Deck 9: Consideration,capacity,and Legality

Question 1

A minor may disaffirm a contract only if the subject matter is illegal.

Answer 1

False

Question 2

A minor may disaffirm a contract only after attaining the age of majority.

Answer 2

False

Question 3

A bargained-for exchange is one of the elements of consideration.

Answer 3

True

Question 4

The doctrine of promissory estoppel requires a clear and definite promise.

Question 5

A promise to do something that one has a prior legal duty to do is not consideration.

Question 6

In contract law,"consideration" refers to the time that a party takes to evaluate a deal.

Question 7

An accord and satisfaction requires that the amount of a debt be certain.

Question 8

In most states,a release requires a signed writing.

Question 9

An illusory promise is a promise that is enforceable without consideration.

Question 10

Unforeseen difficulties that justify a demand for additional compensation include risks ordinarily assumed in business.

Question 11

A release does not require consideration to be legally binding.

Question 12

A covenant not to sue is against public policy.

Question 13

To be legally sufficient,consideration must include something of economic value.

Question 14

For consideration to have "legally sufficient value," it must consist of goods or money.

Question 15

Inadequate consideration may indicate undue influence.

Question 16

Rescission is the substitution of one party to a contract for a third party,who agrees to assume the contractual duties.

Question 17

In contract law,"consideration" refers to the courtesy that one party shows another in negotiating a deal.

Question 18

A promise to pay for an act that has already occurred is enforceable because the event is certain.

Question 19

A covenant not to sue is the substitution of a contractual obligation for a legal action.

Question 20

Normally,a court of law will not question the adequacy of consideration.

Question 21

Parents are ordinarily liable for the contracts made by their minor children,even if the children acted on their own.

Question 22

Adhesion contracts are often held to be contrary to public policy.

Question 23

A covenant not to compete in the sale of an ongoing business is unenforceable.

Question 24

A minor's right to disaffirm a contract terminates sixty days after the contract's date.

Question 25

A person who enters into a contract when he or she is intoxicated can void the contract if the terms are obviously favorable to the other party.

Question 26

Quality Steel Corporation files a suit against Rite Tool Company,claiming that the consideration for their contract is inadequate.The court will most likely not examine the adequacy of the consideration if

A)it is obvious that the consideration is adequate.
B)Rite Tool asserts that there is adequate consideration.
C)something of value passed between the parties.
D)the consideration is worth more than $100.

Question 27

A covenant not to compete is enforceable only if it is necessary to restrain trade.

Question 28

A guardian can enter into legally binding contracts on behalf of a mentally incompetent person.

Question 29

An illegal contract is valid if the parties to it were unaware of the illegality.

Question 30

An exculpatory clause in an employment contract is not enforceable if the clause is against public policy.

Question 31

Contractual capacity refers to the legal ability to enter into a contract.

Question 32

If the purpose of a licensing statute is to protect the public from unlicensed practitioners,a contract with an unlicensed professional is illegal.

Question 33

Fact Pattern 9-2
Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal—a student loan accruing interest at a certain rate and payable beginning on a certain date—was unfair because the consideration for their contract was inadequate.

-Refer to Fact Pattern 9-2.A court is most likely to evaluate the adequacy of consideration if

A)a thing exchanged has no intangible value to one of the parties.
B)something exchanged is not of direct economic or financial value.
C)the items exchanged were of unequal value.
D)there is a gross disparity in the value of the consideration exchanged.

Question 34

A usurious contract involves the purchase and sale of usable goods.

Question 35

A severable contract is unenforceable as a violation of public policy.

Question 36

Fact Pattern 9-2
Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal—a student loan accruing interest at a certain rate and payable beginning on a certain date—was unfair because the consideration for their contract was inadequate.

-Refer to Fact Pattern 9-2."Adequacy" of consideration refers to

A)"how much" consideration is given.
B)legally sufficient value in the eyes of the law.
C)the intangible value to a contracting party of a thing exchanged.
D)the substantiality of the consideration exchanged.

