Deck 11: Capacity and Legality

Question 1

________ is a rule that states that if a minor has transferred money,property,or other valuables to the competent party before disaffirming the contract,that party must place the minor in status quo.

A) Emancipation doctrine
B) Infancy doctrine
C) Duty of restitution
D) Duty of restoration

Answer 1

C

Question 2

________ is the act of a minor to rescind a contract under the infancy doctrine,either orally,in writing,or by the minor's conduct.

A) Ratification
B) Disaffirmance
C) Sanctioning
D) Adherence

Answer 2

B

Question 3

Which of the following is true about a minor's right to disaffirm a contract?

A) A minor must reach the age of majority to disaffirm a contract.
B) Contracts that come under the necessaries of life can be disaffirmed by minors.
C) Minors are exempt from duty of restoration during the period of minority.
D) A minor can disaffirm a contract any time prior to reaching the age of majority.

Answer 3

D

Question 4

Which of the following is true for a minor under the infancy doctrine?

A) A minor is bound to the adult's decisions in a contract between them.
B) A minor can disaffirm contracts he or she has entered into with adults.
C) A minor cannot enter into a legal contract with another minor.
D) A minor cannot choose to enforce a contract at his or her whim.

Question 5

The equitable doctrine of ________ obligates a minor to only pay reasonable value for goods or services received.

A) emancipation
B) restraint of contract
C) contract of adhesion
D) quasi-contract

Question 6

If a minor ratifies a contract while still being a minor,________.

A) the contract can be disaffirmed by the minor
B) the minor is bound by the terms of the contract
C) the minor is exempt from the duty of restitution
D) the minor has to hold the adult in status quo in case of disaffirmance

Question 7

The most prevalent age of majority is ________ years of age for both males and females.

A) 18
B) 25
C) 50
D) 51

Question 8

When Sheila is 16 years old (a minor),she enters into a contract to purchase an automobile costing $20,000 from Brian,a competent adult.Brian asks for verification of her age,and Sheila promptly provides him a fake driving license in which her age is misrepresented.Brian delivers ownership of the automobile to Sheila after he receives the payment of $20,000.Subsequently,before Sheila reaches the age of 18 (the age of majority),she is involved in an automobile accident caused by her own negligence.The automobile sustains $7,000 worth of damage in the accident (the automobile is now only worth $13,000).If Sheila disaffirms the contract and returns the damaged vehicle to Brian,he has to pay her ________.

A) $20,000
B) $10,000
C) $7,000
D) $13,000

Question 9

The ________ is a legal principle that allows minors to cancel most contracts they have entered into with adults.

A) duty of restoration
B) duty of restitution
C) contract of adhesion
D) infancy doctrine

Question 10

What is the significance of the age of majority in relation to legal contracts?

A) People below the age of majority can directly enter into lawful contracts.
B) Mentally incompetent persons need to achieve the age of majority in order to enter into a legal contract.
C) It is the age above which people of capacity can enter into a legal contract.
D) Minors who have entered the age of majority require his or her parents or guardian's consent to enter into a legal contract with adults.

Question 11

Sixteen-year-old Frank bought a video game console from John for $150.Frank is a minor,while John is a competent adult.A month later,the console started malfunctioning on its own.Frank returned the console to John.If Frank disaffirms his contract with John for buying the console,which of the following will be considered true?

A) John is not bound by the contract anymore as the exchange has been completed.
B) Frank can reclaim full refund of the amount he paid.
C) Frank can only ask for full refund once he has reached the age of majority.
D) Frank is legally obligated to fix the console before returning it to John before claiming full refund.

Question 12

In a contract between a minor and an adult,the duty of restoration lies with the ________.

A) adult
B) minor
C) competent party
D) judiciary

Question 13

________ is a rule that states that a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance.

A) Duty of restoration
B) Duty of restitution
C) Infancy doctrine
D) Emancipation doctrine

Question 14

________ is the act of a minor after he or she has reached the age of majority,by which he or she accepts a contract entered into when he or she was a minor.

A) Exculpation
B) Restitution
C) Ratification
D) Emancipation

Question 15

In order for a minor to be bound by a contract with an adult after he becomes an adult himself,he must ________.

