Deck 16: Capacity and Legality

Question 1

All exculpatory clauses are unlawful.

Answer 1

False

Question 2

A contract of an intoxicated person for necessaries will be enforced for the reasonable value of the necessaries.

Answer 2

True

Question 3

In the law when both parties are equally responsible for an illegal agreement, it is known as in pari delicto.

Answer 3

True

Question 4

Which of the following was the result on appeal in Eric Lucier and Karen Haley v. Angela and James Williams, Cambridge Associates LTD., and Al Vasys, the case in the text in which, after finding significant problems with their roof, the plaintiffs claimed that provisions in a home inspection contract illegally limited the liability of the defendants?

A) The court ruled in favor of the plaintiffs on the basis that although the contract was not unconscionable, public policy was violated.
B) The court ruled in favor of the plaintiffs on the basis that the limitation of liability provision in the contract was unconscionable and violated the public policy of the state.
C) The court ruled in favor of the defendants on the basis that no contract of adhesion was involved and that, therefore, by definition the contract satisfied public policy.
D) The court ruled in favor of the defendants on the basis that the plaintiffs freely entered into the contract and should, therefore, be bound to its terms.
E) The court ruled in favor of the defendants on the basis that while the court would intervene in appropriate cases, a presumption against a finding of unconscionability exists in home inspection contracts; and the plaintiffs failed to rebut that presumption.

Question 5

What did the U.S. Supreme Court rule in Buckeye Check Cashing Inc., v. Cardegnaet, the case in the text involving whether the court or the arbitrator should determine decide the issues of a case when illegality in relation to a contract is claimed?

A) That an arbitrator should address charges of illegality involving either an arbitration provision or a contract as a whole.
B) That when an arbitration provision in a contract is not specifically challenged, an arbitrator should address a charge of illegality to a contract as a whole.
C) That when an arbitration provision in a contract is not specifically challenged, a court should address a charge of illegality to a contract as a whole.
D) That the court should address charges of illegality involving either an arbitration provision or a contract as a whole.
E) That whether a court or an arbitrator should address charges of illegality involving either an arbitration provision or a contract as a whole depends upon the first to file rule.

Question 6

As a general rule, parents are not liable for contracts entered into by their minor children.

Question 7

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

A) Emancipated
B) Freed
C) Released
D) Disaffirmed
E) Either freed or disaffirmed depending on the circumstances

Question 8

Which of the following occurs when a minor's parents or legal guardians give up their right to exercise legal control over the minor, typically when the minor moves out of the parents' house and begins supporting himself or herself?

A) Ratification
B) Disaffirmance
C) Emancipation
D) Legal release
E) Reaffirmance

Question 9

In most states a person is given full legal capacity to enter into contracts when he or she becomes ______ before reaching the age of majority.

A) Emancipated
B) Freed
C) Released
D) Employed
E) Acknowledged

Question 10

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

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

Question 11

If a person's mental deficiencies have resulted in his being adjudicated insane and a guardian has been appointed for him, he has no capacity to enter into contracts; and any contract he attempts to enter into is void.

Question 12

What was the result in the Case Opener in which customers of Apple attempted to disaffirm purchases of game currency by their children?

A) The court dismissed the lawsuit on the basis that the parents were bound by the Terms of Service and notifications of their original contracts with Apple binding them to future purchases of game currency when their passwords were used.
B) The court dismissed the lawsuit on the basis that the parents were bound by the Terms of Service and notifications of their original contracts with Apple binding them to future purchases of game currency regardless of whether passwords were used.
C) The court dismissed the lawsuit on the basis that no contractual agreement was needed in order for the parents to be bound in regard to purchases of game currency so long as their passwords were used.
D) The court refused to dismiss the lawsuit because no case law was provided to prove that Apple's Terms of Service served as a contract for all subsequent transactions.
E) The court refused to dismiss the lawsuit because as a matter of law parents cannot be required to contractually agree to future purchases by children that are unapproved by the parents.

