Question 1

At Glamour Mattress Store,Robbie signs a contract to buy a suite of bedroom furniture. The contract sets a schedule of $500 monthly payments,subject to a late fee of 150 percent. Glamour's salesperson hurries Robbie through the deal,giving her no opportunity to read the contract. This is most likely
A)an adhesion contract.
B)procedural unconscionability.
C)substantive unconscionability.
D)an enforceable contract.

Accepted Answer

Procedural unconscionability refers to unfairness in the process of making a contract, such as when a party is rushed or not given an opportunity to read the contract.

Question 2

Intoxicated and not aware of the consequences,Umberto agrees to a two-year cell-phone service contract with Wander Talk,Inc.,at more than the average market price. This contract is
A)enforceable.
B)notenforceable because contracting parties can change their minds.
C)notenforceable because the contract clearly favors Wander Talk.
D)notenforceable because Umberto was intoxicated enough to lack mental capacity when he agreed to it.

Accepted Answer

A contract entered into by a person who lacks mental capacity, such as someone who is intoxicated, is not enforceable because they cannot fully comprehend the consequences of their actions. Therefore, Umberto's contract with Wander Talk, Inc. is not enforceable.

Question 3

Nelson,a minor,misrepresents his age when agreeing to a contract to buy a restored,antique soda vending machine from Old Is New Again,Inc. Ordinarily,Nelson can disaffirm the contract
A)only if he can prove that the seller did not know his true age.
B)only if he can prove that the seller knew his true age.
C)under any circumstances.
D)under no circumstances.

Accepted Answer

Minors have the right to disaffirm a contract, regardless of whether the seller knew or did not know their true age, as long as they disaffirm the contract within a reasonable time after reaching the age of majority. Therefore, option C is the correct choice.

Question 4

Fay is mentally incompetent but has not been so adjudged by a court. Any contract Fay enters into is
A)voidable if Fay has a lucid interval at the time of contracting.
B)voidable if Fay lacks the capacity to comprehend the consequences.
C)voidable if the other party does not realize that Fay is incompetent.
D)unavoidable.

Accepted Answer

The answer of Fay is mentally incompetent but has not...

Question 5

Rosie,a minor subject to her parents' care and control,signs a contract to rent a lake cabin from Sinclair for one year. Before the end of the term,Rosie moves out. Sinclair sues for the rent for the rest of the term. Rosie can
A)avoid liability for the rent but not disaffirm the contract.
B)disaffirm the contract and avoid liability for the rent.
C)disaffirm the contract but not avoid liability for the rent.
D)neither disaffirm the contract nor avoid liability for the rent.

Accepted Answer

As a minor, Rosie has the ability to disaffirm the contract she signed with Sinclair. This means that she can declare the contract void and undo any obligations that it created for her. Therefore, she can avoid liability for the rent for the rest of the term by disaffirming the contract.

Question 6

Jerome relinquishes the right to his daughter Meredith's control,care,custody,and earnings. This act is
A)disaffirmance.
B)emancipation.
C)ratification.
D)severability.

Accepted Answer

Relinquishing control, care, custody, and earnings of one's child is known as emancipation, which means that the child is no longer under the legal control of their parents.

Question 7

William obtains a loan from a bank at 4.5 percent interest. The state where he obtains the loan has a usury statute that limits interest rates to a 3.5 percent maximum. William's contract with the bank is
A)enforceable only if William does not attempt to disaffirm it.
B)enforceable only if the bank does not attempt to disaffirm it.
C)enforceable only if both William and the bank knew of the statute whenthe contract was signed.
D)not enforceable.

Accepted Answer

Usury statutes are put in place to protect borrowers from excessive interest rates. If the interest rate charged by the bank exceeds the maximum rate allowed by the state's usury statute, the contract is considered usurious and unenforceable. In this case, William's contract with the bank violates the usury statute since the interest rate charged is higher than the legal limit. Therefore, the contract is not enforceable.

Question 8

Cray,a minor,returns a digital music player that he bought from Discount City,which refunds the price. Their exchange involves
A)emancipation.
B)ratification.
C)restitution.
D)misrepresentation.

Accepted Answer

Restitution refers to the act of returning something that was received as a consequence of a contract or agreement. In this case, Discount City refunded the price of the digital music player to Cray, which constitutes restitution. Emancipation refers to the legal process of freeing a minor from the control of their parents or guardians, ratification refers to the approval or confirmation of a previously unauthorized agreement, and misrepresentation refers to the act of providing false information that induces someone to enter into a contract. None of these options accurately describe the exchange between Cray and Discount City.

Question 9

Alexis,a minor acting on her own,signs a contract to buy a motorcycle and accessories from Bad Bikes dealership. Later,after taking possession,Alexis disaffirms the deal. She
A)can keep the motorcycle and accessories.
B)can keep the motorcycle but not the accessories.
C)can keep the accessories but not the motorcycle.
D)must return both motorcycle and accessories.

