could not comprehend the legal consequences of entering into a contract.

Answer 2

False

Question 3

When one party uses fraud to induce another party to enter into an illegal bargain, the second party will be allowed to recover for the performance or its value.

Answer 3

True

Question 4

A minor who enters into a contract for necessaries may disaffirm the contract but remains liable for the reasonable value of the goods.

Question 5

In some states, misrepresentation of age is enough to prevent disaffirmance.

Question 6

All adhesion contracts are unconscionable.

Question 7

If the illegal part of a bargain has not yet been performed, the party rendering performance must fulfill the contract before seeking damages.

Question 8

In certain circumstances, bargains are so oppressive that the courts relieve innocent parties of part or all of their duties.

Question 9

For business purposes, an adult may petition a court to treat minors as adults.

Question 10

If a minor can return only damaged goods, the minor cannot disaffirm the contract and obtain a full refund of the purchase price.

Question 11

In general, an illegal contract is void.

Question 12

A contract entered into by an intoxicated person is never valid.

Question 13

An intoxicated person, after becoming sober, may ratify a contract expressly or impliedly.

Question 14

All states' laws permit minors to disaffirm contracts.

Question 15

In a contract, an exculpatory clause releases a party from liability in the event of monetary or physical injury no matter who is at fault.

Question 16

A person who has been determined by a court to be mentally competent cannot form a legally binding contract with another party.

Question 17

Clothing is a "necessary."

Question 18

A contract with an unlicensed person is enforceable if the person is otherwise of good moral character.

Question 19

In most illegal contracts, both parties are considered to be equally at fault, and neither party can enforce it or recover damages under it.

Question 20

A contract entered into by a minor is voidable at the option of either of the contracting parties.

Question 21

A court adjudicates Jimi mentally incompetent and appoints Krispin to be his guard?ian. Later, without Krispin's knowledge, Jimi signs a contract to sell his lake cabin to Lazar for its real market value. The contract is

A) enforceable if Jimi comprehended the consequences.
B) enforceable if Jimi knew the market value of the farm.
C) enforceable if Lazar has been recorded to be the owner of the cabin.
D) void.

Question 22

Lydia, a minor, charges the cost of a smartphone at a Mobile Devices & Minutes store. Two nights later, Lydia loses the phone at Natural Foods restaurant. She disaf?firms the phone's purchase. Lydia owes Mobile Devices the reasonable value of the phone

A) if it is deemed a necessary.
B) if it is deemed a luxury.
C) if it is deemed unique.
D) under no circumstances.

Question 23

Fact Pattern 14-B1 (Questions B15-B16 apply)
Bay City Mall requires its tenants to sign a lease that includes a clause releasing Metro from liability in the event of monetary or physical injury no matter who is at fault. Coco's Chocolate Creations signs a lease with Bay City that contains the clause.
Refer to Fact pattern 14-B1. This clause is

A) a covenant not to compete.
B) an adhesion contract.
C) an exculpatory clause.
D) an illusory promise.

Question 24

Omni Insurance Company violates a state licensing statute when selling an insur?ance policy to Petra, in whose state Omni is not licensed to sell insurance. As a member of the class of persons protected by the statute, Petra can

A) do nothing with respect to the policy.
B) enforce the policy or recover the amount of the premiums paid.
C) only enforce the policy.
D) only recover the amount of the premiums paid.

Question 25

While a minor, Uri misrepresents his age as twenty-one to purchase a motorbike from Van's Dirt Bikes & Scramblers. Ordinarily, Uri can

A) disaffirm the contract but must return the motorbike.
B) none of the choices.
C) ratify the contract, keep the motorbike, and recover any payments that he made to Van's.
D) reject the contract, keep the motorbike, and recover any payments that he made to Van's.

Question 26

Rosalind, a seventeen-year-old, signs a contract to sell her car to Street Fleet Used Cars. The next day, Rosalind tells Street Fleet that she's decided not to sell the car. Rosalind is liable to Street Fleet for

A) the cost of a car of comparable value.
B) the value of her performance under the contract.
C) the amount of its profit on the deal.
D) nothing.

Question 27

Lou and Mike negotiate a deal to transfer stolen body building equipment for counterfeit currency that Mike will attempt to spend at Now! Discount Mart. This contract is

A) enforceable.
B) void.
C) voidable at the option of Lou or Mike.
D) voidable at the option of Now!