Question 37

If there is a statute that prohibits a certain action,a contract to do it is unenforceable.

Question 38

Fact Pattern 9-1
Dave’s Hobby Town and Eva’s Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave’s store if Eva will not tow the cars of Dave’s customers who park in Eva’s lot.



-Refer to Fact Pattern 9-1.Eva's forbearance from towing is legally sufficient consideration

A)because it is a promise of something of value.
B)only if Dave's customers park in Eva's lot.
C)only if Eva's customers cannot park in her lot because it is full.
D)under no circumstances.

Question 39

Fact Pattern 9-1
Dave’s Hobby Town and Eva’s Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave’s store if Eva will not tow the cars of Dave’s customers who park in Eva’s lot.



-Refer to Fact Pattern 9-1.Dave's discount is legally sufficient consideration

A)because it is a promise of something of value.
B)only if Dave adds a cash rebate.
C)only if Eva uses it.
D)under no circumstances.

Question 40

An adult may avoid any contract with a minor.

Question 41

Mica,a minor,signs a contract to pay Natural Health Club a monthly fee for twenty-four months to use its facilities.Six months later,after reaching the age of majority,Mica continues to use the club.This act is

A)a disaffirmance.
B)an emancipation.
C)a ratification.
D)a restitution.

Question 42

Orin enters into a contract with Natalie.Later,Orin is adjudged mentally incompetent and Moseby is appointed Orin's guardian.Lila,Orin's daughter,attempts to void Orin's contract with Natalie on the ground of Orin's incompetency.The contract is

A)enforceable if Orin does not attempt to disaffirm it.
B)enforceable if Natalie is also incompetent.
C)enforceable if Moseby knew of the contract when he was appointed.
D)void.

Question 43

Webline Retail Sales,Inc. ,promises its salaried employees a bonus at the end of the year if management thinks it is warranted.This promise is

A)enforceable.
B)unenforceable because it is not supported by consideration.
C)unenforceable because the dollar amount is missing.
D)unenforceable because the employees are paid salaries.

Question 44

Windshield Repair Shop (WRS)promises to pay Vincent $1,000 a week to work for WRS.Vincent accepts and quits his job with Ultra Glass.WRS fails to provide a job for Vincent.Vincent has a cause of action based on

A)an illusory promise.
B)a release.
C)past consideration.
D)promissory estoppel.

Question 45

Baked Goods Company agrees to supply Comida Café with all the corn chips that it requires for a year.A sudden demand for ethanol results in a shortage of corn,and the price rises sharply.Baked Goods asks Comida to pay a higher price for the chips.This request is

A)invalid as an attempt at extortion or the so-called holdup game.
B)invalid under the preexisting duty rule.
C)valid as a risk ordinarily assumed in business.
D)valid due to the unforeseen difficulty of the sudden price increase.

Question 46

Cherry and Basil are minors who marry each other.Their minority status may be terminated under the laws of

A)all states.
B)most states.
C)some states.
D)no states.

Question 47

Intoxicated,Clio agrees to sell her restaurant,Diners Café,to Evan for half of its real market value.This deal is most likely void if

A)Clio appeared intoxicated to Evan.
B)Clio disaffirms the contract after becoming sober.
C)Clio was so intoxicated as to have no memory of the deal.
D)Evan fraudulently induced Clio to become intoxicated.

Question 48

A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian.Later,without Inez's knowledge,Huck signs a contract to sell his farm to Kyle for its real market value.The contract is

A)enforceable if Huck comprehended the consequences.
B)enforceable if Huck knew the market value of the farm.
C)enforceable if Huck was the record owner of the farm.
D)void.

Question 49

Todos Ltd.agrees to supply United Steel,Inc. ,with minerals from Venezuela.When the government is unexpectedly overthrown in a revolution,Todos can obtain the goods only at a much higher price.United agrees to pay but later files a suit to recover the difference.The court will most likely rule that

A)a change in government is a risk ordinarily assumed in business.
B)an unforeseen difficulty supported the contract modification.
C)Todos engaged in extortion or the so-called holdup game.
D)Todos had a preexisting duty to supply the goods at the initial price.

