Question 1

Intoxicated, Hans enters a contract for the sale of ten acres of timberland to Ira for less than its market value. Later, Hans seeks to cancel the deal. In determining whether Hans can avoid his duties under the contract, a court is most likely to look at

Accepted Answer

The court will consider Hans's intoxicated state to determine if he was capable of understanding the contract, as well as other relevant factors such as the fairness of the deal and whether Ira was aware of Hans's condition.

Question 2

Bern, a minor, signs a contract to buy a Caterwauler jet boat from Dahl, an adult. Dahl

Accepted Answer

Minors generally have the right to disaffirm contracts to protect them from their own lack of experience and from being taken advantage of by adults. However, adults who enter into contracts with minors do not have the same privilege to disaffirm the contract simply because the other party is a minor.

Question 3

Accepting and giving legal force to an obligation that previously was not enforceable is

Accepted Answer

Ratification is the act of accepting and giving legal force to an obligation that was previously not enforceable. This can occur in various contexts, such as contract law, where parties may ratify a previously voidable contract, thereby making it fully enforceable.

Question 4

Seth is mentally incompetent but has not been adjudged by a court to be incompetent. Seth enters into a contract with Toby for the cleaning and maintenance of Seth's warehouse. Most likely, the contract is

Accepted Answer

Contracts entered into by individuals who are mentally incompetent but not adjudged by a court to be so are generally considered voidable if the mentally incompetent party did not understand the nature and consequences of the transaction.

Question 5

Deb is a minor. She can enter into any contract an adult can, provided

Accepted Answer

Contracts involving minors are generally valid unless they are for items prohibited by law for minors, such as alcohol or tobacco. The willingness of adults to enter into contracts with minors or to ratify such contracts does not affect the legality of the contract. Similarly, the minor's willingness to disaffirm the contract is a right they hold, but it does not determine the types of contracts they can enter into.

Question 6

Intoxicated, Obo enters a contract for the sale of his business, Precision Parts, to Quad for less than its market value. This contract is voidable if, at the time,

Accepted Answer

If Quad fraudulently induced Obo to become intoxicated, the contract is voidable because Obo's capacity to understand and consent to the contract could be impaired, making the agreement potentially exploitative.

Question 7

Les, a minor, enters into a contract to buy a dirt bike from Motocross LLC. Les can ordinarily disaffirm the contract

Accepted Answer

Minors have the legal right to disaffirm contracts to protect them from exploitation and ensure they are not bound by agreements made without the capacity to fully understand their implications. This can be done in a timely manner, at any time during their minority, and for a reasonable time after reaching the age of majority.

Question 8

Gretchen is adjudged by a court to be mentally incompetent. Gretchen

Accepted Answer

A person adjudged by a court to be mentally incompetent lacks the legal capacity to enter into a contract, making any contract they attempt to form void.

Question 9

Dari, a minor, wants to disaffirm a contract that she entered into with Echo, a cell service company. The law in Dari's state, as in all states, permits minors to disaffirm

Accepted Answer

Minors generally have the legal right to disaffirm both executory contracts (where some or all of the terms are yet to be performed) and fully executed contracts (where all terms have been performed) to protect them from being unfairly bound by contractual agreements due to their age and potential lack of judgment.

Question 10

A contract to do something that is prohibited by statute is

Accepted Answer

Contracts that involve actions prohibited by statute are generally unenforceable because they violate public policy.

Question 11

Jac enters into a contract with Knut, an unlicensed contractor. This contract may be enforceable if

Accepted Answer

The enforceability of a contract with an unlicensed contractor depends on the purpose and wording of the licensing statute. If the statute does not expressly state that contracts involving unlicensed contractors are unenforceable, then the contract may still be enforceable. This is because the primary aim of some licensing statutes is to regulate the profession and ensure competency rather than to penalize unlicensed work by making contracts unenforceable.

Question 12

Cass agrees to sell her Daily Donut shop to Ernie. In the agreement, there is a covenant not to compete that prohibits Cass from operating a donut shop within a certain distance. If the restriction is unreasonable, a court will most likely

Accepted Answer

Courts often reform covenants not to compete if they find the restrictions to be unreasonable, adjusting them to make them reasonable rather than completely invalidating the agreement or imposing other penalties.

Question 13

Intoxicated, Efron enters a contract for the sale of his business, Freight Dispatch, to Gretel for less than its market value. This contract is enforceable if, at the time,

Accepted Answer

Efron's understanding of the legal consequences of his actions at the time of entering the contract is crucial for the contract's enforceability, regardless of his intoxication. Contracts entered into by intoxicated individuals can still be valid if those individuals understood what they were doing and the legal implications of their actions.

Question 14

In determining procedural unconscionability, a court is most likely to consider whether

Accepted Answer

Procedural unconscionability focuses on the process of making the contract, including whether the buyer had a fair opportunity to understand the terms, such as the chance to ask questions.

Question 15

Quest enters into a contract to buy a thoroughbred from Rancho Mesa. Quest can disaffirm the contract

Accepted Answer

Quest can disaffirm the contract either by explicitly stating it (words) or through actions that indicate a refusal to be bound by the contract (conduct).

Question 16

Horse racing, video poker games, and charity-sponsored bingo are

Accepted Answer

Horse racing, video poker games, and charity-sponsored bingo are forms of gambling that are allowed and regulated by many states, though the specific regulations and the extent of legality vary from one state to another.

Question 17

Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar, competing store anywhere. This promise is most likely

Accepted Answer

The answer of Reed agrees to sell his Sports Equipment...

Question 18

The purpose of the right to disaffirm a contract is to

Accepted Answer

The purpose of the right to disaffirm a contract is primarily to protect minors from being exploited or unfairly bound by contracts they may not fully understand or be able to fulfill due to their age and lack of experience.

Question 19

Foy, a minor, misrepresents his age when entering into a contract to buy a car from Gas Hogs Inc. Foy takes possession of the car, but makes no payments on the contract and tries to disaffirm it. Most likely, Gas Hogs can recover

Accepted Answer

The answer of Foy, a minor, misrepresents his age when...

Question 20

Von, a minor, wants to return a set of skis that he bought from Winter Sports. He used-and wrecked-the skis. In a state in which a duty of restitution is imposed, Von most likely

Accepted Answer

In states where a duty of restitution is imposed, a minor who has used or damaged goods may be required to return the goods and also pay for any damage. This means Von must return the skis and compensate for the damage caused.

Quiz 14: Capacity and Legality