Question 13

Which of the following was the result on appeal in King v. Riedl, the case in the text in which the plaintiffs claimed that the defendant lacked the right to proceed against them for sums allegedly owed because the contractor was not licensed as a residential home builder as required by state law?

A) The court ruled in favor of the plaintiffs on the basis that the contractor was statutorily barred from bringing an action to enforce payment because he lacked a residential home builder license and the amount of the contract satisfied statutory requirements.
B) Although recognizing that the contractor's failure to be properly licensed would not in and of itself bar recovery, the court ruled in favor of the plaintiffs because the facts at trial showed that the contractor performed inadequate work.
C) The court ruled that because the contractor lacked the required state license and the amount of the contract satisfied statutory requirements, under common law he could only recover for expenses for materials and labor costs, not the full contract price.
D) The court ruled that the defendant could maintain an action against the plaintiffs and prevail because the proof showed that he was eligible for the required license although he had not yet obtained it.
E) The court ruled that the defendant could maintain an action against the plaintiffs and prevail because the state statute only applied when the cost of a contractual undertaking exceeded $10,000, and because the contractor billed periodically, the plaintiffs were never presented with a bill exceeding $10,000.

Question 14

Both a minor and the adult with whom the minor contracted may disaffirm a contract based upon the minor's lack of majority.

Question 15

In all states parents are responsible for the torts of their minor children.

Question 16

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 and, therefore, will presumably be able to understand how to comply with the terms of the agreement.

A) Capacity
B) Understanding
C) Ratification
D) History
E) Consideration

Question 17

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) Immajority
B) Capacity
C) Chronic illness
D) Incapacity
E) Terminal illness

Question 18

A contract overturned due to having illegal subject matter or for being illegal to perform is generally declared voidable.

Question 19

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 20

For purposes of determining capacity, intoxicated persons include those under the influence of alcohol, but not drugs.

Question 21

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

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

Question 22

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

A) Life insurance, health insurance, and psychological counseling
B) Health insurance and psychological counseling, but not life insurance
C) Psychological counseling, but not health insurance or life insurance
D) Health insurance, but not life insurance or psychological counseling
E) Education loan contracts and psychological counseling, but not life insurance or health insurance

Question 23

Which of the following is true once a guardian has been appointed for a person who has been adjudicated insane?

A) If a person has been adjudicated insane and has a guardian appointed, that person has no capacity to enter into contracts and any contract he does attempt to enter into is void.
B) If a person has been adjudicated insane and has a guardian appointed, that person has no capacity to enter into contracts and any contract he does attempt to enter into is voidable.
C) If a person has been adjudicated insane and has a guardian appointed, that person retains capacity to enter into contracts so long as the other party to the contract is aware of the guardian's status.
D) If a person has been adjudicated insane and has a guardian appointed, that person retains capacity to enter into contracts so long as the other party to the contract is aware of the insanity issue.
E) If a person has been adjudicated insane and has a guardian appointed, that person retains capacity to enter into contracts so long as the other party to the contract is aware of the guardian's status and also the insanity issue.

Question 24

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

A) Void; disaffirm
B) Void; affirm
C) Void; resist
D) Voidable; disaffirm
E) Voidable; affirm

Question 25

Which of the following is the maximum interest rate?

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

Question 26

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

A) No enforceable legal violation
B) Interest prohibition
C) Principle reduction
D) Usury
E) Plenary

Question 27

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 and deemed legal so long as the substance of the agreement was deemed a crime after the agreement was entered into, 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.
D) An agreement to commit a crime is unenforceable, and an agreement to commit a tort is unenforceable unless a privacy tort is involved in which case the agreement is enforceable.
E) An agreement to commit a crime is unenforceable, and an agreement to commit a tort is unenforceable.

Question 28

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
E) Usury

Question 29

Which of the following is false 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 holding minors liable 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 30

How many states have statutes requiring that people working in certain professions obtain a license before practicing their craft?

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

Question 31

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 have no 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 in 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 32

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) The intoxicated person must be returned to the condition he or she was in at the time the contract was entered into, but that is not true for any other party.
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 33

Which of the following is the majority rule regarding a minor's misrepresentation of 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 precontractual position before obtaining the disaffirmance.
C) That the minor may disaffirm but that 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 half the consideration he or she supplied.

