Deck 12: 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

A minor may not affirm one part of a contract and disaffirm another part.

Answer 2

True

Question 3

The infancy doctrine gives adults the right to disaffirm contracts entered with minors.

Answer 3

False

Question 4

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

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

Question 5

Which of the following is true of 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 6

________ 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) Sanction
D) Adherence

Question 7

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 8

If a minor entered into a contract, and then ratified the contract after reaching the age of majority, which of the following is he or she exempt from?

A) duty of restoration
B) duty of restitution
C) necessaries of life
D) infancy doctrine

Question 9

16-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 any more as the exchange has been completed.
B) Frank can reclaim full refund on 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.

Question 10

________ 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 11

In order for a minor to be bound by a contract with an adult after he or she becomes an adult, he or she 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 until reaching the age of maturity

Question 12

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

A) the contract can still 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 13

People below the age of majority are considered minors.

Question 14

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

A) A minor is bound to an 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 15

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 for 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 16

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

Question 17

The infancy doctrine binds an adult to a minor's decision on a contract.

Question 18

________ 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 19

Which of the following is true of 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 expressly disaffirm a contract orally or in writing.

Question 20

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 21

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

A) when he or she is in a lucid interval
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 22

In a contract involving a competent person and a person adjudged insane, either party can enforce the contract.

Question 23

The court-appointed guardian is the only person who has the legal authority to enter into contracts on behalf of a person who has been adjudged insane.

Question 24

If both parties to a contract are minors, both parties have the right to disaffirm the contract.

Question 25

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) The contract is void.
C) Only the competent party can enforce the contract.
D) The competent party is legally obligated to uphold the contract.

Question 26

The emancipation doctrine helps a minor to enforce the necessaries of life contract on negligent parents.

Question 27

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 28

A minor can disaffirm a contract any time after reaching the age of majority.

Question 29

The duty of restitution states that a competent party should be placed in status quo by the minor upon disaffirmance of a contract.

Question 30

What is the minor's duty of restoration in a disaffirmed contract?

Question 31

A person who was legally insane at the time of entering a contract is relieved of his or her duties from the contract.

Question 32

If a minor ratifies a contract while still being a minor, the contract cannot be disaffirmed.

Question 33

Minors are not obligated to pay for the necessaries of life that they contract for.

Question 34

Describe the infancy doctrine with reference to legal contracts.

Question 35

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

Question 36

According to a minor's duty of restoration, the goods received from an adult should be returned in status quo after the contract has been disaffirmed by the minor.

Question 37

The parental duty of support is terminated if a minor becomes emancipated.

Question 38

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

A) The contract is 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 39

A ratified contract can be disaffirmed even after the minor reaches the age of majority.

Question 40

If a minor does not disaffirm a contract upon reaching the age of majority, the contract is considered as ratified.

Question 41

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

A) It is a situation in which both parties are considered equally at fault in an illegal contract.
B) It is a situation where 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 42

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 43

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 44

A contract with an intoxicated person is not voidable by the other party if that party had contractual capacity.

Question 45

A person who is insane but not adjudged insane cannot void a contract he or she has entered into.

Question 46

A person who is insane but not adjudged insane is appointed a legal guardian to act on his or her behalf.

Question 47

A person who disaffirms a contract based on intoxication must be returned to status quo.

Question 48

Intoxicated persons are liable in quasi-contract to pay the reasonable value for necessaries they receive.

Question 49

________ 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 50

Contracts entered into by intoxicated persons are ________.

A) fully enforceable at the option of either party
B) voidable by both parties
C) void on their face
D) voidable only by the intoxicated person

Question 51

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

Question 52

If an intoxicated person enters into a contract to purchase dinner and drinks for everyone in a restaurant, may that person disaffirm the contract and refuse to pay for the restaurant bill after becoming sober?

Question 53

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

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

Question 54

Which of the following is true regarding contracts entered into by an intoxicated person?

A) The contract would be void.
B) Only the sober party may disaffirm the contract.
C) When the intoxicated person becomes sober, he or she may ratify the contract.
D) The contract is fully enforceable by the sober party.

Question 55

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 $1,500 as interest in one year to pay off the loan. Later, Matt gets to know about 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 56

In a contract involving a competent person and a person who is insane but not adjudged insane, the competent party can void the contract.

Question 57

What is legal insanity?

Question 58

The intoxicated person is not legally obligated to return consideration, received under the contract, to the competent party.

Question 59

________ 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 60

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 person is justifiably ignorant of the law or fact that made the contract illegal
D) when a person completes his act of an illegal contract but is not paid for his consideration

Question 61

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 62

Judges can define morality based on their individual views.

Question 63

A person can sue for nonperformance even if it is an illegal contract.

Question 64

What are licensing statutes?

Question 65

Ashley's employment contract contains a covenant not to compete. It states that when she leaves her current employment, she must not work in a similar business or start a similar business in Georgia, Alabama or Florida for a period of twelve years. If Ashley leaves her current job, could her employer enforce this covenant not to compete? Why or why not?

Question 66

At common law, parties to an illegal contract were considered in equal fault.

Question 67

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 68

Unlicensed persons cannot recover payment for services where they do not have the required license.

Question 69

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 70

How is the doctrine of unconscionability related to public policy?

A) The doctrine of unconscionability is based on 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 71

What are gambling statutes?

Question 72

An exculpatory clause that results from superior bargaining power is usually found to be void.

Question 73

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 74

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 75

Persons who entered into an illegal contract but withdrew before the illegal act was performed can sue to recover consideration.

Question 76

Bobby voluntarily enrolls in a skydiving course at OpenSkies Pvt. Ltd., 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 77

An exculpatory clause must be reciprocal to be considered enforceable.

Question 78

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 79

Lenders can charge interests set higher than the state limit.

Question 80

If the object of a contract becomes illegal after the contract is entered into, the parties are discharged from the contract.