Question 1

Travis had too many beers at the baseball game. Ed realized Travis was so intoxicated he wouldn't know what he was doing, so he got Travis to sign a promise to sell his motorcycle to Ed for $50. When Travis gets sober, he can attempt to void the contract.

Accepted Answer

This is an example of a contract that is voidable due to the intoxication of one party. Travis can attempt to void the contract once he is sober.

Question 2

Spencer, age 18 and of sound mind, has the legal capacity to contract.

Accepted Answer

In most jurisdictions, an individual who is 18 years old and of sound mind has the legal capacity to contract. This means they can enter into legally binding agreements with others.

Question 3

Discuss the meaning of "material fact" in fraud situations.

Accepted Answer

The answer of Discuss the meaning of "material fact" in...

Question 4

In contract law, a minor is someone under the age of 21.

Accepted Answer

In most jurisdictions, the age of majority is 18, meaning a person becomes an adult and no longer a minor at that age. However, some states may have different ages of majority or special rules for certain contracts entered into by minors.

Question 5

Larson entered Forrester's Auto Mart to purchase a used car. Larson found a vehicle with a sales price of $11,000. After Forrester answered all of Larson's questions, Forrester and Larson agreed to a sale. As Larson was leaving to get the money to pay for the car, Forrester told Larson that he thought Robert Redford formerly owned the car. Larson later learned that Robert Redford had never owned the car. If Larson seeks to rescind the deal based on Forrester's statement, Larson will

Accepted Answer

DForrester's statement about Robert Redford's ownership is not a material fact affecting the value or performance of the car, making it unlikely for Larson to successfully prove reliance on this misrepresentation for the purchase. Additionally, Forrester's incorrect statement seems to be a unilateral mistake rather than a deliberate misrepresentation of a material fact.

Question 6

Which of the following terms designates the legal ability of a party to enter into a contract?

Accepted Answer

Capacity refers to the legal ability of a party to enter into a contract. This means that the party has the mental and legal ability to understand the terms and obligations of the contract and can legally bind themselves to those terms. The other options are not directly related to the legal ability to enter into a contract. Consent refers to agreement or permission, affirmation refers to confirmation or support, and materiality refers to the importance or relevance of a particular fact or information.

Question 7

Roger, a minor, buys a stereo from Tuneland, Inc. Roger uses the stereo for a few months, returns it to Tuneland, and demands his money back. Roger may rescind the contract, return the stereo and get his money back.

Accepted Answer

As a minor, Roger has the right to rescind the contract and return the stereo for a refund.

Question 8

Courts will not allow the rescission of a contract due to a unilateral mistake.

Accepted Answer

In some circumstances, courts may allow rescission of a contract due to a unilateral mistake, such as when the mistake was so fundamental that the parties did not have a "meeting of the minds" or when the other party knew or should have known about the mistake and took advantage of it.

Question 9

To formally cancel a contract is to _______ it.

Accepted Answer

To formally cancel a contract means to rescind it. Rescinding a contract is a legal way to declare it void and release the parties from their obligations under the contract.

Question 10

Discuss exculpatory clauses, and designate when an exculpatory clause is unenforceable.

Accepted Answer

The answer of Discuss exculpatory clauses, and designate when an...

Question 11

If a salesperson says, "This is a great car and it's really fun to drive," but the car turns out to be a lemon, the salesperson has committed fraud.

Accepted Answer

The statement made by the salesperson is considered an opinion ("great" and "really fun to drive") rather than a factual misrepresentation. Fraud involves intentionally deceiving someone by misstating a material fact.

Question 12

If Jane persuades Linda to buy her horse by telling Linda that the horse runs "like the wind," then Jane's statement is

Accepted Answer

Jane's statement is an example of puffery, which refers to exaggerated or fanciful claims made for promotional purposes. Puffery is not considered a legally binding statement but rather an opinion or subjective interpretation that is not meant to be taken at face value. In this case, Jane is using puffery to promote her horse and convince Linda to buy it.

Question 13

Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. Marty agrees to make monthly payments until the purchase price plus interest is paid in full. Which of the following is correct?

Accepted Answer

Contracts entered into by minors are generally voidable at the option of the minor. This means Marty, being 16, can choose to void the contract. Cream-of-the-Crop Cycles, on the other hand, is bound by the contract unless Marty decides to void it.

Question 14

A person who is mentally impaired generally can create only __________ contracts.

Accepted Answer

A person who is mentally impaired can create a contract, but that contract may be voidable if they did not have the capacity to understand the terms of the contract. This means that the contract is not automatically void, but it can be voided by the impaired person or their legal representative.

Question 15

Which of the following statements, if made by a seller who knows the statement to be untruthful, would NOT be misrepresentation of material fact resulting in a cause of action for fraud?

Accepted Answer

This statement is mere puffery or exaggeration, which is not considered a misrepresentation of material fact that can result in a cause of action for fraud. The other statements are specific factual assertions that can be proven true or false and are thus potentially actionable as fraud if the seller knowingly made a false statement.

Question 16

Fraudulent but innocent misrepresentation permits the injured party to rescind a contract.

Accepted Answer

In cases of fraudulent but innocent misrepresentation, the injured party can rescind the contract because the misrepresentation was made innocently, but still amounted to fraud.

Question 17

The Tavern's secret recipe for its pizza sauce would be considered

Accepted Answer

The Tavern's secret recipe for its pizza sauce would be considered a trade secret, which is a form of intellectual property that can be protected through legal means such as non-compete clauses. Non-compete clauses are enforceable to protect trade secrets from being shared or used by former employees who could use the information to benefit a competing business.

Question 18

To be valid, a non-compete clause must be

Accepted Answer

Non-compete clauses must be ancillary to a legitimate bargain, reasonable in terms of time, geographical area, and scope, and necessary to protect trade secrets or confidential information, whether they are part of a business sale or an employment contract.

Question 19

A party injured by fraud generally has the choice of suing for damages or rescinding the contract.

Accepted Answer

This is true. If a party has been defrauded in a contract, they can either sue for damages or choose to rescind (cancel) the contract. Rescinding the contract would essentially undo the agreement and release both parties from their obligations under it.

Question 20

Alice offers to sell her car to Barry for $500, and Barry accepts. Alice's car has a market value of $1,000 but this fact is unknown to Alice. The contract is enforceable.

Accepted Answer

The contract is enforceable as both parties have entered into the agreement with mutual consent and consideration. The market value of the car is not relevant as both parties have agreed to the $500 price. Alice's lack of knowledge of the true market value of the car is not relevant to the enforceability of the contract.

Quiz 11: Requirements for a Contract