Question 1

Which of the following is untrue regarding the contracts of incompetent persons?
A) An incompetent person is liable for necessaries.
B) Unlike a minor, an incompetent person can never ratify a contract.
C) To avoid a contract, a person need not be permanently incompetent.
D) Under the cognitive ability test, a person is incompetent if he is unable to understand the nature and effect of his act.

Accepted Answer

The statement that an incompetent person can never ratify a contract is untrue. Incompetent persons may have periods of lucidity or may regain competence, during which they could potentially ratify a contract.

Question 2

Fay, age 17, ordered a pair of skis on the installment plan. She paid $20 every month until she turned 18, the age of majority. The next day, she sold the skis to Sharon and disaffirmed the contract. Fay is:
A) still liable since she had to disaffirm before her 18th birthday.
B) still liable because selling the skis amounted to a ratification.
C) still liable because she used the skis.
D) not liable because skis are not necessaries.

Accepted Answer

Selling the skis to Sharon is considered an act of ratification, which means Fay accepted the contract terms by her actions after reaching the age of majority.

Question 3

The legal ability to avoid a contract is known as:
A) return.
B) disaffirmance.
C) ab initio.
D) cancellation.

Accepted Answer

Disaffirmance is the legal term for the ability of a party to avoid a contract or declare it void. This is often applicable in cases where one party lacks the capacity to enter into a contract, such as minors.

Question 4

Robert Briscoe is 17 years old. He lies to Bouyers Auto about his age in order to induce them to sell him a new pickup truck. Bouyers falls for this lie and sells him the pickup. Under the prevailing view, Robert:
A) may disaffirm and get his money back.
B) may not disaffirm since he lied.
C) may only receive a portion of his money.
D) will receive his money less depreciation.

Accepted Answer

Under the prevailing legal view, minors have the right to disaffirm contracts to protect them from their own lack of judgment and experience. This right typically allows them to get their money back, even if they misrepresented their age.

Question 5

Melody, age 17, makes a contract with Seung, who is an adult. Melody:
A) may exercise the power of avoidance, called disaffirmance, while still a minor, and thereby be released from any liability on the contract.
B) may ratify the contract while still a minor, thereby surrendering the power of avoidance.
C) has entered a void contract since she lacked capacity.
D) may disaffirm only after reaching the age of majority.

Accepted Answer

Minors have the legal right to disaffirm contracts while they are still minors, which releases them from any contractual liabilities due to their lack of capacity to enter into contracts.

Question 6

Oswald, a minor, makes a contract with Albert, an adult, to buy a motorcycle. One week later, Oswald has his eighteenth birthday and shortly thereafter tells Albert he will pick up the motorcycle next week. In this case:
A) Oswald has expressly ratified the contract.
B) the contract must be renegotiated, because Oswald was a minor when it was made.
C) Oswald can change his mind and avoid the contract, because it was made when he was a minor.
D) the contract is void ab initio , because Oswald was a minor at the time it was made.

Accepted Answer

Oswald has expressly ratified the contract by affirming his intention to go through with it after reaching the age of majority, which makes the contract binding.

Question 7

Tim, who is a minor, enters into a contract with Violet, who is an adult. Which of the following is correct?
A) Violet may not disaffirm the contract.
B) Violet may disaffirm the contract at any time.
C) Violet may disaffirm the contract when Tim becomes an adult.
D) Tim may ratify the contract at any time during his minority.

Accepted Answer

Violet, being an adult, does not have the legal ability to disaffirm the contract based on Tim's minority. Only the minor party in a contract has the special legal right to disaffirm or void the contract.

Question 8

Elsie is 88 years old and under the legal guardianship of her daughter. One day Elsie receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy. This contract is:
A) valid.
B) voidable.
C) void.
D) unenforceable.

Accepted Answer

The answer of Elsie is 88 years old and under...

Question 9

Which of the following is not a method of ratification?
A) Through express language.
B) Written acceptance of a portion of the contract.
C) Through failure to make a timely disaffirmance.
D) As implied from conduct.

Accepted Answer

Ratification can occur through express language, implied from conduct, or by failure to make a timely disaffirmance, but not merely by written acceptance of a portion of the contract without other ratifying actions.

Question 10

Cornelio purchases an SUV from Barron Auto Sales. Cornelio is only 17 years of age. He wrecks the vehicle while off-roading and attempts to disaffirm the contract and have Barron repay him all that he has paid. In the majority of jurisdictions, Cornelio :
A) would be out of luck.
B) must have the SUV repaired.
C) will receive his money less the depreciation in value of the vehicle.
D) may simply return the vehicle and get his money.

