Deck 11: Consideration, Capacity, and Legality

Question 1

It is illegal for two parties to mutually agree to rescind a valid contract.

Answer 1

False

Question 2

If a minor disaffirms a contract, he or she must disaffirm the entire contract.

Answer 2

True

Question 3

Forbearance is the act of refraining from doing something that one has a legal right to do.

Answer 3

True

Question 4

In some states, misrepresentation of age by a minor is enough to prohibit disaffirmance.

Question 5

An illusory promise is unenforceable.

Question 6

For a minor to disaffirm a contract, he or she must present the contract to a court.

Question 7

Some states impose a duty on a minor who disaffirms a contract to re?store the adult party to the position he or she held before the con?tract was made.

Question 8

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

Question 9

Adequacy of consideration refers to how much consideration is given.

Question 10

A preexisting duty may arise from a previous contract.

Question 11

The doctrine of promissory estoppel does not apply if there exists a clear and definite promise.

Question 12

In general, courts consider the fairness of a contract when deciding if the contract is binding.

Question 13

Past consideration can be legally sufficient consideration.

Question 14

Consideration is the value given in return for a promise.

Question 15

A covenant not to sue does not always bar further recovery.

Question 16

A release does not require consideration to be legally binding.

Question 17

In general, minors are personally liable for their contracts.

Question 18

Inadequate consideration always indicates undue influence.

Question 19

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

Question 20

A minor has a reasonable time, after the minor reaches the age of major?ity, to disaffirm a contract.

Question 21

Rollo promises to perform, for a price, shoe repair services in affiliation with Togs 'n Things, a clothing store. To support a contract, the consid?eration ex?changed by the parties must be

A) adequately considerate.
B) equally valuable.
C) legally sufficient.
D) wisely priced.

Question 22

A person who enters into a contract when he or she is intoxicated can void the contract under any circumstances.

Question 23

An adhesion contract is a contract drafted by one party and presented to another on a take-it-or-leave-it basis.

Question 24

A covenant not to compete is never enforceable.

Question 25

Sparky offers Teodora $1,000 for her collection of rare coins. She ac?cepts. If a dispute arises, a court would likely

A) enforce the deal after questioning the adequacy of consideration.
B) not question the adequacy of the consideration.
C) rewrite the deal after questioning the adequacy of consideration.
D) set aside the deal after questioning the adequacy of consideration.

Question 26

Jenilee promises to pay Kyle $500 because "he does not have as much money as other people." Jenilee's promise is

A) enforceable because society wants people to keep their promises.
B) enforceable because the redistribution of wealth is a valid social goal.
C) not enforceable because Jenilee could have paid Kyle more.
D) not enforceable because Kyle has not given consideration in return.

Question 27

An exculpatory clause in an employment contract is not enforceable if it removes the employer's potential liability for injuries to employees.

Question 28

All states require that members of certain professions to have licenses.

Question 29

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

Question 30

Gambling involves the distribution of property by chance among persons who have paid valuable consideration for the opportunity to receive it.

Question 31

Kingston promises to pay Melina $500 to install a sump pump in his warehouse. Melina com?pletes the installation. The act of installing the pump

A) imposes a moral obligation on Kingston to pay Melina.
B) imposes no obligation on Kingston unless he is satisfied with the job.
C) is not sufficient consideration because it is not goods or money.
D) is the consideration that creates Kingston's obligation to pay Melina.

Question 32

If a contract is fully performed by all parties to it, then it is pre?sumed to have been ratified.

Question 33

It is legal to charge any interest rate for an ordinary loan.

Question 34

Statutes often set forth rules specifying the terms of contracts.

Question 35

Any contract entered into with an unlicensed party is unenforceable.

Question 36

All forms of gambling are legal in all states.

Question 37

A person who enters into a contract when he or she is intoxicated can void the contract if he or she did not comprehend the legal consequences.

Question 38

Parents who sign a contract made by their minor child with an adult have the same option to disaffirm as the child.

Question 39

Henry promises not to open his restaurant before 10:00 A.M. if Suzy, who owns a bakery next door to him, promises to close her bakery by 4:00 P.M. Henry's consideration is

A) the destruction of a legal relationship.
B) the creation of a legal relationship.
C) a forbearance.
D) an exchange of money.

Question 40

When a statute protects a certain class of people, a member of that class cannot enforce an illegal contract.

