Question 1

On your first spring break,you go in a bar after reading a large sign outside saying,"Beers $1.00 each all night long.If you can drink 30,they're all free?we'll pay for a taxi." You pay for your beers as you drink,and you manage to drink 30 beers.The bar agrees that you drank 30 beers,but refuses to refund your money.You sue the bar.Which is most likely true?

Accepted Answer

The court might consider the contract illegal due to promoting excessive drinking, which could be against public policy, even if it doesn't violate a specific statute.

Question 2

You and Gary enter a contract where you will receive $1,000 if you tamper with a slot machine in the "Bye-Bye Bucks Casino" in Las Vegas so that Gary can make it pay out a jackpot whenever he wants it to.You perform your part of the contract,but Gary doesn't pay.In your breach of contract suit against Gary,the court will:

Accepted Answer

The contract is illegal and unenforceable because it involves tampering with a gaming device, which is likely illegal. Courts do not enforce illegal contracts.

Question 3

Mary is a bartender at a local pub.The state in which Mary works requires all bartenders to be licensed.No special education or experience is required,but one must pay $25 per year for the license.Mary was not aware of this,so she did not obtain a license.When her boss found out about this,he refused to pay Mary for the two weeks of work that she had done.Mary sues.What results?

Accepted Answer

The licensing requirement is primarily for revenue-raising purposes, not regulatory. Therefore, Mary can still collect her wages despite not having the license.

Question 4

Julie buys an auto from John when she is 17.When she turns 21,Julie decides that she does not want the automobile.The age of majority in Julie's state is 18.Can Julie disaffirm this contract?

Accepted Answer

The answer of Julie buys an auto from John when...

Question 5

Bob sells Frank some cocaine,but Frank thinks he received baking soda.In this case:

Accepted Answer

The contract is illegal due to the sale of cocaine, so the court will not enforce it or order any payments.

Question 6

John hires Jane to steal a particular type of car for him.Jane demands $2,000 payment in advance,which John pays.Jane does not deliver the stolen car at the appointed time.John sues Jane.Which of the following is most likely?

Accepted Answer

The contract between John and Jane is illegal and unenforceable because it involves criminal activity (car theft). Courts will not enforce illegal contracts or order restitution in such cases.

Question 7

Bob,a 16-year-old minor,buys a snowmobile from Sam,an adult,for $2,000.Bob uses it for 2 months and then advertises the snowmobile for sale for $3,000 but has not yet sold it.At this point,which of the following is true?

Accepted Answer

Because Bob is a minor, he has the option to disaffirm the contract at any time before reaching the age of majority or within a reasonable time after reaching the age of majority. The fact that he advertised the snowmobile for sale does not necessarily constitute ratification of the contract, as he may simply be attempting to sell the snowmobile to recoup his costs. Similarly, the fact that he used the snowmobile for two months does not necessarily constitute ratification, as minor's contracts for necessaries (such as transportation) are often enforceable.

Question 8

Lisa has been a dentist in Elmville for several years.She is now ready to retire and she sells her practice to Angie.As part of the sales agreement,Lisa agrees not to practice dentistry within 20 miles of Elmville for a period of three years.After 2 years,Lisa is bored,so she opens up a dental practice in her home.This practice is very small and Lisa wants to keep it that way.Angie sues on the noncompete agreement.What is the most likely result?

Accepted Answer

The agreement is likely enforceable because noncompete agreements are generally enforceable if they are reasonable in scope, duration, and geographic area. A 20-mile radius for three years is typically considered reasonable.

Question 9

Andrea is a real estate agent; however,she does not have a license as required by statue.Andrea sells a piece of property for George,but George refuses to pay her the agreed commission.Andrea sues George.What results?

Accepted Answer

If the licensing statute is a regulatory statute, Andrea cannot collect her commission because she did not have a license as required by law. Regulatory statutes are designed to protect the public and ensure that those engaged in certain activities, such as selling real estate, are competent and qualified to do so. Therefore, if Andrea did not have a license, she was not authorized to sell the property in the first place, and her right to collect a commission is voided.

Question 10

Arthur had been adjudicated insane.During his period of insanity,Arthur sold some unimproved real estate to Katrina for $5,000,its fair value.Katrina did not know that Arthur was insane.In fact,he acted perfectly normal in every way.Arthur spends this $5,000.Arthur's guardian learns of this transaction and sues to void the contract and recover the land.What results?

Accepted Answer

Even though Katrina did not know of Arthur's insanity, the contract can be voided because Arthur was adjudicated insane at the time of the transaction. As a result, the contract is voidable and the guardian can recover the land. However, because Katrina acted in good faith, she is entitled to be reimbursed for the $5,000 she paid for the land. Therefore, Arthur must pay Katrina the $5,000.

Question 11

A computer that is the subject of a contract has the capability to be programmed to embezzle funds in a way that no other computer is able to do.The contract to sell such a computer:

Accepted Answer

Contracts that are against public policy are generally considered illegal and void. In this case, the computer in question has the capability to commit a crime (embezzlement), and as such, selling such a computer would be considered against public policy. Even if there is no statute prohibiting the sale of such a computer, the contract would still be considered illegal and void.

Question 12

Marsha bought a car from Indy Auto Sales when she was 16.Marsha's parents had given their consent for Marsha to purchase the car.However,in order to buy the car,Marsha lied about her age.A few months later,Marsha was intoxicated,driving too fast,and caused an accident with Mr.Jones.Marsha's car was totally destroyed,and Mr.Jones' car was badly damaged.Marsha wishes to minimize her liability for this accident.Which of the following best describes this situation?