Accepted Answer

In most jurisdictions, a minor can disaffirm a contract and return the vehicle to get a full refund, as contracts with minors are generally voidable.

Question 11

At age 17, Wanda purchased an expensive sound system from Lectronic City. If Wanda wishes to ratify this contract, Wanda:
A) must reach the age of majority and ratify the contract as a whole.
B) may do so by express notification at any time before reaching the age of majority.
C) may at any time keep the sound system but avoid any remaining debt owed on it.
D) may do so at any time by express or implied action before or after reaching the age of majority.

Accepted Answer

Contracts entered into by minors are generally voidable at the minor's discretion. However, once a minor reaches the age of majority, they can choose to ratify (formally approve) the contract, but it must be done as a whole, not in parts. Ratification can only occur after reaching the age of majority.

Question 12

The case of In re The Score Board, Inc. involved the issue of:
A) a minor's liability for misrepresentation of age.
B) whether an incompetent person's contracts are void or voidable.
C) ratification of a contract upon attaining majority.
D) liability for necessaries.

Accepted Answer

The case of In re The Score Board, Inc. involved the issue of ratification of a contract upon attaining majority. This case is often cited in discussions about the legal ability of minors to enter into contracts and what happens when those minors reach the age of majority and whether they choose to affirm or disaffirm the contracts they entered into while they were minors.

Question 13

Percy, age 17, purchased a used mobile home from a mobile home dealer for $20,000. This price, however, is twice the reasonable value of that mobile home. Several months later, Percy wants to disaffirm the contract. If the mobile home is considered a necessary item:
A) Percy can disaffirm the contract based on the wrongful act of the dealer.
B) Percy can disaffirm the contract because the minor can live in an apartment rather than a mobile home.
C) Percy is only liable for the reasonable value of the mobile home.
D) Percy must keep the mobile home and abide by the original terms of the contract.

Accepted Answer

Contracts involving minors are generally voidable at the option of the minor, except for contracts for necessaries, which include items essential for the minor's survival such as food, clothing, shelter, and medical services. In the case of necessaries, a minor is liable for the reasonable value of the item or service, not necessarily the contract price, especially if it's significantly higher than the item's reasonable value. Since a mobile home can be considered necessary for providing shelter, Percy would be liable for the reasonable value of the mobile home, not the inflated price he agreed to.

Question 14

Which of the following is least likely to be classified as a necessary item for which a minor will be held liable on a contract?
A) A cell phone.
B) Textbooks for school.
C) Basic clothing.
D) An automobile.

Accepted Answer

A cell phone is generally not considered a necessary item, as it is not essential for survival or basic living needs, unlike textbooks, basic clothing, or an automobile for transportation.

Question 15

In Berg v. Traylor , the court found that:
A) a minor may not disaffirm an agreement signed by a parent.
B) the disaffirmance of an agreement by a minor does not operate to terminate the contractual obligations of the parent who signed the agreement.
C) Craig could not disaffirm the contract to secure personal management services because it was a contract to provide his and his family's necessaries.
D) Craig, an infant, could not disaffirm in this case because it would cause undue hardship on the other party.

Accepted Answer

The court in Berg v. Traylor found that the disaffirmance of an agreement by a minor does not operate to terminate the contractual obligations of the parent who signed the agreement. This means that while a minor may have the right to disaffirm a contract, this action does not affect the contractual obligations of a parent who also signed the contract.

Question 16

Fourteen-year-old Marsha bought $120 worth of video games at a local store, using her own money. Her parents insisted that she return the items and get her money back. Which of the following is true?
A) If there is a conflict, the store's return policy will override Marsha's right of disaffirmation.
B) In most jurisdictions, Marsha may get her money back only if she has not opened or damaged the merchandise in any way.
C) In a majority of jurisdictions, Marsha may get her money back even if she cannot return the merchandise.
D) In most jurisdictions, Marsha may get some of her money back but she must pay the reasonable value of the goods if that differs from the contract price.

Accepted Answer

In most jurisdictions, minors have the right to disaffirm contracts, meaning they can void the contract and get their money back, even if they cannot return the merchandise.

Question 17

In the First State Bank of Sinai v. Hyland case, the Supreme Court of South Dakota held:
A) Mervin's obligation on a promissory note was void due to his alcohol-related incapacity.
B) Mervin ratified his voidable contract by conduct, making it a fully valid legal obligation.
C) the alcohol intoxication of a party to a contract does not affect the contract's enforceability.
D) Mervin could only use express language to ratify a contract formed while he was incapacitated by alcohol use.

