Deck 13: Capacity and Legality

Question 1

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.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

All contracts between adults and minors are void.

Answer 3

False

Question 4

When a minor disaffirms a contract, he or she can keep whatever prop?erty is in his or her possession as a result of the contract.

Question 5

A minor may avoid any contract with an adult.

Question 6

When both parties to a contract are minors, neither of them may disaf?firm the contract.

Question 7

Parents are required by law to provide neces?saries for their minor children.

Question 8

Contractual capacity refers to the legal ability to disaffirm a contract.

Question 9

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

Question 10

Parents are ordinarily liable for the contracts made by their minor chil?dren, whether or not the children acted on their own.

Question 11

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 12

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

Question 13

A minor who affirmatively misrepresents himself or herself to be an adult will not be able to disaffirm a contract in most states.

Question 14

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

Question 15

A person who enters into a contract when he or she is intoxicated can void the contract only if the intoxication was involuntary.

Question 16

The age of majority in most states is eighteen years.

Question 17

A minor may disaffirm a contract for necessaries and thereby avoid li?abil?ity for the reasonable value of the goods.

Question 18

Clothing is not something that the courts have been willing to define as "necessary."

Question 19

An adult may avoid any contract with a minor.

Question 20

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

Question 21

An exculpatory clause in a residential property lease is usually enforceable.

Question 22

A contract that exculpates one party for negligence or other wrongdoing will not usually be viewed as unconscionable.

Question 23

Most courts are usually very concerned about the fairness of contracts.

Question 24

A covenant not to compete is never enforceable.

Question 25

A contract with an unlicensed professional is always enforceable.

Question 26

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

Question 27

If the purpose of a licensing statute is to raise government revenues, a contract with an unlicensed professional will normally be enforceable.

Question 28

A blue law is a state statute that prohibits loans at an interest above the "blue line."

Question 29

An executed contract entered into on Sunday in a state having a Sunday law cannot be rescinded.

Question 30

An exculpatory clause in an employment contract is always enforceable.

Question 31

A lender who makes a loan at a rate above the lawful maximum commits usury.

Question 32

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

Question 33

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

Question 34

If an illegal contract is executory, either party can enforce it.

Question 35

A contract is unenforceable if there is a statute that prohibits the action promised by the contract.

Question 36

A guardian cannot enter into legally binding contracts on behalf of a mentally incompetent person.

Question 37

A covenant not to compete between ongoing businesses is always enforceable.

Question 38

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

Question 39

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

Question 40

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

Question 41

Ruth, a minor, charges groceries at Sam's Mini-Mart. Two days later, Ruth disaffirms the purchase. Ruth owes Sam's

A) the reasonable value of the groceries.
B) the retail value of the groceries.
C) the wholesale value of the groceries.
D) nothing.

Question 42

Opie enters into a contract with Pia. Later, Opie is adjudged mentally incompetent and Quint is appointed Opie's guardian. Raye, Opie's daughter, attempts to void Opie's contract with Pia on the ground of Opie's incompetency. The contract is

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

Question 43

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 44

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 45

Gary, a minor, buys a car from Hot Cars, Inc., in a state in which a duty of restitution is imposed. After wrecking the car, Gary wants to return it. Gary

A) can keep the car without paying for it or the damage.
B) cannot return the car unless it can be fully repaired.
C) can return the car but must pay for the damage.
D) can return the car without paying for the damage.

Question 46

Chris, a minor, signs a contract to buy 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 Ed, the manager of Dine & Drink.

Question 47

Don enters into a contract with Edie, who does not have contractual ca?pacity. The law will permit Don to enforce the contract only if Edie

A) elects not to avoid the contract.
B) is a minor.
C) is a minor, intoxicated, or mentally incompetent.
D) is intoxicated or men?tally incompetent.

Question 48

Curt, a doctor, renders medical care to Dora, a minor. According to the reasoning of the court in Case 13.1, Yale Diagnostic Radiology v. Estate of Harun, a contract between Curt and Dora is

A) express.
B) implied in fact.
C) implied in law.
D) non-existent.

Question 49

Ann, an emergency medical technician, renders medical care to Brad, a minor. Under the ruling of the court in Case 13.1, Yale Diagnostic Radiology v. Estate of Harun, Ann may recover the cost from

A) Brad only.
B) Brad or Brad's parent.
C) Brad's parent only.
D) no one.

