Question 1

The age when someone possesses capacity to contract is 21 years.

Accepted Answer

The general age of majority for contractual capacity in many jurisdictions, including the United States, is 18 years, not 21.

Question 2

Rachel, a 16 year old girl, buys a bike for $20 from an adult. From an adult. If she chooses she may avoid the contract because she is a minor.

Accepted Answer

Minors, typically anyone under the age of 18, have the legal right to disaffirm or avoid contracts they enter into with adults, as they are considered not fully capable of understanding the consequences of their agreements.

Question 3

Intoxication will always negate capacity to contract.

Accepted Answer

Intoxication does not always negate capacity to contract. It may affect a person's capacity if they are so intoxicated that they cannot understand the nature and consequences of the transaction, but mild intoxication that does not impair understanding typically does not negate capacity.

Question 4

Capacity is the ability to make reasoned wise decisions when contracting.

Accepted Answer

The answer of Capacity is the ability to make reasoned...

Question 5

In C.M.D. v. Facebook, the court determined that a 13 year old never disaffirmed or disavowed the user agreement, therefore, Facebook was able to use his likeness in advertising.

Accepted Answer

The court found that the minor did not disaffirm the user agreement, allowing Facebook to use his likeness in advertising as per the terms agreed upon.

Question 6

Determining if an adult is lucid, and thus possesses capacity to contract, is a bright-line rule and fairly easy to apply.

Accepted Answer

Determining if an adult is lucid and possesses the capacity to contract often involves nuanced assessments of mental state, understanding, and intention, making it not a straightforward, bright-line rule but rather a complex, case-by-case determination.

Question 7

Open-ended standards of determining capacity are more flexible and allow a greater range of discretion.

Accepted Answer

Open-ended standards for determining capacity are designed to be adaptable to the specific circumstances of each case, allowing decision-makers to exercise more discretion in their assessments. This flexibility enables a more nuanced and individualized determination of capacity.

Question 8

If both the employer and the employee agree to it, the employer can pay the employee below minimum wage.

Accepted Answer

Minimum wage laws set the lowest amount an employer can legally pay their employees, and agreements to pay less than the legal minimum wage are not enforceable, even if both parties agree.

Question 9

If U.S. House Representative Jones agrees to get Valerie appointed to a community organizer position in his district so long as she agrees to give him a large donation to his political campaign, then that is an example of an agreement that is illegal as against public policy.

Accepted Answer

This scenario describes a quid pro quo arrangement that involves trading a political appointment for a campaign donation, which is considered illegal and against public policy as it constitutes bribery.

Question 10

If one party to a contract is not in pari delicto with the other party (that is, the one party is not as guilty as the other party) because he entered the contract due to the other party's fraud, duress, or strong economic pressure, the more innocent party may have restitution for the value of the portion of the contract he already performed.

Accepted Answer

When one party enters a contract under conditions such as fraud, duress, or strong economic pressure, they are considered less culpable (not in pari delicto) and may be entitled to restitution for the parts of the contract they have already performed. This is because the law recognizes the imbalance in the parties' culpability and seeks to restore the more innocent party to their original position as much as possible.

Question 11

The ability to understand the terms of an agreement is

Accepted Answer

Capacity refers to the legal ability of a party to enter into a contract, including understanding the terms of the agreement.

Question 12

Examples of characteristics of individuals who lack capacity include all of the following except

Accepted Answer

Impulsive individuals can still have the capacity to make decisions; impulsivity does not inherently mean a lack of capacity. Capacity generally refers to the ability to understand and appreciate the nature and consequences of decisions, which impulsive individuals can possess.

Question 13

Ralph, 32 years old, sells his car to Joe, 16 years old, thinking Joe is actually 18 years old. When Ralph finds out Joe is actually only 16 years old, he is outraged and wants to have the contract voided because Joe is a minor. Will Ralph be successful?

Accepted Answer

Contracts involving minors are generally voidable at the discretion of the minor, not the adult party. Therefore, only Joe has the legal right to void the contract due to his age.

Question 14

According to the contract laws of capacity, the age at which a person can contract is

Accepted Answer

The age at which a person is generally considered legally competent to enter into contracts is 18 years in most jurisdictions. This is the age at which an individual is considered to have the legal capacity to enter into binding agreements.

Question 15

Kevin, at 17 ½ years of age, buys a motorcycle from an adult, Shelby. On his 18^th birthday Kevin continues to drive his motorcycle. Because he has done so, he becomes legally bound to the terms of the contract by

Accepted Answer

Ratification occurs when a person who reaches the age of majority (18 in most jurisdictions) confirms a contract made during their minority. By continuing to use the motorcycle after turning 18, Kevin has ratified the contract.

Question 16

16 year old Grace agrees to quit school to work for Andrew in his flower shop full-time. When Grace's mom finds out what she has done, she orders her to tell Andrew that she will quit the job. This is called

Accepted Answer

Disaffirmance is the right term because it refers to the legal right of minors to void or cancel certain types of contracts, including employment agreements, to protect themselves from exploitation and ensure their actions do not harm their well-being.

Question 17

In the case of C.M.D. v. Facebook, Facebook allowed a minor to create a Facebook account, but the minor had to accept Facebook's terms, which included using the minor's name and likeness in advertisements. The minor's parents sued Facebook, claiming the terms of the agreement were not enforceable against a minor, and also claiming that the minor disaffirmed the agreement with Facebook. How did the court rule?

Accepted Answer

The answer of In the case of C.M.D. v. Facebook,...

Question 18

Leona is a mean, vindictive woman with a great deal of money. Instead of sharing her money with her family, she donates almost all of her fortune, $53,000,000.00, to the local dog pound in exchange for them naming the building shelter after her daughter. She laughs all the way home. When her daughter finds out, she challenges the contract by stating that her mother lacked legal mental capacity. What would most likely be the outcome of the case?

Accepted Answer

CThe court would likely find that Leona had mental competency because she understood the consequences of her actions, evidenced by her deliberate decision to donate her fortune and the specific condition attached to the donation. Additionally, the presence of consideration (the donation in exchange for naming the building after her daughter) supports the validity of the contract, indicating that Leona was capable of entering into a legal agreement. Mental capacity in legal terms is about the ability to understand the nature and effects of one's actions, not whether those actions are wise or morally right.

Question 19

At an after work networking event, Mike drinks wine while negotiating the terms of an employment contract with Cyndy to start the next day. Cyndy shows up to work the next day and Mike states that he was drunk the night before and therefore lacked capacity. The court will most likely rule

Accepted Answer

The contract is voidable by Mike if he can prove that at the time he entered into the contract his intoxication prevented him from understanding the consequences of his actions. This is because the law recognizes that severe intoxication can impair a person's capacity to enter into a contract.

Question 20

To determine if a person is lucid, courts employ

Accepted Answer

Courts use a flexible standard to determine if a person is lucid, recognizing that mental capacity can vary greatly among individuals and situations, requiring a case-by-case assessment rather than a rigid rule.

Quiz 8: Capacity and Legality