A) disaffirm the contract before reaching the age of majority
B) complete his or her contractual duties of restitution and restoration
C) ratify the contract after reaching the age of majority
D) place the adult in status quo till reaching the age of maturity

Question 16

When Sheila is 16 years old (a minor),she enters into a contract to purchase an automobile costing $20,000 from Brian,a competent adult.Brian,who believes that Sheila is an adult,does not ask for verification of her age,and delivers ownership of the automobile to Sheila after he receives her payment of $20,000.Subsequently,before Sheila reaches the age of 18 (the age of majority),she is involved in an automobile accident caused by her own negligence.The automobile sustains $7,000 worth of damage in the accident (the automobile is now only worth $13,000).If Sheila disaffirms the contract and returns the damaged vehicle to Brian,he has to pay her ________.

A) $20,000
B) $10,000
C) $7,000
D) $13,000

Question 17

Which of the following is true about the ratification of a contract by a minor?

A) A minor can only ratify a contract after reaching the age of majority.
B) A minor cannot ratify a contract that falls under the necessaries of life doctrine.
C) A minor can ratify a contract during the period of minority if he or she so wishes.
D) A minor can ratify a contract under the guidance of a parent or legal guardian.

Question 18

The act or process of a minor voluntarily leaving home and living apart from his or her parents is referred to as ________.

A) restitution
B) emancipation
C) restoration
D) adhesion

Question 19

If a minor makes a contract with an adult,and the minor does not disaffirm the contract either during the period of minority or within a reasonable time after reaching the age of majority,________.

A) the adult is no longer obligated to the contract
B) the minor can disaffirm it later and obtain full restitution
C) the contract is considered ratified
D) the minor is no longer obligated to the contract

Question 20

________ is a rule that states that a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance.

A) Duty of restoration
B) Duty of restitution
C) Infancy doctrine
D) Emancipation doctrine

Question 21

Usury laws set a(n)________.

A) lower limit on annual interest rates
B) upper limit on annual interest rates
C) lower limit on levels of intoxication
D) upper limit on levels of intoxication

Question 22

A person who has alternative periods of sanity and insanity can enter into contracts ________.

A) when he or she is in a state of sanity
B) when there is a legal guardian appointed by the court for that person
C) once he or she has been adjudged to be insane
D) only once he or she has been adjudged to be legally insane

Question 23

Which of the following would constitute legal insanity?

A) weakness of intellect
B) emotional problems
C) slight delusions
D) mental retardation

Question 24

Suppose a state has set a usurious rate of interest as any interest rate above 25 percent.Samuel borrows $1,000 from Clara.Clara can demand a maximum of ________ without violating the usury law.

A) $1,000
B) $25
C) $1,250
D) $750

Question 25

The term ________ refers to a doctrine that states that the courts will refuse to enforce or rescind an unlawful contract and will leave the parties where it finds them.

A) disaffirmance
B) exculpatory clause
C) emancipation
D) effect of illegality

Question 26

Which of the following is an example of a contract contrary to statutes by its very existence?

A) a usurious loan contract
B) a contract between two minors
C) a contract where one party is insane but not adjudged insane
D) a contract of adhesion

Question 27

Which of the following is true of a contract with an adjudged insane person?

A) The adjudged insane person is bound by the terms of the contract.
B) Such a contract is void.
C) Only the competent party can enforce the contract.
D) The competent party is legally obligated to uphold the contract.

Question 28

When can an intoxicated person ratify the contracts he or she entered into while intoxicated?

A) while still intoxicated
B) after becoming sober
C) after reaching the age of majority
D) when the other party is intoxicated

Question 29

Which of the following is true of a contract,the object of which has become unlawful after the creation of the contract?

A) The contract is still legal as the object was legal at the time of creating that contract.
B) The contract is illegal even if the parties don't complete the contractual agreement.
C) The parties of the contract will be discharged from that contract.
D) Both parties are still obligated to complete their contractual agreements.

Question 30

The objective cognitive "understanding" test is used to determine ________.

A) duty of restoration
B) legal intoxication
C) legal insanity
D) duty of restitution

Question 31

________ set an upper limit on the interest rate that can be charged on certain types of loans.

A) Federal banking reforms
B) State usury laws
C) Congressional committees
D) Chambers of commerce

Question 32

Intoxicated persons are liable in a(n)________ to pay the reasonable value for necessaries they receive.

A) void contract
B) unconscionable contract
C) quasi-contract
D) pseudo-contract

Question 33

The parental duty of support terminates if a minor becomes ________.

A) poor
B) emancipated
C) diseased
D) intoxicated

Question 34

Under the ________ rule,a contract with an intoxicated person is voidable only if the person was so intoxicated when the contract was entered into that he or she was incapable of understanding or comprehending the nature of the transaction.

