Deck 7: Capacity to Contract

Question 1

Patrick and Ken enter into a contract in which Ken sells his farm to Patrick. According to the contract, Patrick needs to pay $500 to Ken every month for the next ten years in order to settle the purchase. Later, it is found that Ken purposely caused Patrick to become drunk so that he would enter into the contract. Which of the following is most likely to be a consequence of this case?

A) Patrick will not need to pay Ken because the contract will be held invalid.
B) Patrick will need to pay a reasonable amount to Ken because housing is a necessity.
C) Ken will need to choose whether to affirm or disaffirm the contract.
D) Regardless of the intensity of intoxication, Patrick will be required to pay the contract amount because he signed the contract.

Answer 1

A

Question 2

Kenneth, aged sixteen, sells his car to Robin, aged 49. Later, Robin sells the car to Sarah, an innocent third party, before Kenneth can disaffirm the contract. In this case, which of the following will hold true?

A) Sarah can obtain good title to the property.
B) Kenneth can recover a portion of the property's value from Sarah.
C) Kenneth is a minor and thus cannot recover money from Robin.
D) Robin will still be held as the legal owner of the property.

Answer 2

A

Question 3

Which of the following conditions is a prerequisite for any agreement to be legally enforceable?

A) The parties entering into the agreement must be over the age of thirty five.
B) The agreement must be made in a court of law.
C) The parties entering into the agreement must have the mental capacity to contract.
D) The agreement must be signed in the presence of a third party who witnessed the proceedings.

Answer 3

C

Question 4

If a minor contracts for necessaries, the minor's liability is quasi-contractual in nature. This means that:

A) the minor is not required to pay the contract price.
B) the firm does not need to pay the minor because the contract is voidable.
C) the minor must pay the contract price to prevent the firm from being unjustly enriched.
D) the minor's parent or spouse needs to pay the reasonable value of what was received.

Question 5

Which of the following statements is true of the ratification of a minor's contracts?

A) A minor can ratify a voidable contract only if he/she is of legal age.
B) Silence ratifies an executed contract after a minor attains majority.
C) Ratification of a contract is plausible only if the minor has completed high school.
D) A minor is allowed to ratify one part of a contract and disaffirm another.

Question 6

Even if a minor does not have possession of property received under a contract, the contract can be disaffirmed.

Question 7

The safest way to contract with minors is to have the minor's guardian join in the contract as a cosigner.

Question 8

Specially enforced contracts such as student loan agreements are voidable contracts.

Question 9

Contracts made by people who were intoxicated to such an extent that they would not have entered into it if they were sober, makes the contract voidable.

Question 10

If two minors enter into a contract, each has the right to avoid it.

Question 11

The term disaffirmation refers to:

A) the election to avoid a contract or set it aside.
B) the process of executing terms of a contract in an unscrupulous manner.
C) willingness by a person to be bound by the terms of a contract.
D) the election to avoid a contract or set it aside.

Question 12

Ratification to a contract can be made any time before reaching majority.

Question 13

A minor has the legal right to disaffirm a voidable contract at any time during minority.

Question 14

A minor may ratify a voidable contract only after attaining majority. Explain.

Question 15

A person who has been legally declared to be a habitual drunkard is not liable for the reasonable value of necessaries furnished.

Question 16

A minor must ratify none or all parts of a contract.

Question 17

Which of the following is true of contracts of minors?

A) A contract between two minors gives the person of higher age the right to avoid it.
B) An adult is bound by a contract if a minor wishes to treat the contract as valid.
C) An adult can avoid a contract on the ground that the minor might avoid it.
D) A minor does not have the power to avoid or repudiate any contract.

Question 18

Sam and Martha sign a contract in which Sam agrees to pay a certain price and buy Martha's house. Later, Sam's brother states that Sam often has intervals of delusions and hence the contract is invalid because it has been made by an incompetent person. Sam has not been declared by the court as insane. In such a scenario, according to law, which of the following will entitle Martha to the price agreed upon in the contract?

A) Martha was not aware of Sam's mental condition while signing the contract.
B) Martha will incur a huge loss if the contract is held invalid.
C) Sam was in a sane frame of mind and understood the contract when he signed it.
D) Sam signed the contract on his own and was not forced to do so.

Question 19

If an adult purchases personal property from a minor, the minor has only a voidable title to the property.

Question 20

A contract between two minors gives the person of higher age the right to avoid it.