Question 50

Fact Pattern 9-2
Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal—a student loan accruing interest at a certain rate and payable beginning on a certain date—was unfair because the consideration for their contract was inadequate.

-Refer to Fact Pattern 9-2.If,as Brad claims,the consideration in this problem is inadequate,it may indicate a lack of

A)accord in Brad's satisfaction with the value of the deal.
B)bargained-for exchange or mutual assent.
C)flexibility on the part of College Credit to accommodate Brad's needs.
D)"heft," "substance," or "weight" in the terms of the contract.

Question 51

Fact Pattern 9-3
Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not to pursue her potential legal claim against Dex. Carmen agrees. Later, Carmen discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury.



-Refer to Fact Pattern 9-3.In Carmen's suit against Dex to recover her repair and medical expenses,Carmen will most likely recover

A)half the amount to pay the costs over what Dex already paid Carmen.
B)nothing.
C)the estimated amount to pay those costs and any other liability.
D)the exact amount to pay those costs and no more.

Question 52

Cray returns a digital music player that he bought from Discount City,which refunds the price.Their exchange involves

A)an emancipation.
B)a ratification.
C)restitution.
D)severability.

Question 53

Boyd is a minor.As a minor,Boyd has the capacity to enter into

A)an invalid contract.
B)an unavoidable contract.
C)a valid contract.
D)no contract.

Question 54

Elmo,a minor,misrepresents his age to be twenty-one and contracts to buy a car from Fine New Autos.Ordinarily,Elmo can disaffirm the contract

A)only if he can prove that Fine New Autos did not know his true age.
B)only if he can prove that Fine New Autos knew his true age.
C)under any circumstances.
D)under no circumstances.

Question 55

Ken relinquishes the right to his son Lee's control,care,custody,and earnings.This act is

A)a disaffirmance.
B)an emancipation.
C)a ratification.
D)restitution.

Question 56

Fay is mentally incompetent but has not been so adjudged by a court.Any contract Fay enters into is

A)voidable if Fay has a lucid interval at the time of contracting.
B)voidable if Fay lacks the capacity to comprehend the consequences.
C)voidable if the other party does not realize that Fay is incompetent.
D)unavoidable.

Question 57

Fact Pattern 9-3
Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not to pursue her potential legal claim against Dex. Carmen agrees. Later, Carmen discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury.



-Refer to Fact Pattern 9-3.The agreement between Dex and Carmen is

A)a covenant not to sue.
B)an accord and satisfaction.
C)a release.
D)promissory estoppel.

Question 58

On Tom's eighteenth birthday,he decides that he no longer wants to keep a car he bought from U-Pick Autos,when he was seventeen.His right to disaffirm the deal will depend on

A)the car's condition when Tom bought it.
B)the car's current condition.
C)whether Tom acts within a reasonable period of time.
D)whether U-Pick has the right to disaffirm.

Question 59

Intoxicated but fully aware of the consequences,Uri agrees to a two-year cell-phone service contract with Wander Talk,Inc. ,at more than the average market price.This contract is

A)enforceable.
B)not enforceable because contracting parties can change their minds.
C)not enforceable because the contract clearly favors Wander Talk.
D)not enforceable because Uri was intoxicated when he agreed to it.

Question 60

Cielo is fifteen.In most states,Cielo would be considered a minor because she is under the age of

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

Question 61

Neil represents himself as a contractor in Ohio,but he is not licensed in that state.A contract between Pam and Neil by which Neil agrees to build a warehouse for Pam in Ohio is

A)enforceable only if Pam does not object after learning of Neil's status.
B)enforceable only if Pam knows that Neil is unlicensed.
C)enforceable only if the outcome is successful.
D)not enforceable.

Question 62

Jock and Kim decide to wager in violation of a state statute on the outcome of a football game.They each deposit money with Iverson,who agrees to pay the winner of the bet.Before the game begins,Kim tells Iverson that she changed her mind about the bet.Kim can recover

A)the amount of her bet and the amount of Jock's bet.
B)the amount of her bet minus Iverson's expenses.
C)the amount of her bet only.
D)nothing.