Accepted Answer

Although Marsha is a minor, because her parents consented to her purchasing the car, she cannot disaffirm the contract. However, she may still be able to get back her money from Indy Auto Sales. She is still liable to Mr. Jones for damages caused by the accident.

Question 13

Mary,age 16,buys a car from Friendly Auto Dealers.She pays $1,500 for the car.It turns out that the car is really worth $2,500.Friendly wants to disaffirm the contract and get the car back.Which of the following best describes this situation?

Accepted Answer

Because Mary is a minor, the contract is voidable at her option, not at the option of Friendly Auto Dealers. Minors have the right to disaffirm contracts to protect them from exploitation.

Question 14

At age 16,Phil bought a car from Acme Auto Co.for $2,500.Phil drove the car for about six months,and then he had an accident.The damage to the auto was $1,500.In addition,the value of the auto before the accident was only $2,000.The accident was not Phil's fault.Phil wishes to disaffirm the contract.Which of the following best describes this situation?

Accepted Answer

Phil can disaffirm the contract and recover the entire $2,500 because the contract was voidable due to his age at the time of purchase. The fact that he had an accident and the value of the car decreased does not negate his right to disaffirm the contract and be refunded the full purchase price. Furthermore, since the accident was not Phil's fault, he may have a separate claim for the damage caused to the car by the other party involved in the accident.

Question 15

Mike,who is 16 years old,buys a motorcycle from Cycle Sellers,Inc.Assume that Mike pays $5,000 and that the fair value of the motorcycle at the time of purchase is $4,500.Which of the following is true?

Accepted Answer

Minors generally have the right to disaffirm contracts, meaning they can void the contract, even if they have agreed not to disaffirm.

Question 16

When Harry met Sally last month,he fell in love.Unfortunately Sally did not.He has appeared at her door twice daily since then to ask her to go on a sailing vacation.Sally has repeatedly told Harry to leave her alone,but he ignores that.Finally,Sally said,"I'll give you $100 if you never come here again." Harry left Sally alone for two months and then demanded the $100,which Sally refuses to pay.Which is true?

Accepted Answer

There is no valid contract between Harry and Sally as the agreement is based on an illegal consideration (Harry leaving Sally alone) and is therefore void. Additionally, Sally did not promise to pay Harry the $100 in exchange for him leaving her alone indefinitely, but rather only for him to never come to her home again, and even then it was not a binding contract.

Question 17

A minor,unable to live at home,contracts to rent an apartment for one year at $600 per month.After living there for three months,he disaffirms the contract.The reasonable value of that apartment was only $500 per month.Assuming no rent has been paid,the minor must pay which of the following?

Accepted Answer

When a minor disaffirms a contract, they are released from any obligations under the contract. However, they may still be responsible for the reasonable value of any goods or services received before disaffirming the contract. In this case, the minor lived in the apartment for three months and would be responsible for paying the reasonable value of the apartment during that time, which is $500 per month. Therefore, the minor must pay $1,500 ($500 per month for three months). Option A is incorrect because the minor is still responsible for the reasonable value of the apartment for the time they lived there. Option B is incorrect because the contract rate is not relevant after disaffirming the contract. Option D is incorrect because the minor only lived in the apartment for three months, not the entire year. Option E is incorrect because it assumes the minor would have continued living in the apartment for the entire year, which is not the case.

Question 18

Juan owns a house in a poor area of a large city.A salesman visits his home,selling aluminum siding.Juan buys and signs a contract,which calls for a price of $25,000 to be paid in monthly installments of $500 for 20 years.Juan only earns $700 per month.In addition,Juan's home is only worth about $35,000.The aluminum siding put on is worth no more than $1,500.Juan speaks and reads very little English and Juan thought he was signing a receipt for a free gift.Which of the following best describes this contract?

Accepted Answer

This contract is unconscionable because it takes advantage of Juan's lack of understanding of the contract and his financial situation. It is highly unfavorable to Juan in terms of the amount he would have to pay and the value he would receive. As a result, the contract is likely to be deemed unenforceable by a court.

Question 19

The courts have very broad powers to enforce or not enforce certain types of contracts.Which of the following statements best describes this power?

Accepted Answer

The courts have a lot of discretion in determining whether certain types of contracts violate public policy or are unconscionable. Exculpatory clauses and noncompete agreements are two examples of contracts that may or may not be contrary to public policy depending on the circumstances. This determination is not always clear-cut and may vary from case to case.

Question 20

Sid is a 15-year-old sophomore at East High School.He purchases a computer at a local store for a computer class,but wants to return it after using it for a couple of weeks because his classmates have nicer computers than his and he wants to get one of the better models.Sid can:

Accepted Answer

As a minor, Sid has the option to void the contract and return the computer unless the computer is considered a necessary item. In that case, he would be liable for its fair value. Sid has not ratified the contract by simply using the computer as this may be considered a form of inspection to determine if he wishes to keep it or not. Option A is incorrect as ratification would require Sid to explicitly state that he intends to keep the computer. Option C is also incorrect as minors can enter into contracts, but they have the option to void them. Option D is incorrect as minors can enter into contracts but can void them.

Quiz 12: Capacity and Legality