Deck 9: Capacity and Legality

Question 1

Disaffirmance is the legal avoidance of a contractual obligation.

Answer 1

True

Question 2

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.

Answer 2

False

Question 3

A contract that calls for the performance of an illegal act is not enforceable.

Answer 3

True

Question 4

A minor can disaffirm a contract only after reach?ing the age of majority.

Question 5

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

Question 6

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

Question 7

A guardian cannot enter into a legally binding contract on behalf of a men?tally incompetent person.

Question 8

A minor's failure to perform an executory contract within a reasonable time after reaching the age of majority implies disaffirmance.

Question 9

If the purpose of a licensing statute is to raise revenue,a con?tract with an unlicensed professional may be enforceable.

Question 10

In general,minors are not held personally liable for their contracts.

Question 11

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

Question 12

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 13

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

Question 14

Parents are required by law to provide necessaries for their minor children.

Question 15

Some states provide for the termination of minority status on marriage.

Question 16

Food is the only thing that courts have been willing to de?fine as "necessary."

Question 17

The maximum rate of interest is the same in every state.

Question 18

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

Question 19

An adult may disaffirm a contract entered into with a minor.

Question 20

A minor may accept and validate a contract with an adult.

Question 21

A covenant not to compete is enforceable only if it is reasonable in duration and geographic area.

Question 22

An exculpatory clause on a ticket to a ride in an amusement park is never enforceable.

Question 23

A covenant not to compete that is part of an employment contract will gen?erally be struck down.

Question 24

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

Question 25

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

Question 26

An innocent party who has fully performed an illegal contract may some?times enforce it against a guilty party.

Question 27

An exculpatory clause in an employment contract is always enforceable.

Question 28

If a contract is illegal,a court will not enforce it.

Question 29

Bret runs an illegal business and pays Cal,a law enforcement officer,not to interfere.The payments are discovered.Bret and Cal are sent to prison.Bret can successfully sue Cal for the return of

A)all of the money paid to Cal.
B)only the money paid to Cal that has been spent.
C)only the money paid to Cal that has not been spent.
D)none of the choices.

Question 30

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

Question 31

A covenant not to compete is never enforceable.

Question 32

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

Question 33

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

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

Question 34

Don enters into a contract with Emma,who does not have contractual ca?pacity.Don can enforce the contract only if Emma

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

Question 35

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 Edie,the manager of Dine & Drink.

Question 36

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

Question 37

Marco convinces his parents to permit him to become an emancipated minor.On emancipation,Marco will acquire the right to

A)buy alcoholic beverages only.
B)buy alcoholic beverages and vote.
C)neither buy alcoholic beverages nor vote.
D)vote only.

Question 38

A contract in which the stronger party dictates the terms is an adhesion contract.

Question 39

An exculpatory clause may viewed as unconscionable.

Question 40

A contract with an unlicensed professional is always enforceable.

Question 41

Elle,a minor acting on her own,signs a contract to buy a horse from Field Equine Ranch.Later,Elle disaffirms the deal.Liability most likely rests with

A)Elle and her parents.
B)Elle only.
C)Elle's parents only.
D)neither Elle nor her parents.

Question 42

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 43

Fernando,a seventeen-year-old,signs a contract to sell his car to Gusto Used Autos.Fernando receives a better offer the next day from Hi-Valu Cars & Trucks,Inc. ,and accepts the new offer.Fernando is

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

Question 44

Dudley,a minor who is under his parents' care and control,signs a contract to rent an apartment from Ewan for one year.Before the end of the term,Dudley moves out.Ewan sues for the rent for the rest of the term.Dudley 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 45

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 46

Ruth,a minor,charges groceries at Sam's Mart.Two days later,Ruth disaf?firms the purchase.Ruth owes Sam's Mart

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

Question 47

John agrees to sell his sports equipment store to Kay and,as part of the sale,promises not to open a similar store in the United States for twenty years.John's promise is

A)an unreasonable restraint of trade like all covenants not to compete.
B)unreasonable in terms of geographic area and time.
C)unreasonable in terms of Kay's "goodwill" and "reputation."
D)valid and enforceable.