Question 34

Which of the following is the age of majority in regard to the right to contract in Great Britain?

A) 18
B) 19
C) 21
D) 16
E) There is not a set age of majority

Question 35

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 30 days of the minor's reaching the age of majority.
C) Within 60 days of the minor's reaching the age of majority.
D) Within 90 days of the minor's reaching the age of majority.
E) Within one year of the minor's reaching the age of majority.

Question 36

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) Enforced
C) Disregarded
D) Executed
E) Executory

Question 37

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 intent to ratify the contract.

A) Implied ratification
B) Express ratification
C) Express novation
D) Implied novation
E) Continued safety

Question 38

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 contract entered in to as a minor?

A) Implied ratification
B) Express ratification
C) Express novation
D) Implied novation
E) Express ratification if the statement is in writing but nothing if the statement is only oral

Question 39

Because ______ does not favor intoxication, the courts tend to be unsympathetic to intoxicated parties and will fairly liberally interpret behavior that seems like ratification as ratifying the contract.

A) Morality
B) Popular opinion
C) Medical literature
D) Religion
E) Public policy

Question 40

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 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 half the minor's investment.
E) The obligations of a minor upon disaffirmance vary from state to state.

Question 41

"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 which 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 six months after she turned 18. Sally then returned the car to Dings and Dents, informed the owner that she was under 18 when she entered into the contract to purchase the car, and told the owner that she was returning the car for a full refund. Dings and Dents claimed the car was a necessity. Sally and her parents disagreed claiming 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 effect of Sally turning 18 before she attempts to disaffirm 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 an express ratification.
B) Sally was required to expressly ratify the contract before she could be bound to it.
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; but if she did any damage to the car, as a matter of law, she is said to have impliedly ratified it.

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 is a term for laws that limit the types of business activities in which parties may legally engage on Sundays?

A) Red laws
B) Blue laws
C) True laws
D) Colonial laws
E) Christian laws

Question 44

"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 per month in payment. 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 in smearing Tessa 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.

-Which of the following is true under the Restatement of Contracts, Section 16, regarding the claim of Charles that he should be able to avoid the contract involving Tessa because he was intoxicated?

A) Contracts of an intoxicated person are voidable 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 rendering the intoxicated person unable to understand the nature and consequences of the transaction or unable to act in a reasonable manner in relation to the transaction.
E) Contracts of an intoxicated person are voidable only if it can be proven that the other party was involved in encouraging the abuse of alcohol by the intoxicated person rendering the intoxicated person unable to understand the nature and consequences of the transaction or unable to act in a reasonable manner in relation to the transaction.

Question 45

Which of the following are contracts that contain multiple parts which can each be performed separately and for which separate consideration is offered?

A) Independent contracts
B) Substantive contracts
C) Adhesion contracts
D) Justifiable contracts
E) Severable contracts

Question 46

"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 which 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 six months after she turned 18. Sally then returned the car to Dings and Dents, informed the owner that she was under 18 when she entered into the contract to purchase the car, and told the owner that she was returning the car for a full refund. Dings and Dents claimed the car was a necessity. Sally and her parents disagreed claiming 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 claim 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 irrelevant as a matter of law 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 frivolous matter that is clearly not required.
E) Even if a minor disaffirms a contract for a necessary, the minor will still be held liable for the reasonable value of the necessary.

Question 47

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) Justifiable
D) Indivisible
E) Independent

Question 48

In the law, when both parties are equally responsible for an illegal agreement, it is known as ____.

A) In pari delicto
B) Procedurally unconscionable
C) An adhesion contract
D) A res ipsa contract
E) A stare decisis contract

Question 49

Which of the following was the result in the case in the text William Cavanaugh v. Margaret McKenna, the case in which the plaintiff was sued for opening a funeral home after she agreed to refrain from doing so in her divorce as part of a covenant not to compete with her ex-husband?