Question 50

Olga, a minor, signs a contract to buy a computer from Phil, the owner of Quality Computer Store. Olga'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 Olga is still a minor.
C) gives Phil, an adult, the right to disaffirm the contract.
D) is not valid because a computer is a "necessary."

Question 51

Nina, a seventeen-year-old, signs a contract to sell her car to OK Used Cars. Nina receives a better offer the next day from Perfect Pre-owned Cars, Inc., and accepts the new offer. Nina is

A) liable to OK and must sell it a car of comparable value.
B) liable to OK and must sell it her car.
C) not liable to OK because she is a minor.
D) not liable to OK because the sale of the car disaffirmed their deal.

Question 52

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 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

Yvon and Zack 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 55

Jack, a minor, takes out an automobile insurance policy and pays a $1,000 pre?mi?um. If Jack disaffirms the contract, he can most likely recover

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

Question 56

Jill, a minor, is living at home with her parents, but signs a lease with a land?lord to rent an apartment. Jill can

A) disaffirm the lease because her parents can be held liable for it.
B) disaffirm the lease without liability.
C) not disaffirm the lease because an apartment is a "necessary."
D) not disaffirm the lease if she intended to live on her own.

Question 57

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 58

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

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

Question 59

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

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

Question 60

Max, a minor subject to his parents' care and control, signs a contract to rent an apartment from Noel for one year. Before the end of the term, Max moves out. Noel sues for the rent for the rest of the term. Max can

A) avoid liability for the rent but not disaffirm the contract.
B) disaffirm the contract and avoid liability for the rent.
C) disaffirm the contract but not avoid liability for the rent.
D) not disaffirm the contract nor avoid liability for the rent.

Question 61

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 62

A court adjudicates Huck mentally incompetent and appoints Inez to be his guard?ian. 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 63

U-Can-Own-It Corporation sells appliances to less educated consumers, including Viv, on installment plans. U-Can-Own-It files a suit against Viv when she stops making payments. Viv 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 64

Lara is a real estate broker licensed only in Minnesota. Lara concludes a sale in North Dakota. She can successfully sue to

A) collect the commission only.
B) collect the commission or keep it if it has already been paid.
C) keep the commission if it has already been paid but not to collect it.
D) neither collect the commission nor keep it.

Question 65

Through fraudulent means, Fred induces Gail to sign a contract to in?vest with him the profits from High Styles, her clothing store. When Gail learns the truth, she may

A) do nothing with respect to the contract.
B) enforce the contract or recover the payment.
C) only enforce the contract.
D) only recover the payment.

Question 66

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 67

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 68

A contract between Eppie and Fab to lease real property contains an ex?cul?patory clause. This clause is

A) enforceable as a matter of public policy.
B) enforceable if either party is in a business important to the pub?lic.
C) enforceable if the lease involves residential property.
D) generally unenforceable.

Question 69

Ralph signs a covenant not to compete with his employer, Super Sales Company. A court decides that the covenant is overly restrictive. The court will most likely

A) enforce it so as not to interfere with the parties' freedom to contract.
B) enforce it but evaluate its effects over time.
C) reform its terms to prevent any undue burdens.
D) refuse to enforce it unless Super pays additional consideration.

Question 70

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 71

Nora signs a contract to buy a car just before reaching the age of major?ity. After reaching the age of majority, Nora does not take possession or make payments. Most courts would hold that she had

A) disaffirmed the contract.
B) executed the contract.
C) ratified the contract.
D) rescinded the contract.

Question 72

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 73

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

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

Question 74

National Insurance Company violates a state statute when selling an insur?ance policy to Opal. The policy may be enforced by

A) National Insurance only.
B) National Insurance or Opal.
C) no one.
D) Opal only.

Question 75

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 76

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

A) Joy only.
B) Joy or Kent.
C) Kent only.
D) no one.

Question 77

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

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

Question 78

Boz runs an illegal gambling business and pays Colin, a law enforcement 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 79

Dina signs a contract with Ellen to kill Frank. Dina pays Ellen but she re?fuses to perform. Dina can

A) do nothing with respect to the contract.
B) enforce the contract or recover the payment.
C) only enforce the contract.
D) only recover the payment.

Question 80

Delia enters into, and fails to disaffirm soon after reaching the age of ma?jority, a contract with Electronics Stores, Inc. (ESI). Later Delia attempts to disaffirm the contract. ESI files a suit against her. The court will most likely consider the contract ratified if it is

A) executed.
B) executory.
C) executed or executory.
D) neither executed nor executory.