Question 28

Odina signs a covenant not to compete with her employer, Penultimate Sales Corporation. A court decides that the covenant is overly restrictive. Depending on the jurisdiction, the court will likely

A) enforce it as written so as not to undercut the freedom of contract.
B) enforce it but evaluate its effects over time.
C) reform its terms to prevent any undue burden.
D) refuse to enforce it unless Penultimate pays a fine to the court.

Question 29

Geri is a minor. Without her parents' knowledge, she signs a contract to buy an airline ticket to Hawaii for spring break. Geri's parents are liable for

A) the entire price of the ticket.
B) no part of the price of the ticket.
C) up to half of the price of the ticket.
D) up to two-thirds of the price of the ticket.

Question 30

Lucy, a minor, disaffirms a contract for necessaries without returning the goods. To Manny's Food Mart, the seller, Lucy is required to pay

A) nothing.
B) the reasonable value of the goods.
C) the sales price of the goods.
D) the ultimate worth of the goods.

Question 31

Jolie signs a contract with Keaton, an unlicensed physician, to perform a medical procedure. This contract is enforceable by

A) Jolie.
B) Jolie's medical insurance company.
C) Keaton.
D) no one.

Question 32

Stella is fifteen. In most states, for contractual purposes, Stella would be considered a minor until she is

A) sixteen.
B) eighteen.
C) seventeen.
D) twenty-one.

Question 33

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

A) collect the commission if it has not been paid.
B) keep the commission if it has already been paid.
C) foreclose on the property to obtain any unpaid amount.
D) not collect the commission, keep it, or foreclose on the property.

Question 34

Becca is a minor. As a minor, Becca

A) is not usually legally bound by a contract.
B) has the right to avoid liability under a valid contract.
C) has the capacity to enter into a valid contract.
D) all of the choices.

Question 35

Jimenez is an emergency medical technician. Medical personnel such as Jimenez are pro?hibited by state statute from working more than a certain num?ber of consecutive hours. One month, Jimenez works more than the legal limit. Jimenez can recover for

A) the hours up to the statutory maximum but not more.
B) the hours up to the statutory maximum and the extra hours.
C) the hours up to the statutory maximum or the extra hours.
D) nothing.

Question 36

Intoxicated but still capable of comprehending the consequences of her actions, Cricket signs a contract to sell her phone app design to Downloads, Inc. This contract is

A) unenforceable because Cricket was intoxicated.
B) enforceable.
C) unenforceable if Cricket disaffirms it.
D) unenforceable if Downloads disaffirms it.

Question 37

At age seventeen, Daryl enters into a contract to buy a dozen movies from eHD Stream, Inc., an online video service. Soon after reaching the age of ma?jority, Daryl attempts to disaffirm the contract. eHD files a suit against him. The court will most likely consider the contract ratified if it is

A) executed.
B) exculpatory.
C) express or implied.
D) emancipated.

Question 38

Refer to Fact pattern 14-B1. The clause is most likely

A) enforceable as a matter of public policy.
B) enforceable if either party is considered to be a business for essential services.
C) enforceable if the lease also involves residential property.
D) unenforceable.

Question 39

Duffy and Elbert agree to hijack a truck carrying a load of almonds. Duffy later refuses to go through with the crime. Elbert can

A) enforce the agreement.
B) obtain damages from Duffy in the amount of Duffy's probable share of the illegal profits.
C) recover in quasi contract for the loss of his share of the illegal profits.
D) not enforce the agreement or recover damages.

Question 40

Vijay enters into a contract to sell his laptop to Winnie. Winnie takes possession of the laptop as a minor and continues to use it well after reaching the age of majority. Winnie has

A) expressly ratified the contract.
B) impliedly ratified the contract.
C) disaffirmed the contract.
D) none of the choices.

Question 41

Global Airline, Inc., is a commercial passenger airline. Global Airline includes on its tickets a clause stating that the airline is not liable for any injury to, or the death of, any passenger caused by its, or its employees', negligence. A Global Airline flight from Los Angeles to New York crashes into Long Island Sound, resulting in the deaths of all passengers. The ac?cident is found to be due to Global Airline's negligence. Based on the clause on its tickets, can Global Airline avoid liability?

Question 42

Games Galore Corporation hires Haley, a minor, to create new customized game software for certain clients. Haley signs a contract that requires her to work for Games Galore for eighteen months. Before beginning work, however, Haley tells Games Galore that she will not create new software for Games Galore and that she is going to work for Ideal Worldcraft, Inc., a Games Galore competitor. Is Games Galore's contract with Haley en?forceable? Why or why not?