A) That the agreement was invalid because it was entered into in connection with a divorce, not in connection with either an employment agreement or the sale of a business.
B) That the agreement was invalid because it was most analogous to the sale of a business and was unreasonable.
C) That the agreement was valid because it was most analogous to an employment agreement and was reasonable.
D) That the covenant was invalid because it did not contain an explicit time limitation.
E) That the covenant was reasonable and valid and construed liberally because it was most analogous to the sale of a business.

Question 50

"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 which 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 six months after she turned 18. Sally then returned the car to Dings and Dents, informed the owner that she was under 18 when she entered into the contract to purchase the car, and told the owner that she was returning the car for a full refund. Dings and Dents claimed the car was a necessity. Sally and her parents disagreed claiming 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 51

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 52

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] ______ agreement.

A) Substantive
B) Adhesion
C) In pari delicto
D) Exculpatory
E) Res Ipsa

Question 53

"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 per month in payment. 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 in smearing Tessa 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.

-Which of the following would be a possible defense to Bobby's contract involving the harsh and lopsided terms in the contract involving chores?

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

Question 54

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 25 miles for a period of two years. That type of agreement is called a[n] ______.

A) Covenant not to compete
B) Employment covenant
C) Working covenant
D) Termination agreement
E) Public policy agreement

Question 55

"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 a number of new techniques. After nine months, Janice was offered a great job down the street at a new beauty shop, she 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 who was threatening to sue her because her hair turned green after Janice worked on it. Janice said that she knew that the customer's hair was damaged; but that she told the customer that odd results could result from a dye attempt, and had her sign a contract that she released Janice from all liability and would not sue. The customer, 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 56

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) Exculpatory clauses.
E) An in pari delicto agreement.

Question 57

"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 per month in payment. 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 in smearing Tessa 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.

-Which of the following is true regarding Charles' 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 only if it can be proven that the defamation would cause Tessa money damages.
C) Charles is correct only if it can be proven that the defamation would cause Tessa actual injury.
D) Charles is correct only if it can be proven that the defamation is undeserved.
E) Charles is correct only if it can be proven that he had a prior relationship with Tessa.

Question 58

"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 per month in payment. 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 in smearing Tessa 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.

-Which of the following would be a possible defense to Bobby's contract involving chores based upon the size of the print on the back of the contract?

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

Question 59

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 60

"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 a number of new techniques. After nine months, Janice was offered a great job down the street at a new beauty shop, she 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 who was threatening to sue her because her hair turned green after Janice worked on it. Janice said that she knew that the customer's hair was damaged; but that she told the customer that odd results could result from a dye attempt, and had her sign a contract that she released Janice from all liability and would not sue. The customer, 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 regards to the enforceability of such agreements.

Question 61

Define the offense of usury. Identify two legal exceptions identified in the text whereby usury statutes will not be applied.

Question 62

Maurice wishes to purchase a small restaurant named "Tasty Burger" in his community from Todd who tells Maurice that, while he loves the teenagers who have frequented his establishment, he is tired of flipping burgers and wants to spend more time fishing on the lake. Maurice has Todd sign a covenant not to compete prohibiting Todd from opening a restaurant within 25 miles of Tasty Burger for one year. Assuming that the covenant was drafted properly, is it likely to be enforced, and why or why not? Also, discuss arguments for and against covenants not to compete in the sale of a business.

Question 63

In regard to the rule used in determining the obligations of a minor on disaffirmance of a contract, discuss both the traditional rule and also the modification of the rule applied in a number of states today, set forth which of the rules you support, and why.

Question 64

Set forth in detail the test that most states follow regarding the treatment of the capacity of intoxicated persons to enter into contracts.

Question 65

Discuss in detail the age of majority in Great Britain.

Question 66

"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 a number of new techniques. After nine months, Janice was offered a great job down the street at a new beauty shop, she 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 who was threatening to sue her because her hair turned green after Janice worked on it. Janice said that she knew that the customer's hair was damaged; but that she told the customer that odd results could result from a dye attempt, and had her sign a contract that she released Janice from all liability and would not sue. The customer, however, sued anyway.



-What type of agreement did Janice have the customer with green hair sign?

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