Question 41

Katie buys a car when she is seventeen. When she is twenty-five, Katie tries to disaffirm the contract and recover all her car payments. A court will likely find that the contract was

A) ratified and Katie cannot recover her payments.
B) not ratified and Katie can recover her payments.
C) not a valid contract because Katie was a minor when she entered into it and she can recover her payments.
D) ratified, but Katie can still recover her payments because she was a minor when she entered into the contract.

Question 42

The state of Illinois enacts a usury statute. The purpose is to

A) establish a maximum rate of interest that may be charged for loans.
B) establish a minimum rate of interest that may be charged for loans.
C) prevent the misuse of money advanced as loans.
D) prevent the misuse of money paid back on loans.

Question 43

Mariah promises to pay her assistant Nadine $10,000 in consideration of the ser?vices she provided over the years. Mariah never pays Nadine. Mariah is

A) liable for payment of the $10,000.
B) liable only if Nadine still works for Mariah.
C) not liable, because the consideration is in the past.
D) not liable, because the consideration was unintentional.

Question 44

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 45

Genovese Contracting, Inc., agrees to build a warehouse for Hawthorne Distributors. Genovese runs into the types of difficulties that contrac?tors ordinarily confront, and Hawthorne agrees to pay extra compensation to over?come them. Regarding the agreement to pay more, a court would likely

A) enforce it.
B) rescind it.
C) order the parties to renegotiate it.
D) not enforce it.

Question 46

Chris, a minor, signs a contract to purchase alcoholic beverages for Dine & Drink, his parents' restaurant. The contract is

A) valid but may be disaffirmed.
B) valid but may not be disaffirmed.
C) void as a matter of law.
D) void unless it is also signed by Edie, the manager of Dine & Drink.

Question 47

Franzea is injured in an accident caused by Gentry. Gentry agrees to pay Franzea $2,500 if she agrees to release him from further liability. She agrees. If Franzea's damages ultimately exceed $2,500, she can collect

A) the balance from Gentry in a breach-of-contract suit.
B) the balance from Gentry in a tort suit.
C) the balance from Gentry on the ground of unforeseen difficulties.
D) nothing more from Gentry.

Question 48

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

A) can disaffirm the contract and return the water bottle and weights, but keep the training sessions.
B) can only disaffirm the contract if she returns all the goods.
C) cannot disaffirm the contract.
D) can disaffirm the contract and keep all the goods.

Question 49

After an accident with a driver for Onyx Security Company, Paul signs a covenant not to sue Onyx for damages in a tort action if it pays for the damage to his car. This covenant

A) bars recovery only if Onyx pays.
B) is an illusory contract.
C) is barred by the preexisting duty rule.
D) is unconscionable.

Question 50

Colleen is intoxicated, but still mentally capable of understanding the consequences of her actions when she signs a contract to sell the rights to her latest phone app design to Addie. The contract is

A) enforceable only if Colleen does not attempt to disaffirm it.
B) enforceable even if Colleen attempts to disaffirm it.
C) unenforceable if Addie attempts to disaffirm it.
D) enforceable only if Addie does not attempt to disaffirm it.

Question 51

Richard is an adult. He enters into a contract to sell sixteen-year-old Jane his car for $3,000. The next day Richard recieves an offer of $4,000 for his car from twenty-year-old Bill. Richard

A) cannot disaffirm his contract with Jane because he is an adult.
B) can disaffirm his contract with Jane because Bill is an adult and contracts with adults take precedence over contracts with minors.
C) cannot disaffirm his contract with Jane because she is a minor.
D) can disaffirm his contract with Jane because the contract has not been ratified.

Question 52

Dave's uncle tells Dave that if "he feels that Dave deserves it," he will give Dave $1,000 when Dave graduates from college. Dave's uncle's promise is

A) illusory.
B) enforceable.
C) a forbearance.
D) a preexisting duty.

Question 53

At age seventeen, Daryl enters into a contract to buy a dozen movies from eHD TV 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 54

Refer to Fact Pattern 11-1. Sally and Tasty

A) may rescind their entire contract.
B) may rescind their contract to the extent that it is executory.
C) must perform their entire contract.
D) must perform the part of their contract that is executory.

Question 55

Gaye, a minor, signs a contract to buy a motorcycle from Hi-Valu Cycles by mis?representing her age as twenty-one. Gaye fails to make the pay?ments. Hi-Valu sues. Ordinarily, Gaye can

A) not return the motorcycle nor avoid further liability.
B) not return the motorcycle but can avoid further liability.
C) return the motorcycle and avoid further liability.
D) return the motorcycle but cannot avoid further liability.