Accepted Answer

As a minor, Alexis has the right to disaffirm the contract and return both the motorcycle and accessories. This is because minors are not legally binding to contracts, and therefore the contract is voidable at their option. Therefore, Alexis must return both the motorcycle and accessories to the dealership.

Question 10

Oklahoma charges Dewey,a design engineer and the owner of Windfarm Energy Corporation,a fee to practice his profession in the state. This is
A)usurious.
B)unconscionable.
C)a license.
D)an adhesion contract.

Accepted Answer

The fee charged to Dewey is a license fee, which is a common and legal requirement for professions such as engineering. It allows the state to regulate and ensure that those practicing their profession meet certain standards and qualifications. Terms like "usurious" and "unconscionable" imply excessive or unfair fees, which is not the case here. "Adhesion contract" refers to a type of contract where one party has more bargaining power than the other, which also does not apply in this scenario.

Question 11

Intoxicated but fully aware of the consequences,Cory agrees to a two-year service contract with Signal Maintenance,Inc.,at more than the average market price. This contract is
A)enforceable.
B)notenforceable because contracting parties can change their minds.
C)notenforceable because the contract clearly favors Signal.
D)notenforceable because Cory was intoxicated when he agreed to it.

Accepted Answer

Intoxication may affect the capacity of a person to enter into a contract, but if Cory was fully aware of the consequences and voluntarily agreed to sign the contract with Signal Maintenance, Inc, the contract is enforceable. A contract is only considered voidable due to intoxication if the intoxicated person lacked the mental capacity to understand the nature and consequences of the agreement. However, since Cory was fully aware of the terms and consequences of the contract, his intoxication would not render the contract unenforceable.

Question 12

Machine Parts Corporation requires its customers to sign contracts with uncon-scionable terms or the company,which has few competitors,will not do busi-ness with them. Machine Parts can normally enforce
A)a covenant not to compete.
B)an adhesion contract.
C)a contract to restrain trade.
D)none of the choices.

Accepted Answer

Unconscionable terms in a contract are generally not enforceable because they are considered unfair or oppressive to one party.

Question 13

Presley agrees to sell his Omni Sports Center facility to Nola. As part of the sale,Presley promises never to open a similar,competing business anywhere. This promise is most likely
A)invalid because it is part of a sale of an ongoing business.
B)invalid because of the unreasonable terms of area and time.
C)valid because it is part of a sale of an ongoing business.
D)valid if Presley and Nola are reasonably intelligent.

Accepted Answer

Non-compete agreements are generally viewed with disfavor by the courts and are strictly scrutinized. In this case, the unreasonable terms of area and time make this promise invalid.

Question 14

Shannon signs a contract with Tevin,an unlicensed contractor,to build a deck and gazebo at the rear of her house. This contract is enforceable by
A)Shannon.
B)any third party who is not aware that Tevin is not licensed.
C)Tevin.
D)no one.

Accepted Answer

In most jurisdictions, contracts with unlicensed contractors for work that requires a license are considered illegal and unenforceable by either party.

Question 15

Orin enters into a contract with Natalie. Later,Orin is adjudged mentally incompetent and Moseby is appointed Orin's guardian. Lila,Orin's daughter,attempts to void Orin's contract with Natalie on the grounds of Orin's incompetency. The contract is
A)enforceable if Orin does not attempt to disaffirm it.
B)enforceable if Natalie is also incompetent.
C)enforceable if Moseby knew of the contract when he was appointed.
D)void.

Accepted Answer

The answer of Orin enters into a contract with Natalie....

Question 16

U-Can-Own-It Corporation sells appliances to less educated consumers,including Vi,on installment plans. U-Can-Own-It files a suit against Vi when she stops making payments. Vi claims that the deal is unconscionable. The court will most likely consider
A)the geographic area of the relevant market.
B)the parties' relative bargaining power.
C)the quality of related products in the general market.
D)the relation of this deal to those of other customers.

Accepted Answer

The court will most likely consider the parties' relative bargaining power when determining if the deal is unconscionable. Vi, as a less educated consumer buying on an installment plan, may have less bargaining power than U-Can-Own-It Corporation, and this power dynamic may make the deal unconscionable. The other options listed are less relevant to a determination of unconscionability.

Question 17

Intoxicated,Clio agrees to sell her restaurant,Diners Café,to Evan for half of its real market value. This deal is most likely void if
A)Clio appeared intoxicated to Evan.
B)Clio disaffirms the contract after becoming sober.
C)Clio was so intoxicated as to have no memory of the deal.
D)Evan fraudulently induced Clio to become intoxicated.

Accepted Answer

If Evan fraudulently induced Clio to become intoxicated, then the agreement is voidable. This means that Clio can choose to either enforce or void the contract, depending on her decision. However, if Clio voluntarily became intoxicated on her own accord, then the agreement is still enforceable, as being intoxicated does not necessarily make a contract void or voidable.

Question 18

Mica,a minor,signs a contract to pay Natural Health Club a monthly fee for twenty-four months to use its facilities. Six months later,after reaching the age of majority,Mica continues to use the club. This act is
A)disaffirmance.
B)emancipation.
C)ratification.
D)restitution.

Accepted Answer

Ratification. Mica's continued use of the club after reaching the age of majority constitutes ratification of the contract, which means that she is fully accepting and agreeing to abide by the terms of the contract that she had signed when she was a minor.

Question 19

Serenity,a minor,obtains fruits and vegetables on credit from Virgil at Growers' Market. Later,Serenitydisaffirms the purchase. Serenityowes Virgil
A)the reasonable value of the goods.
B)the retail value of the goods.
C)the wholesale value of the goods.
D)nothing.

Accepted Answer

When a minor disaffirms a purchase, they are no longer bound to the contract and are not required to pay the full price. However, they are still obligated to pay the reasonable value of the goods, which is the amount that is deemed fair for the goods received. This is to prevent minors from taking advantage of the situation and receiving free goods without any consequences. Therefore, Serenity would owe Virgil the reasonable value of the fruits and vegetables obtained on credit.

Question 20

Nyoko signs a covenant not to compete with her employer,Midstate Distribu-tion,Inc. The covenant will be enforced if it
A)does not require either party to obtain a business license.
B)is reasonable with respect to geographic area and time.
C)relieves Midstate from liability for any injury to Nyoko due to simple negligence.
D)none of the choices.

Accepted Answer

A covenant not to compete must be reasonable with respect to geographic area and time in order to be enforceable. Options A and C are irrelevant to the enforceability of the covenant, and Option D is too vague.

Quiz 13: Capacity and Legality

Intoxicated and not aware of the consequences,Umberto agrees to a two-year cell-phone service contract with Wander Talk,Inc.,at more than the average market price. This contract is

Nelson,a minor,misrepresents his age when agreeing to a contract to buy a restored,antique soda vending machine from Old Is New Again,Inc. Ordinarily,Nelson can disaffirm the contract

Fay is mentally incompetent but has not been so adjudged by a court. Any contract Fay enters into is

Rosie,a minor subject to her parents' care and control,signs a contract to rent a lake cabin from Sinclair for one year. Before the end of the term,Rosie moves out. Sinclair sues for the rent for the rest of the term. Rosie can

Jerome relinquishes the right to his daughter Meredith's control,care,custody,and earnings. This act is

William obtains a loan from a bank at 4.5 percent interest. The state where he obtains the loan has a usury statute that limits interest rates to a 3.5 percent maximum. William's contract with the bank is

Cray,a minor,returns a digital music player that he bought from Discount City,which refunds the price. Their exchange involves

Alexis,a minor acting on her own,signs a contract to buy a motorcycle and accessories from Bad Bikes dealership. Later,after taking possession,Alexis disaffirms the deal. She

Oklahoma charges Dewey,a design engineer and the owner of Windfarm Energy Corporation,a fee to practice his profession in the state. This is

Intoxicated but fully aware of the consequences,Cory agrees to a two-year service contract with Signal Maintenance,Inc.,at more than the average market price. This contract is

Machine Parts Corporation requires its customers to sign contracts with uncon-scionable terms or the company,which has few competitors,will not do busi-ness with them. Machine Parts can normally enforce

Presley agrees to sell his Omni Sports Center facility to Nola. As part of the sale,Presley promises never to open a similar,competing business anywhere. This promise is most likely

Shannon signs a contract with Tevin,an unlicensed contractor,to build a deck and gazebo at the rear of her house. This contract is enforceable by

Orin enters into a contract with Natalie. Later,Orin is adjudged mentally incompetent and Moseby is appointed Orin's guardian. Lila,Orin's daughter,attempts to void Orin's contract with Natalie on the grounds of Orin's incompetency. The contract is

U-Can-Own-It Corporation sells appliances to less educated consumers,including Vi,on installment plans. U-Can-Own-It files a suit against Vi when she stops making payments. Vi claims that the deal is unconscionable. The court will most likely consider

Intoxicated,Clio agrees to sell her restaurant,Diners Café,to Evan for half of its real market value. This deal is most likely void if

Mica,a minor,signs a contract to pay Natural Health Club a monthly fee for twenty-four months to use its facilities. Six months later,after reaching the age of majority,Mica continues to use the club. This act is

Serenity,a minor,obtains fruits and vegetables on credit from Virgil at Growers' Market. Later,Serenitydisaffirms the purchase. Serenityowes Virgil

Nyoko signs a covenant not to compete with her employer,Midstate Distribu-tion,Inc. The covenant will be enforced if it