Question 48

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 49

Gina,a minor,enters into a contract to buy a tractor from Herb,an adult.If the deal is set aside,restoring Gina and Herb to the positions they held be?fore the contract is required in

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

Question 50

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

A)only if he does not know he is entering into the contract.
B)only if he lacks the mental capacity to comprehend the consequences.
C)if he either does not know it is a contract or does not comprehend the consequences.
D)none of the choices.

Question 51

Betty,a minor,signs a contract to buy an SUV by misrepresenting her age to be twenty-one.In most states,Betty may

A)disaffirm the contract.
B)disaffirm the contract only if she first makes full payment.
C)disaffirm the contract only if she returns the SUV in orig?inal condition.
D)not disaffirm the contract.

Question 52

While intoxicated,Tim contracts to buy a bicycle for double its normal price.The contract is

A)enforceable even if Tim did not understand its legal consequences.
B)enforceable only if Tim understood its legal consequences.
C)unenforceable because it obviously favors the other party.
D)unenforceable under any circumstances.

Question 53

Clay,a minor,signs a contract to buy a car from Delta Motors by mis?repre?senting his age as twenty-one.Clay fails to make the pay?ments.Delta sues.In most states,Clay can

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

Question 54

While a minor,Jason buys a car that he continues to use and keep in re?pair after reaching the age of majority.Jason has

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

Question 55

Desiree and Eduardo decide to wager,in violation of a state statute,on the out?come of a soccer game.They each deposit money with Felipe,who agrees to pay the winner of the bet.Before the game begins,Eduardo tells Felipe that he has changed his mind about the bet.Eduardo can recover

A)the amount of his bet and the amount of Desiree's bet.
B)the amount of his bet minus Felipe's expenses.
C)the amount of his bet only.
D)nothing.

Question 56

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 57

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

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

Question 58

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

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

Question 59

A court adjudicates Holly mentally incompetent and appoints a guardian.Holly subsequently signs a contract to sell her house.The contract is

A)enforceable if Holly comprehended the consequences.
B)enforceable if Holly knew she was entering into a contract.
C)enforceable if the house was entirely paid for.
D)void.

Question 60

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 61

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 Odell or Remy.
D)voidable at the option of Quik Work.

Question 62

Through fraudulent means,Roy induces Sal to sign a contract to in?vest with him her profits from Tasty Café.When Sal learns the truth,she may

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

Question 63

Lora signs a covenant not to compete with her employer,Midstate Distribu?tion,Inc.The covenant will be enforced if it

A)does not require either party to obtain a business license.
B)is reasonable with respect to geographic area and time.
C)is supported by consideration.
D)none of the choices.

Question 64

A contract between Kim and Larry to lease real property contains an excul?patory clause.This clause is

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

Question 65

As part of a sale of a business,Lee signs a covenant not to compete that is unreasonable in its essential terms.To prevent undue hardship,a court will most likely

A)enforce the covenant as written.
B)enforce the covenant but evaluate its effects over time.
C)reform the covenant's terms.
D)refuse to enforce the covenant without additional consideration.

Question 66

First National Bank signs an agreement not to compete with City Bank that will bar City Bank from continuing to operate in the state in which both banks do almost all of their business.The agreement is likely

A)an unreasonable restraint of trade.
B)enforceable.
C)enforceable if it is ancillary to an agreement by the First National Bank to purchase all of the assets of the City Bank.
D)none of the choices.

Question 67

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

A)enforce it as written so as not to interfere with the parties' freedom of 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 Topp pays additional consideration.

Question 68

National Insurance Company violates a 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 69

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

Question 70

Airway International,Inc. ,is a commercial passenger airline.Airway in?cludes on its tickets a clause that states the airline is not liable for any in?jury to,or the death of,any passenger caused by its,or its employees',neg?ligence.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 71

A contract 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!