Question 1

Chet, a minor, signs a contract with Denise, an adult. The contract is voidable at the option of​
A) ​neither party.
B) ​Chet only.
C) ​either party.
D) ​Denise only.

Accepted Answer

Minors have the right to void a contract, making it unenforceable. The adult party, in this case Denise, cannot void the contract themselves but may instead be subject to legal consequences if they attempt to enforce the contract against a minor who has opted to void it. Therefore, the contract is voidable at the option of Chet only.

Question 2

Stephen offers Theresa $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely​
A) ​enforce the deal after questioning the adequacy of consideration.
B) ​not question the adequacy of the consideration.
C) ​rewrite the deal after questioning the adequacy of consideration.
D) ​set aside the deal after questioning the adequacy of consideration.

Accepted Answer

A court would likely not question the adequacy of consideration because the exchange of $1,000 for a collection of rare coins constitutes a valid and enforceable contract. As long as the parties entered the agreement freely and voluntarily, without fraud, duress, mistake, or undue influence, the court would likely uphold the deal. The court's main concern would be to ensure that there was a meeting of the minds and a mutual assent to the terms of the agreement.

Question 3

Fact Pattern 9-2
Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
-Refer to Fact Pattern 9-2. The next day, Sal changes his mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sal and Tasty​
A) ​may agree to a new contract, but it cannot include a new price.
B) ​may agree to a new contract that includes the new price.
C) ​must perform their original contract.
D) ​must perform the part of their original contract that is executory.

Accepted Answer

When both parties agree to cancel a contract, it is considered terminated. Therefore, Sal and Tasty are free to negotiate a new contract, including a new price. The original contract is no longer binding, so they are not obligated to perform it.

Question 4

​Intoxicated but capable of comprehending the consequences of her actions, Cricket signs a contract to sell her phone app design to Download, Ltd. This contract is
A) ​unenforceable because Cricket was intoxicated.
B) ​enforceable.
C) ​unenforceable if Cricket disaffirms it.
D) ​unenforceable if Download disaffirms it.

Accepted Answer

Intoxication does not necessarily make a contract unenforceable unless the person was incapacitated to the point of being unable to comprehend the consequences of their actions. Since Cricket was capable of comprehending the consequences of her actions, the contract with Download, Ltd. is enforceable.

Question 5

Jenny promises to pay Kay $500 because "she does not have as much money as other people." Jenny's promise is​
A) ​enforceable because society wants people to keep their promises.
B) ​enforceable because the redistribution of wealth is a valid social goal.
C) ​not enforceable because Jenny could have paid Kyle more.
D) ​not enforceable because Kay has not given consideration in return.

Accepted Answer

Jenny's promise is not enforceable because Kay has not given consideration in return. In a contract, consideration is something of value exchanged between the parties, and in this case, Kay did not provide anything in return for Jenny's promise to pay $500. The reason why Jenny made the promise is also not relevant, as the enforceability of a contract depends on whether there was consideration given by both parties, not on the motivations behind the promise.

Question 6

Desi's Uncle Eduardo tells Desi, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." This promise​
A) ​is illusory.
B) ​is enforceable.
C) ​relies on forbearance.
D) ​consists of a preexisting duty.

Accepted Answer

The promise is considered illusory because it is not binding on Uncle Eduardo; he has not definitively committed to anything and retains the choice to give a car or not based on his subjective determination of Desi's deservingness at the time of graduation.

Question 7

Rita, a minor, misrepresents her age as twenty-one and signs a contract with Sporty Motors to buy a sport utility vehicle (SUV. In most states, Rita may​
A) ​disaffirm the contract.
B) ​disaffirm the contract only if she makes full payment.
C) ​disaffirm the contract only if she returns the SUV in good condition.
D) ​not disaffirm the contract due to the misrepresentation.

Accepted Answer

As a minor, Rita lacks contractual capacity and therefore can disaffirm the contract (i.e. treat it as void) due to the misrepresentation of her age. This means she can choose to rescind the contract and return the SUV or receive a refund of any payment made.

Question 8

Baylor obtains a loan from City Bank at 24.5 percent interest. Their state's usury statute limits interest rates to a 22.0 percent maximum. Baylor's contract with the bank is enforceable only if​
A) ​Baylor does not attempt to disaffirm it.
B) ​the bank does not attempt to disaffirm it.
C) ​both Baylor and the bank knew of the state limit.
D) ​none of the choices.

Accepted Answer

The contract would not be enforceable because the interest rate exceeds the state's usury limit, making the contract illegal regardless of the parties' knowledge or attempts to disaffirm it.

Question 9

​Rosa, a seventeen-year-old, signs a contract to sell her car to Street Fleet Cars. Later, Rosa decides not to sell the car. Rosa is liable to Street Fleet for
A) ​the cost of a car of comparable value.
B) ​the value of her performance under the contract.
C) ​the amount of the buyer's profit on the deal.
D) ​nothing.

Accepted Answer

Rosa, being a minor (under 18), has the legal right to disaffirm or void most contracts she enters into with adults, including contracts for the sale of personal property like a car. Therefore, she is not liable to Street Fleet for any costs or losses incurred as a result of her decision not to sell the car.

Question 10

Geri is a minor. Without her parents' knowledge, she signs a contract to buy an airline ticket to Hawaii for spring break. Geri's parents are liable for​
A) ​the entire price of the ticket.
B) ​no part of the price of the ticket.
C) ​up to half of the price of the ticket.
D) ​up to two-thirds of the price of the ticket.

Accepted Answer

Geri is a minor and therefore cannot enter into a binding contract without the consent of her parents or legal guardians. Since Geri's parents did not give their consent or knowledge of the contract, they are not liable for any part of the price of the airline ticket.

Question 11

Under a contract with Valley Vineyard, Walsh begins grading a terraced hillside for the planting of grapes. Halfway through the project, Walsh asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." Valley agrees but later refuses to pay. Valley's agreement to pay more is​
A) ​unenforceable because Walsh's performance was a preexisting duty.
B) ​unenforceable because Valley's promise was illusory.
C) ​enforceable.
D) ​unenforceable because Walsh's request modified the contract.

Accepted Answer

Valley's agreement to pay more is unenforceable because Walsh's performance was a preexisting duty under the original contract. Asking for additional compensation to fulfill a duty one is already legally obligated to perform does not constitute consideration for a new agreement.

Question 12

A court adjudicates Henry mentally incompetent and appoints Inez to be his guardian. Later, without Inez's knowledge, Henry signs a contract to sell his farm to Jason for its real market value. The contract is​
A) ​enforceable if Henry comprehended the consequences.
B) ​enforceable if Henry knew the market value of the farm.
C) ​enforceable if Henry was the record owner of the farm.
D) ​void.

Accepted Answer

Henry was adjudicated mentally incompetent and appointed a guardian, which means he is legally unable to enter into contracts without the approval or knowledge of his guardian. Therefore, the contract he signed with Jason is considered to be void because he did not have the legal capacity to enter into it.

Question 13

Laurel enters into a contract to sell her bike to Melanie. Melanie takes possession of the bike as a minor and continues to use it well after reaching the age of majority. She has​
A) ​expressly ratified the contract.
B) ​impliedly ratified the contract.
C) ​expressly disaffirmed the contract.
D) ​impliedly disaffirmed the contract.

Accepted Answer

Melanie's continued use of the bike after reaching the age of majority can be seen as an implied ratification of the contract that was entered into when she was a minor.

Question 14

Kent buys Lizzie's house for $100,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kent's consideration​
A) ​inadequate.
B) ​past.
C) ​legally sufficient.
D) ​illusory.

Accepted Answer

Kent's consideration is legally sufficient because the fair market value of $100,000 is a reasonable value for a house.

Question 15

Fact Pattern 9-2
Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
-Refer to Fact Pattern 9-2. Sal and Tasty​
A) ​may rescind their entire contract.
B) ​may rescind their contract to the extent that it is executory.
C) ​must perform their entire contract.
D) ​must perform the part of their contract that is executory.

Accepted Answer

Both parties may rescind their contract to the extent that it is executory, meaning any obligations that have not been fully performed. However, any obligations that have already been performed cannot be rescinded.

Question 16

Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can​
A) ​collect it.
B) ​not collect it because she had a preexisting duty to capture Oscar.
C) ​not collect it because it is not legally sufficient consideration.
D) ​not collect it because it would be unconscionable.

Accepted Answer

Maria cannot collect the reward because, as the sheriff, she already has a preexisting duty to capture criminals, which includes Oscar. This duty is part of her job responsibilities, so capturing Oscar does not constitute an action above and beyond her normal duties that would entitle her to the reward.

Question 17

Rory questions whether there is consideration for his contract with Silver Spurs Club to exchange his performance of country music on certain dates for Silver's payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be​
A) ​objectively worthy.
B) ​precisely adequate.
C) ​legally sufficient.
D) ​practically sound.

Accepted Answer

Consideration must be legally sufficient, meaning it has some value in the eyes of the law. It does not have to be objectively worthy or precisely adequate, but it must be something of value. Practically sound is not a standard for consideration.

Question 18

Twyla's dock is damaged in a boating accident caused by Ulrich's negligence. Twyla agrees not to sue him if he will pay for the damage. If Ulrich fails to pay, Twyla can bring an action for breach of contract. This is​
A) ​a covenant not to sue.
B) ​an illusory promise.
C) ​an unforeseen difficulty.
D) ​a release.

Accepted Answer

This scenario describes a covenant not to sue, where Twyla agrees not to sue Ulrich in exchange for his agreement to pay for the damage. This is a binding agreement that can lead to a breach of contract action if Ulrich fails to pay.

Question 19

Pi in the Sky Aircraft Inc. files a suit against Quest Engineering Inc., claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the consideration if​
A) ​there is a large disparity in the amount of consideration exchanged.
B) ​the consideration involves the performance of services.
C) ​something of value passed between the parties.
D) ​the consideration is worth less than $100.

Accepted Answer

The court will not examine the adequacy of consideration as long as something of value passed between the parties. Adequacy of consideration is determined by whether there was any consideration at all, not by the amount of it. Hence, option A is incorrect. Similarly, the nature of the consideration, whether it is money or services, isn't important in determining adequacy. Hence option B is incorrect. A contract for a sum below $100 is still enforceable, and thus option D is incorrect.

Question 20

While biking, Jolene is injured when Kirby carelessly causes them to crash. Kirby's insurance company offers Jolene $50,000 to release Kirby from liability, and she accepts. Later, Jolene learns that her injuries are more serious than she realized. The release is​
A) ​enforceable.
B) ​unenforceable because Jolene's injuries are unforeseeably difficult.
C) ​unenforceable because Kirby has a preexisting duty to pay.
D) ​unenforceable because the release is an illusory promise.

Accepted Answer

The release is enforceable because Jolene accepted the settlement from Kirby's insurance company, effectively agreeing to not pursue further claims related to this incident. The fact that her injuries were more serious than initially realized does not invalidate the agreement she entered into.

Quiz 9: Consideration, Capacity, and Legality

Chet, a minor, signs a contract with Denise, an adult. The contract is voidable at the option of​

Stephen offers Theresa $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely​

​Intoxicated but capable of comprehending the consequences of her actions, Cricket signs a contract to sell her phone app design to Download, Ltd. This contract is

Jenny promises to pay Kay $500 because "she does not have as much money as other people." Jenny's promise is​

Desi's Uncle Eduardo tells Desi, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." This promise​

Rita, a minor, misrepresents her age as twenty-one and signs a contract with Sporty Motors to buy a sport utility vehicle (SUV. In most states, Rita may​