Question 56

Eli, a minor, buys an automobile insurance policy from Faithful Insurance Company and pays a $1,000 pre?mi?um. If Eli can disaffirm the contract, he can most likely recover

A) $500.
B) $1,000.
C) $1,500.
D) nothing.

Question 57

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

A) liable for the contract.
B) not liable for the contract.
C) liable for up to half the value of the goods in the contract.
D) liable for up to one third of the value of the goods in the contract.

Question 58

Olivia, a minor, signs a contract to buy a bike from Phil, the owner of SuperCycles Bike Store. Olivia's right to disaffirm the contract

A) does not change the fact that Phil is bound by the contract.
B) does not yet exist because Olivia is still a minor.
C) gives Phil, an adult, the right to disaffirm the contract.
D) is not valid because a bike is a "necessary."

Question 59

Ruthie, a minor, charges the cost of an expensive leather jacket at a Girl's Trend store. Two nights later, Ruthie loses the jacket at Minors Only Club. She disaf?firms the jacket's purchase. Ruthie owes Girl's Trend the reasonable value of the jacket

A) if it is deemed a "necessary."
B) if it is deemed unnecessary.
C) under any circumstances.
D) under no circumstances.

Question 60

Refer to Fact Pattern 11-1. The next day, Sally changes her mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sally and Tasty

A) may agree to a new contract, but it cannot include a new price.
B) may agree to a new contract that includes the new price.
C) must perform their original contract.
D) must perform the part of their original contract that is executory.

Question 61

Rolf is an emergency medical technician. Medical personnel such as Rolf are pro?hibited by state statute from working more than a certain num?ber of consecutive hours. One month, Rolf works more than the legal limit. Rolf 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 62

Odina signs a covenant not to compete with her employer, Penultimate Sales Corporation. A court decides that the covenant is overly restrictive. 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 additional consideration.

Question 63

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 64

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 65

Best Products, Inc., hires Cole to develop and implement an e-commerce strategy for marketing Best's products. Cole signs a contract that in?cludes a clause prohibiting him from competing with Best during and af?ter the employment. Before the strategy is implemented, Cole resigns from Best's employ and opens a business to compete with Best. In Best's suit against Cole, what is the most important factor the court should consider in determining whether Cole should be allowed to compete with Best?

Question 66

Jake and John make an illegal contract that unjustly enriches Jake at the expense of John. A court will

A) not be concerned with the unjust enrichment of Jake.
B) force Jake to pay damages to John.
C) reform the contract to prevent undue burdens.
D) enforce the contract as it was originally written.

Question 67

Doug agrees with Elinor to sell methamphetamine to patrons of Elinor's nightclub Garden of Eden for 25 percent of the take. Doug sells the drugs but keeps all of the money. Elinor can

A) recover her share of the money only if she did not aid in the crime.
B) not enforce the deal.
C) recover the total amount of the sales.
D) recover her costs but none of the illegal profit.

Question 68

Frugal Insurance Company sells a policy to Grover Company, in?suring the life of one of Grover's key executives. When the executive dies, Frugal re?fuses to pay, noting that it was not licensed to sell insurance in Grover's state and arguing that thus, its policy cannot be enforced. Grover can recover

A) the amount of the policy from Frugal in full.
B) the amount of the premiums that Grover paid to Frugal.
C) as much of the amount of the policy from Frugal as will cover Grover's costs.
D) nothing.

Question 69

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 re?member promising you $40,000. But if there was a promise, it's not en?forceable, because we didn't bargain for it. And even if there was a prom?ise that would other?wise be enforceable, I revoke it now." Can Dina en?force Chris's "prom?ise"? Why or why not?

Question 70

Duffy and Elbert agree to hijack a truck carrying a load of pecans. If 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) do nothing.

Question 71

SuperBumperCars, Inc. requires all customers to sign a release that contains a clause that releases SuperBumperCars from all liability in the event of an injury occurring during a bumper car ride, no matter who is at fault. This is an example of

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

Question 72

Betty is selling her used clothing shop on Main Street. In the sale agreement, there is a covenant not to compete that prohibits Betty from opening another used clothing shop within 300 miles of the shop she is selling. A court will most likely conclude that this restriction on competition is

A) reasonable.
B) unreasonable and order Betty's successor to stop doing business.
C) unreasonable and may reform the covenant .
D) unreasonable and prohibit both parties from opening used clothing shops.