Accepted Answer

The Supreme Court of South Dakota held that Mervin ratified his voidable contract by conduct, making it a fully valid legal obligation. This means that despite any initial incapacity due to alcohol, his subsequent actions affirmed the contract, making it enforceable.

Question 18

When a minor falsely advises the other party that he is of the age of majority and based upon that misrepresentation, the other party enters into a contract with the minor:
A) the minor has lost his right to disaffirm the contract because of the misrepresentation if the adult party in good faith reasonably relied on the misrepresentation.
B) the adult party can recover damages from the minor in tort.
C) the minor is required to restore the other party to the position occupied before the making of the contract.
D) There is no uniform rule. States differ, and depending upon the state, any of the above could be correct.

Accepted Answer

The correct answer is D because the laws regarding contracts with minors, especially when a minor misrepresents their age, vary significantly from state to state. Some jurisdictions may hold the minor accountable in certain ways, while others may not. Therefore, there is no single rule that applies across all states, making D the correct choice.

Question 19

Which of the following is untrue regarding the contracts of intoxicated persons?
A) If an intoxicated person is unable to understand the nature and consequences of his act, then the contract is voidable.
B) The effect of intoxication is generally the same as that given to contracts that are voidable because of incompetency.
C) Slight intoxication will destroy one's contractual capacity.
D) To make a contract voidable, a person need not be so drunk that he is totally without reason or understanding.

Accepted Answer

Slight intoxication does not destroy one's contractual capacity. A contract is only voidable if the intoxication is so severe that the person cannot understand the nature and consequences of the contract.

Question 20

Under the Uniform Commercial Code, when the minor has sold goods and the buyer has resold them to a good faith purchaser for value:
A) the minor can disaffirm and recover the property.
B) both the purchaser from the minor and the good faith purchaser for value acquire legal title.
C) the good faith purchaser for value acquires legal title.
D) the good faith purchaser for value receives a voidable title.

Accepted Answer

The Uniform Commercial Code (UCC) provides protection for good faith purchasers for value by allowing them to acquire legal title to the goods, even if the goods were sold by a minor who could disaffirm the contract. This ensures stability and trust in commercial transactions by protecting the interests of third parties who rely on the apparent validity of their purchase.

Quiz 14: Contractual Capacity

Which of the following is untrue regarding the contracts of incompetent persons?

Fay, age 17, ordered a pair of skis on the installment plan. She paid $20 every month until she turned 18, the age of majority. The next day, she sold the skis to Sharon and disaffirmed the contract. Fay is:

The legal ability to avoid a contract is known as:

Robert Briscoe is 17 years old. He lies to Bouyers Auto about his age in order to induce them to sell him a new pickup truck. Bouyers falls for this lie and sells him the pickup. Under the prevailing view, Robert:

Melody, age 17, makes a contract with Seung, who is an adult. Melody:

Oswald, a minor, makes a contract with Albert, an adult, to buy a motorcycle. One week later, Oswald has his eighteenth birthday and shortly thereafter tells Albert he will pick up the motorcycle next week. In this case:

Tim, who is a minor, enters into a contract with Violet, who is an adult. Which of the following is correct?

Elsie is 88 years old and under the legal guardianship of her daughter. One day Elsie receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy. This contract is:

Which of the following is not a method of ratification?

Cornelio purchases an SUV from Barron Auto Sales. Cornelio is only 17 years of age. He wrecks the vehicle while off-roading and attempts to disaffirm the contract and have Barron repay him all that he has paid. In the majority of jurisdictions, Cornelio :

At age 17, Wanda purchased an expensive sound system from Lectronic City. If Wanda wishes to ratify this contract, Wanda:

The case of In re The Score Board, Inc. involved the issue of:

Percy, age 17, purchased a used mobile home from a mobile home dealer for $20,000. This price, however, is twice the reasonable value of that mobile home. Several months later, Percy wants to disaffirm the contract. If the mobile home is considered a necessary item:

Which of the following is least likely to be classified as a necessary item for which a minor will be held liable on a contract?

In Berg v. Traylor , the court found that:

Fourteen-year-old Marsha bought $120 worth of video games at a local store, using her own money. Her parents insisted that she return the items and get her money back. Which of the following is true?

In the First State Bank of Sinai v. Hyland case, the Supreme Court of South Dakota held:

When a minor falsely advises the other party that he is of the age of majority and based upon that misrepresentation, the other party enters into a contract with the minor:

Which of the following is untrue regarding the contracts of intoxicated persons?

Under the Uniform Commercial Code, when the minor has sold goods and the buyer has resold them to a good faith purchaser for value: