Question 1

Generally, when a person of legal age makes a contract with a minor, the contract is voidable by either party.

Accepted Answer

The contract is generally voidable at the option of the minor, not the adult party. Adults are bound by the contracts they enter into unless the contract is void for reasons that apply to all contracts, such as fraud.

Question 2

A person who has drunk too much alcohol at a party and signs a contract may be able to rescind that contract.

Accepted Answer

If the person was under the influence of alcohol and did not have the capacity to fully understand and consent to the terms of the contract, they may be able to rescind the contract. This would depend on the specific circumstances of the situation and applicable laws.

Question 3

Factual incapacity is imposed because of the class or group to which a person belongs.

Accepted Answer

Factual incapacity is imposed due to a person's individual characteristics or circumstances, not their belonging to a particular class or group.

Question 4

Certain persons cannot make contracts that will bind them.

Accepted Answer

There are certain categories of persons, such as minors and persons of unsound mind, who lack legal capacity to enter into binding contracts.

Question 5

The "necessaries" of minors are precisely defined by law.

Accepted Answer

The definition of "necessaries" for minors can vary by jurisdiction and is often interpreted by courts, making it not precisely defined by law. It generally includes items essential for a minor's sustenance, health, education, and welfare, but the specifics can depend on the context and the minor's lifestyle.

Question 6

Ordinarily, every party to a contract is presumed to have contractual capacity until the contrary is shown.

Accepted Answer

This means that unless proven otherwise, all parties involved in a contract are assumed to have the mental and legal ability to enter into the contract. This presumption can be challenged if there is evidence that a party lacked capacity at the time of contract formation.

Question 7

Ratification consists of any words or conduct of a former minor manifesting an intent to be bound by the terms of a contract made while a minor.

Accepted Answer

Ratification is indeed when a former minor demonstrates an intent to be bound by a contract they made while still a minor.

Question 8

A party who speaks with a reckless disregard for the truth not knowing of the falsity of his or her words cannot be liable for fraud.

Accepted Answer

A party may still be liable for fraud if they speak with reckless disregard for the truth, even if they do not know that their words are false. This is known as "reckless misrepresentation."

Question 9

Fraud requires intent that the listener rely on the false statement of fact.

Accepted Answer

Fraud involves intentionally making a false statement of fact with the intention of deceiving the listener, who then relies on the statement to their detriment. Without the element of intent and reliance, there can be no fraud.

Question 10

A contract made by an incompetent person after a guardian has been appointed is voidable.

Accepted Answer

The answer of A contract made by an incompetent person...

Question 11

A factual incapacity may exist when, because of a mental condition caused by medication, drugs, alcohol, illness, or age, a person does not understand that a contract is being made or understand its general nature.

Accepted Answer

A factual incapacity exists when a person is not able to understand that a contract is being made or its general nature due to mental conditions caused by medication, drugs, alcohol, illness, or age.

Question 12

At common law, a minor cannot be held contractually liable for his or her necessary medical expenses when the parent is unable or unwilling to pay.

Accepted Answer

At common law, a minor can be held contractually liable for necessary items, including medical expenses, even if the parent is unable or unwilling to pay. This is because necessities (food, clothing, shelter, and medical care) are exceptions to the general rule that contracts with minors are voidable.

Question 13

When necessary medical care is provided to a minor, a parent is liable at common law for the medical expenses provided the minor child.

Accepted Answer

This is a common law principle known as the "doctrine of necessaries," which holds that a parent is responsible for providing necessary medical care and related expenses for their minor child.

Question 14

An incompetent person may ordinarily avoid a contract in the same manner as a minor.

Accepted Answer

An incompetent person, such as someone with a mental illness or those under the influence of drugs or alcohol, may avoid a contract in the same manner as a minor because they lack the capacity to enter into a legally binding agreement.

Question 15

Contractual capacity can exist even though a party does not understand every provision of the contract.

Accepted Answer

As long as a party has the ability to comprehend the general nature and consequences of the contract, they have contractual capacity. It is not necessary for them to understand every provision in detail.

Question 16

Fraud requires a misstatement of either a fact or an opinion.

Accepted Answer

Fraud can involve a misrepresentation of fact, but it can also involve concealing or omitting facts, or making promises or assurances with no intention of following through, without necessarily involving a misstatement of fact or opinion.

Question 17

When a minor avoids contracts, the minor always must return the other contracting parties to their original financial positions.

Accepted Answer

Minors are generally allowed to disaffirm contracts due to their lack of legal capacity, and the requirement to return the other party to their original financial position varies by jurisdiction and the nature of the contract. Some laws may not require minors to provide restitution if they cannot do so or if the contract involved items considered necessities.

Question 18

Discriminatory and punitive incapacities have largely disappeared.

Accepted Answer

Discriminatory and punitive incapacities have largely disappeared over time due to the recognition of civil rights and the implementation of fairer laws and policies. However, some instances of discrimination and punitive measures may still exist in certain areas and circumstances.

Question 19

The seller of a painting is not bound by the sales contract if the painting purchased was considered of little value and only later discovered to be valuable to the surprise of both buyer and seller.

Accepted Answer

The doctrine of mutual mistake applies in this situation, and both parties were unaware of the true value of the painting at the time of the sale. Therefore, the seller would not be bound by the sales contract.

Question 20

A unilateral mistake as to a fact does not affect the contract when the mistake is unknown to the other contracting party.

Accepted Answer

This is the principle of unilateral mistake in contract law. As long as the mistake is unknown to the other party, the contract remains valid and enforceable. However, if the mistake is known or should have been known by the other party, then the contract may be voidable or unenforceable.

Quiz 14: Capacity and Genuine Assent