Baylor obtains a loan from City Bank at 24.5 percent interest. Their state's usury statute limits interest rates to a 22.0 percent maximum. Baylor's contract with the bank is enforceable only if​

​Rosa, a seventeen-year-old, signs a contract to sell her car to Street Fleet Cars. Later, Rosa decides not to sell the car. Rosa is liable to Street Fleet for

Geri is a minor. Without her parents' knowledge, she signs a contract to buy an airline ticket to Hawaii for spring break. Geri's parents are liable for​

A court adjudicates Henry mentally incompetent and appoints Inez to be his guardian. Later, without Inez's knowledge, Henry signs a contract to sell his farm to Jason for its real market value. The contract is​

Laurel enters into a contract to sell her bike to Melanie. Melanie takes possession of the bike as a minor and continues to use it well after reaching the age of majority. She has​

Kent buys Lizzie's house for $100,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kent's consideration​

Fact Pattern 9-2 Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. -Refer to Fact Pattern 9-2. Sal and Tasty​

Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can​

Rory questions whether there is consideration for his contract with Silver Spurs Club to exchange his performance of country music on certain dates for Silver's payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be​

Twyla's dock is damaged in a boating accident caused by Ulrich's negligence. Twyla agrees not to sue him if he will pay for the damage. If Ulrich fails to pay, Twyla can bring an action for breach of contract. This is​

Pi in the Sky Aircraft Inc. files a suit against Quest Engineering Inc., claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the consideration if​

While biking, Jolene is injured when Kirby carelessly causes them to crash. Kirby's insurance company offers Jolene $50,000 to release Kirby from liability, and she accepts. Later, Jolene learns that her injuries are more serious than she realized. The release is​

Chet, a minor, signs a contract with Denise, an adult. The contract is voidable at the option of

Stephen offers Theresa $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely

Intoxicated but capable of comprehending the consequences of her actions, Cricket signs a contract to sell her phone app design to Download, Ltd. This contract is

Jenny promises to pay Kay $500 because "she does not have as much money as other people." Jenny's promise is

Desi's Uncle Eduardo tells Desi, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." This promise

Rita, a minor, misrepresents her age as twenty-one and signs a contract with Sporty Motors to buy a sport utility vehicle (SUV. In most states, Rita may

Baylor obtains a loan from City Bank at 24.5 percent interest. Their state's usury statute limits interest rates to a 22.0 percent maximum. Baylor's contract with the bank is enforceable only if

Rosa, a seventeen-year-old, signs a contract to sell her car to Street Fleet Cars. Later, Rosa decides not to sell the car. Rosa is liable to Street Fleet for

Geri is a minor. Without her parents' knowledge, she signs a contract to buy an airline ticket to Hawaii for spring break. Geri's parents are liable for

A court adjudicates Henry mentally incompetent and appoints Inez to be his guardian. Later, without Inez's knowledge, Henry signs a contract to sell his farm to Jason for its real market value. The contract is

Laurel enters into a contract to sell her bike to Melanie. Melanie takes possession of the bike as a minor and continues to use it well after reaching the age of majority. She has

Kent buys Lizzie's house for $100,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kent's consideration

Fact Pattern 9-2 Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. -Refer to Fact Pattern 9-2. Sal and Tasty

Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can

Rory questions whether there is consideration for his contract with Silver Spurs Club to exchange his performance of country music on certain dates for Silver's payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be

Twyla's dock is damaged in a boating accident caused by Ulrich's negligence. Twyla agrees not to sue him if he will pay for the damage. If Ulrich fails to pay, Twyla can bring an action for breach of contract. This is

Pi in the Sky Aircraft Inc. files a suit against Quest Engineering Inc., claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the consideration if

While biking, Jolene is injured when Kirby carelessly causes them to crash. Kirby's insurance company offers Jolene $50,000 to release Kirby from liability, and she accepts. Later, Jolene learns that her injuries are more serious than she realized. The release is