Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)   50
B)   49
C)   45
D)   30
E)   25F) All of the above
G) A) and E)

Question 3

The agreement Rick and Janice entered into is referred to as which of the following?

Accepted Answer

A)   A competition agreement
B)   A prohibited competition agreement
C)   A covenant not to misappropriate
D)   A policy agreement
E)   A covenant not to competeF) C) and D)
G) B) and E)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

If a legal contract is formed and the subject of the contract then becomes illegal under a new statute,the contract is ____.

Accepted Answer

A)   Discharged
B)   Enforced
C)   Disregarded
D)   Executed
E)   ExecutoryF) B) and E)
G) A) and B)

Question 6

When must a disaffirmance of a contract based on minority occur?

Accepted Answer

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.F) A) and E)
G) A) and D)

Question 7

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?

Accepted Answer

A)   Substantive unconscionability.
B)   Adhesion conscionability.
C)   Procedural unconscionability.
D)   Exculpatory clauses.
E)   An in pari delicto agreement.F) A) and B)
G) All of the above

Question 8

Which of the following is the majority rule regarding a minor's misrepresentation of his or her age?

Accepted Answer

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.F) B) and E)
G) A) and B)

Question 9

Which of the following is true regarding the ability of persons suffering from a mental illness to enter into a binding contract?

Accepted Answer

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.F) C) and E)
G) B) and E)

Question 10

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.

Accepted Answer

Traditionally,most states simply require...

Question 11

Which of the following is false regarding contracts for necessaries entered into by minors?

Accepted Answer

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.F) A) and B)
G) B) and E)

Question 12

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?

Accepted Answer

A)   Ratification
B)   Disaffirmance
C)   Emancipation
D)   Legal release
E)   ReaffirmanceF) B) and D)
G) A) and D)

Question 13

Which of the following is true if a contract is disaffirmed on the basis of intoxication?

Accepted Answer

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.F) A) and E)
G) None of the above

Question 14

A[n] ______ contract is one requiring complete performance by both parties,even if it appears as if the contract contains multiple parts.

Accepted Answer

A)   Adhesion
B)   Divisible
C)   Justifiable
D)   Indivisible
E)   IndependentF) C) and D)
G) C) and E)

Question 15

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

Accepted Answer

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

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.

Accepted Answer

A)   Capacity
B)   Understanding
C)   Ratification
D)   History
E)   ConsiderationF) A) and D)
G) A) and C)

Question 17

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.

Accepted Answer

A)   Emancipated
B)   Freed
C)   Released
D)   Employed
E)   AcknowledgedF) A) and D)
G) A) and C)

Question 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?

Accepted Answer

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.F) A) and D)
G) A) and C)

Question 19

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

Accepted Answer

Most states follow the Restatement of Co...

Question 20

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

Accepted Answer

A)   No enforceable legal violation
B)   Interest prohibition
C)   Principle reduction
D)   Usury
E)   PlenaryF) B) and C)
G) B) and D)

Exam 16: Capacity and Illegality

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

Correct AnswerverifiedShow Answer

The agreement Rick and Janice entered into is referred to as which of the following?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

If a legal contract is formed and the subject of the contract then becomes illegal under a new statute,the contract is ____.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is true if a contract is disaffirmed on the basis of intoxication?

Correct AnswerverifiedShow Answer

A[n] ______ contract is one requiring complete performance by both parties,even if it appears as if the contract contains multiple parts.

Correct AnswerverifiedShow Answer

Which of the following is true regarding the ability of persons suffering from a mental illness to enter into a binding contract?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedMost states follow the Restatement of Co...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

When must a disaffirmance of a contract based on minority occur?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedTraditionally,most states simply require...View AnswerShow Answer

Which of the following is false regarding contracts for necessaries entered into by minors?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is the majority rule regarding a minor's misrepresentation of his or her age?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Most states follow the Restatement of Co...
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Traditionally,most states simply require...
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