Question 63

Chris promises Dina $40,000 if she graduates from Eagle College.Dina enrolls in Eagle,attends full-time for four years,and graduates.When Dina asks Chris for $40,000,Chris says,"I don't remember promising you $40,000.But if there was a promise,it's not enforceable,because we didn't bargain for it.And even if there was a promise that would otherwise be enforceable,I revoke it now." Can Dina enforce Chris's "promise"? Why or why not?

Question 64

A contract between Donald and Chloe to lease commercial property contains an exculpatory clause.This clause is

A)enforceable as a matter of public policy.
B)enforceable if either party is in a business important to the public.
C)enforceable if an event occurs to which the clause applies.
D)generally unenforceable.

Question 65

Cross-Country Trucking Company contracts with Baldwin to transport crated goods to a certain destination for $5,000.Cross-Country delivers the crates,but Baldwin does not pay.Cross-Country learns that the crates contained stolen goods.Cross-Country can

A)do nothing with respect to the contract.
B)recover $5,000 from Baldwin.
C)recover the goods but not the $5,000 from Baldwin.
D)recover the goods or the $5,000 from Baldwin.

Question 66

U-Can-Own-It Corporation sells appliances to less educated consumers,including Vi,on installment plans.U-Can-Own-It files a suit against Vi when she stops making payments.Vi claims that the deal is unconscionable.The court will most likely consider

A)the geographic area of the relevant market.
B)the parties' relative bargaining power.
C)the quality of related products in the general market.
D)the relation of this deal to those of other customers.

Question 67

Through fraudulent means,Fred induces Gail to sign a contract to build resort cabins on land that Fred does not own.Gail performs,but Fred does not pay.When Gail learns the truth,she may

A)do nothing with respect to the contract.
B)recover for the performance or its value.
C)recover for the performance only.
D)recover the value of the performance only.

Question 68

Jon agrees to sell his K9 Sports Equipment store to Lacy.As part of the sale,Jon promises never to open a similar,competing store anywhere.Jon's promise is most likely

A)invalid because it is part of a sale of an ongoing business.
B)invalid because of the unreasonable terms of area and time.
C)valid because it is part of a sale of an ongoing business.
D)valid because Jon and Lacy apparently have the capacity to contract.

Question 69

Eli obtains a consumer loan from First State Bank at an interest rate that exceeds the state's maximum.First State has

A)calculated the optimum rate that the market will bear.
B engaged in a restraint of trade.
C)underestimated the risk of the loan's nonpayment.
D)violated the usury laws.

Question 70

Boz runs an illegal gambling business and pays Colin,a police officer,not to interfere.The payments are discovered.Boz and Colin are sent to prison.With respect to the amount of the payments,Boz can recover

A)all of it.
B)none of it.
C)only as much as Colin has not spent.
D)only as much as Colin has spent.

Question 71

Odell owns Payroll Company,a bookkeeping service losing market share to Quik Work,Inc.Odell pays Remy $5,000 to steal a list of Quik's clients,to whom Odell will aggressively market Payroll's services.This deal is

A)enforceable.
B)void.
C)voidable at the option of either party.
D)voidable at the option of the party having less bargaining power.

Question 72

In State X,persons must be at least eighteen years old before they can purchase alcoholic beverages.The state also has passed a law requiring that persons who prepare and serve liquor in the form of drinks in commercial establishments be licensed.The only requirement for obtaining a yearly license is that the person be at least eighteen years old.Moffitt,aged thirty-five,is hired as a bartender for Lone Star Restaurant.Bekins,an alumnus of State X University,brings twenty of his friends to the restaurant to celebrate State X U's football victory.Bekins orders four rounds of drinks,and the bar bill exceeds $200.When Bekins learns that Moffitt has failed to renew his bartender's license,Bekins refuses to pay,claiming the contract is unenforceable.Is Bekins correct? Explain.