A) validation
B) exclusionary
C) force majeure
D) majority

Question 35

The state of Transas has set a maximum interest rate of 12 percent on loans.Matt borrows $10,000 from Tony to pay off a gambling debt.Both are residents of Transas.They sign a contract which states that Matt would have to pay $15,000 as interest in one year to pay off the loan.Later Matt finds out the state usury limit and sues Tony.What is the nature of the contract between Matt and Tony?

A) It is illegal as it violates gambling statutes.
B) It is legal as both parties were competent when the contract was signed.
C) The contract is void as it violates usury laws.
D) The contract is void as it is a contract to commit a crime.

Question 36

Suppose a state has set a usurious rate of interest as any interest rate above ________ percent.Joseph borrows $10,000 from Derek.Derek can demand a maximum of $11,000 without violating the usury law.

A) 10
B) 100
C) 1
D) 1000

Question 37

Which of the following groups is legally deprived from directly entering into contracts?

A) minors
B) persons adjudged insane
C) persons with alternating states of sanity and insanity
D) intoxicated persons

Question 38

Which of the following is true of a minor's duty toward a contract for necessaries of life?

A) Minors need to reach the age of majority to enter into contracts for necessaries of life.
B) Minors are exempt from paying for contracts of necessaries of life.
C) Minors must pay the reasonable value of necessaries of life for which they contract.
D) Parents are liable to provide necessaries of life to their minor children if they become emancipated.

Question 39

________ constitutes legal insanity.

A) Weakness of intellect
B) Mild delusion
C) Mild emotional instability
D) Brain damage

Question 40

Which of the following is true of a contract where one of the parties is insane but not adjudged insane?

A) The contract is only voidable by the competent party.
B) The contract is only voidable by the insane person.
C) Only the court appointed legal guardian to the insane person can modify contracts.
D) The non-insane person must be placed in status quo if the insane person voids the contract.

Question 41

A(n)________ is a contractual provision that relieves one or both of the parties to a contract from tort liability.

A) contract of adhesion
B) exculpatory clause
C) duty of restitution
D) fundamental breach

Question 42

A licensing statute enacted to protect the public is called a(n)________ licensing statute.

A) regulatory
B) contracting
C) revenue-raising
D) accounting

Question 43

A situation in which both parties are equally at fault in an illegal contract is termed ________.

A) suo moto
B) in pari delicto
C) corpus juris
D) habeus corpus

Question 44

A licensing statute is one that requires a person or business to obtain a license from the government ________.

A) prior to engaging in a specified occupation or activity
B) after engaging in any activity or profession
C) prior to obtaining a degree or diploma from any school
D) after obtaining a degree from any school

Question 45

________ is a licensing statute with the primary purpose of increasing earnings for the government.

A) Usury statute
B) Ratification statute
C) Regulatory-licensing statute
D) Revenue-raising statute

Question 46

Which of the following elements has to be proved for a contract to be deemed unconscionable?

A) that the weaker party did not enter the contract under duress
B) that the parties had equal bargaining power
C) that the dominant party justly used its bargaining power
D) that the adhering party had no reasonable alternative

Question 47

According to the regulatory licensing statute,________.

A) unlicensed persons can recover payment for services
B) only licensed persons can recover payment for services
C) persons breaching a revenue-raising statute cannot recover payment for services
D) all government-licensed persons have to pay an annual fee to renew their licenses

Question 48

Which of the following statements is true of exculpatory clauses?

A) They can be used in situations involving intentional torts.
B) They do not have to be reciprocal.
C) They cannot be found in parking lot tickets or service contracts.
D) They cannot relieve a party of liability for ordinary negligence.

Question 49

What is the doctrine of in pari delicto with reference to contracts?

A) It is a situation in which both parties are equally at fault in an illegal contract.
B) It is a situation where only one party has unknowingly signed a contract to commit crimes.
C) It gives minors the right to disaffirm a contract.
D) It is a special exemption right to circumvent usury laws.

Question 50

Darren is a certified interior designer with a lucrative client list in the city of Kelsa,situated in the state of Touslon.His business affords him a substantial amount of goodwill from his clients.Darren sells his accounting interior designing business to Glenda.When he sells his business to Glenda,Darren agrees not to open another interior designing firm in the city of Kelsa for a 25-year period.What kind of agreement exists between Darren and Glenda in this case?

A) contract in restraint of trade
B) covenant not to compete
C) unconscionable contract
D) quasi-contract

Question 51

Bobby voluntarily enrolls in a skydiving course at OpenSkies,Inc.,an adventure firm.He signs a contract that relieves OpenSkies of liability.After receiving proper instruction,he jumps from an airplane.Unfortunately,Bobby is injured when he could not steer his parachute toward the target area while landing.He sues the parachute center for damages.But the court found that the contract protected OpenSkies from damages,as Bobby had voluntarily joined the course knowing all the risks involved.What kind of contractual provision protected OpenSkies from having to pay Bobby damages?

