Deck 13: A: Capacity and Legality

Question 1

A covenant not to compete can be enforceable if it is part of the sale of an ongoing business.

Answer 1

True

Question 2

Discriminatory contracts are invalid.

Answer 2

True

Question 3

A contract that exculpates one party for wrongdoing no matter who is at fault can be unconscionable.

Answer 3

True

Question 4

A court may refuse to enforce an exculpatory clause on the ground that it is unconscionable.

Question 5

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

Question 6

An adult may avoid any contract with a minor.

Question 7

Clothing is not a "necessary."

Question 8

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 9

A minor may avoid any contract with an adult.

Question 10

A person who enters into a contract when he or she is intoxicated can void the contract even if he or she understood the legal consequences.

Question 11

A party's lack of understanding of contract terms can deprive him or her of any meaningful choice.

Question 12

An unconscionable contract is a contract entered into unconsciously.

Question 13

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

Question 14

Ordinarily,a minor who affirmatively misrepresents his or her age cannot disaffirm a contract.

Question 15

A contract with an unlicensed professional is never enforceable.

Question 16

Contractual capacity refers to the size or volume of a contract.

Question 17

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

Question 18

The only purpose of a licensing statute is to protect the public from unlicensed practitioners.

Question 19

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

Question 20

Parents who cosign a contract with a minor have the same option to disaffirm.

Question 21

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

A)appears intoxicated to Evan.
B)disaffirms the contract after becoming sober.
C)is so intoxicated as to have no memory of the deal.
D)is so intoxicated as to lack comprehension of the legal consequences.

Question 22

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 23

Regular Insurance Company violates a state statute when selling an insur?ance policy to Simone.As a member of the class of persons protected by the state statute,Simone 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 24

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

A)disaffirm the lease because her parents can be held liable.
B)disaffirm the lease without liability.
C)not disaffirm the lease because an apartment is a "necessary."
D)not disaffirm the lease because her parents could be liable.

Question 25

Stacy,a minor,charges the cost of an expensive leather jacket at a Girl's Trend store.Two nights later,Stacy loses the jacket at Minors Only Club.She disaf?firms the jacket's purchase.Stacy 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 26

Noni,a seventeen-year-old,signs a contract to sell her car to Metro Used Cars.The next day,Noni tells Metro that she's decided not to sell the car.Noni is

A)liable to Metro and must sell it a car of comparable value.
B)liable to Metro and must sell it her car.
C)liable to Metro for the amount of its profit on the deal.
D)not liable to Metro.

Question 27

Bree is a real estate broker licensed only in Minnesota.She concludes a sale in North Dakota on O'Reilly's behalf.Bree's contract with O'Reilly to be paid a certain commission for the sale is

A)enforceable if O'Reilly comprehended the consequences.
B)enforceable if O'Reilly knew Bree was not licensed in North Dakota.
C)enforceable if the amount of her commission is reasonable.
D)unenforceable.

Question 28

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 29

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 30

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 Galen 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 31

Koko signs a covenant not to compete as part of a sale of her ongoing medical equipment business to Laurel Valley Medico,Inc. ,in exchange for a bonus payment.The covenant is most likely enforceable by

A)both parties.
B)Koko,but not Laurel Valley.
C)Laurel Valley,but not Koko.
D)no one.

Question 32

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

A)enforceable if Opie had capacity at the time the contract was formed.
B)enforceable if Belle is also incompetent.
C)enforceable if Raye knew of the contract when it was formed.
D)void.

Question 33

While a minor,Jason buys a large-screen HD TV and home theatre system that he continues to use after reaching the age of majority.After a reasonable time has passed,Jason will be considered to have

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

Question 34

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

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

Question 35

Solana,a minor,enters into a contract to buy a dozen movies from eHD TV Stream,Inc. ,an Internet video service.Solana reaches the age of ma?jority and does not disaffirm the contract nor make payment on it.eHD files a suit against her.The court will most likely consider the contract ratified if it is

A)executed.
B)executory.
C)express.
D)emancipated.

Question 36

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 37

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

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

Question 38

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 39

Desiree signs a contract with Elena to kill Francois.Desiree pays Elena but she re?fuses to perform.Desiree 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 40

Mica,a minor,signs a contract to pay National Fitness 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)disaffirmance.
B)emancipation.
C)ratification.
D)unconscionable.

Question 41

Airway International,Inc. ,is a commercial passenger airline.Airway includes on its tickets a clause that states the airline is not liable for any injury to,or the death of,any passenger caused by its,or its employees',negligence.An Airway flight from Boston to New York crashes into Long Island sound,resulting in the deaths of all passengers.The cause of the ac?cident is found to be due to Airway's negligence.Based on the clause on its tickets,can Airway avoid liability?

Question 42

Inventory Control Corporation (ICC)hires Jim,a minor,to create customized software for ICC's clients.Jim signs a contract that requires him to work for ICC for eighteen months.Before beginning work,Jim tells ICC that he will not work for ICC but is going to work for Kwik Kounts,Inc. ,an ICC competitor.Is ICC's contract with Jim en?forceable? Why or why not?