Question 1

Only Parliament can declare certain types of contracts to be illegal.

Accepted Answer

In many jurisdictions, the legality of contracts is determined by laws and regulations, which can be enacted by various legislative bodies, not exclusively by Parliament.

Question 2

Which of the following contracts are enforceable?&#10;A) Reasonable contracts in restraint of trade.&#10;B) Contract to beat up another person.&#10;C) Contract to buy a knighthood.&#10;D) Contract to carry and bear a child for another to bring up.

Accepted Answer

Reasonable contracts in restraint of trade are enforceable if they protect legitimate business interests and are not excessively restrictive.

Question 3

If a contract is tainted by illegality, it is in all cases absolutely unenforceable. A court may not sever the illegal part of the transaction and allow the remainder to continue to bind the parties.

Accepted Answer

Courts may sever the illegal parts of a contract and enforce the remainder if the illegal portion does not affect the contract's main purpose.

Question 4

Courts may refuse to assist 'guilty' parties in enforcing illegal contracts or to help parties recover money or property transferred under an illegal contract where public policy requires this. The law of unjust enrichment governs the circumstances when a party can recover benefits conferred pursuant to a contract. In which of the following circumstances will restitution not be available to a party to the illegal contract?
Correct

A) Where the defendant is unaware of the facts giving rise to the illegality
B) Where the claimant has to rely on her own illegal act to prove her case
C) Where the claimant cannot establish a legal or equitable proprietary right to the property independent of the illegal contract.
D) In all of these cases

Accepted Answer

This is because the law generally does not permit a party to profit from their own wrongdoing. If a claimant must rely on evidence of their own illegal actions to establish their claim for restitution, courts will typically refuse to assist them. This is a principle rooted in public policy, which aims to discourage illegal activity by denying judicial support for enforcing rights arising from such activities.
Options A and C describe situations where restitution may still be available:
A) Where the defendant is unaware of the facts giving rise to the illegality: If the defendant is innocent of the illegality, the courts may allow the claimant to recover on the grounds of unjust enrichment, as the defendant would otherwise be unjustly enriched at the claimant's expense.
C) Where the claimant cannot establish a legal or equitable proprietary right to the property independent of the illegal contract: Even if the claimant cannot establish a legal or equitable right to the property, they may still be able to recover if they can show that the defendant would be unjustly enriched without restitution.
Therefore, the correct answer is B) Where the claimant has to rely on her own illegal act to prove her case, as this is the circumstance where restitution will not be available.

Question 5

Consider the following two statements.&#10;I)A contract concluded with a minor can only be tainted by incapacity if the adult had knowledge of the minority.&#10;II)A contract may only be avoided for mental incapacity by someone (who is not regarded as incapacitated under the Mental Capacity Act 2005) if the other party knows of his incapacity.&#10;Which of these statements is true?&#10;A) Both I and II.&#10;B) Only I.&#10;C) Only II.&#10;D) Neither I nor II.

Accepted Answer

The answer of Consider the following two statements.&#10;I)A contract concluded...

Question 6

Gloria, 15, is interested in art and frequently visits the antiques market on the Portobello Road. On a stall owned by Anthony, 56, she sees a sketch which she is sure was drawn by Constable. The sketch costs £300. She buys the sketch and subsequently tries to get it authenticated. A week later, Anthony reads in a local paper that the sketch he sold to Gloria is worth £25,000 and that several London museums have been interested in buying it. Can Anthony recover the painting by pleading Gloria's incapacity as a minor?

A) Yes, a contract concluded between a minor and an adult is void for incapacity.
B) Yes, a contract concluded between a minor and an adult is voidable for incapacity. Gloria has not yet passed title in the property to any museum.
C) No, a contract concluded between a minor and an adult is enforceable by the minor. Anthony cannot escape the bad bargain by pleading Gloria's incapacity.

Accepted Answer

A contract with a minor is generally voidable at the minor's discretion, not the adult's. Anthony cannot use Gloria's minority to void the contract to recover the painting.

Question 7

Which of the following contracts can a minor repudiate before or within a reasonable time of attaining majority?&#10;A) Contracts for necessaries which are for the benefit of the minor.&#10;B) Contracts for employment which are for the benefit of the minor.&#10;C) Contracts to buy or lease land which are for the benefit of the minor.&#10;D) Contracts for medical care which are for the benefit of the minor.

Accepted Answer

A minor can repudiate contracts related to buying or leasing land upon reaching the age of majority, as these are not considered necessities.

Deck 16: Contract law and capacity: Illegality, incapacity, and enforcement