A) noncompete clause
B) exculpatory clause
C) duty of restitution
D) disaffirmance

Question 52

Which of the following elements has to be proved for a contract to be deemed unconscionable?

A) that the stronger party entered the contract under duress
B) that the parties had equal economic resources at their disposal
C) that the parties possessed severely unequal bargaining power
D) that the dominant part had justly used its economic resources

Question 53

How is the doctrine of unconscionability related to public policy?

A) The doctrine of unconscionability is derived from public policy.
B) All contracts contrary to public policy are considered unconscionable.
C) Both are used to save a contracting party from a bad bargain.
D) Both are very distinctly defined by law.

Question 54

Damien,a first-year law student,offers his services to Mr.Jenkins to help draft his will.Mr.Jenkins agrees to Damien's offer,and promises to pay him $400 for his services.Damien completes the draft of the will.But when Damien goes to collect his payment,Mr.Jenkins refuses payment.Damien knew that he had no legal recourse to enforce the contract.What statute had Damien violated in his contract with Mr.Jenkins?

A) revenue-raising statute
B) regulatory licensing statute
C) usury statute
D) ratification statute

Question 55

The release of the liability clause is also known as the ________ clause.

A) exculpatory
B) exclamatory
C) tort
D) noncompete

Question 56

A ________ is a contract that provides that a seller of a business or an employee will not engage in a similar business or occupation within a specified geographical area for a specified time following the sale of the business or termination of employment.

A) quasi-contract
B) contract in restraint of trade
C) covenant not to compete
D) contract of adhesion

Question 57

Preprinted forms whose terms the consumer cannot negotiate,and must sign in order to obtain a product or service are referred to as ________.

A) contracts of adhesion
B) quasi-contracts
C) contracts in restraint of trade
D) voidable contracts

Question 58

In which of the following situations would the effect of illegality be an exception?

A) when both parties of an illegal contract execute their agreements
B) when both parties of an illegal contract are considered in pari delicto
C) when a party is justifiably ignorant of the law or fact that made the contract illegal
D) when a party completes his act of an illegal contract but has not received consideration

Question 59

An innocent party may use the court system to sue for damages or to recover consideration paid under an illegal contract when he or she ________.

A) withdrew from the contract immediately after the illegal act was performed
B) was as much at fault as any other party involved in the illegal contract
C) was justifiably aware of the law or fact that made the contract illegal
D) was induced to enter into an illegal contract by fraud, duress, or undue influence

Question 60

A(n)________ is a contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust.

A) unconscionable contract
B) contract of adhesion
C) contract in restraint of trade
D) quasi-contract

Question 61

Usury laws set a lower limit on the interest rate that can be charged on certain types of loans.

Question 62

Under the infancy doctrine,the contract is voidable by a minor.

Question 63

A person who has dealt with an insane person need not place that insane person in status quo if the contract is either void or voided by the insane person.

Question 64

The standard definition of what is a necessary of life does not include medical care.

Question 65

Disaffirmance may be conveyed orally or by the minor's conduct.

Question 66

The duty of restoration is a rule that states that if a minor has transferred money,property,or other valuables to the competent party before disaffirming the contract,that party must place the minor in status quo.

Question 67

Minors must pay the reasonable value of necessaries of life for which they contract.

Question 68

The act or process of a minor voluntarily leaving home and living apart from his or her parents is referred to as ratification.

Question 69

Judges are free to define morality based on their individual views.

Question 70

Any age below the statutory age of majority is called the period of minority.

Question 71

Usury laws are intended to protect unsophisticated borrowers from loan sharks and others who charge exorbitant rates of interest.

Question 72

A contract with an illegal object is not voidable.

Question 73

The duty of restitution is a rule that states that a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance.

Question 74

After becoming sober,an intoxicated person can ratify the contracts he or she entered into while intoxicated.

Question 75

A doctrine that allows minors to disaffirm (cancel)most contracts they have entered into with adults is referred to as covenant not to compete.

Question 76

Any contract entered into by a person who has been adjudged insane is void.

Question 77

Weakness of intellect constitutes legal insanity.

Question 78

Senility cannot lead to mental incapacity.

Question 79

A situation in which both parties are equally at fault in an illegal contract is termed "emancipation."

Question 80

If a minor does not disaffirm a contract either during the period of minority or within a reasonable time after reaching the age of majority,the contract is considered ratified.