Question 1

In most states, the agreements of persons who have been adjudicated insane are void.

Accepted Answer

This is because contractual capacity requires that a person is of sound mind and able to understand the terms and consequences of the agreement they are entering into. Adjudication of insanity indicates a lack of mental capacity, which makes any agreements made during that time void.

Question 2

A person could be medically insane but still have the legal capacity to contract.

Accepted Answer

Medical insanity is a clinical diagnosis that refers to a severe mental illness or disorder that results in significant impairment in a person's behavior, thoughts or emotions. However, legal capacity refers to a person's ability to understand the nature and consequences of their actions and to make informed decisions. While a person may be medically insane, they may still have the cognitive capacity to contract and make legally binding agreements.

Question 3

The idea behind _____ is that adults who indicate an intent to be bound by contracts entered while still minors should be bound to those contracts and denied the right to disaffirm thereafter.

Accepted Answer

The idea behind ratification is that adults who indicate an intent to be bound by contracts entered while still minors should be bound to those contracts and denied the right to disaffirm thereafter. As adults, they are assumed to have sufficient knowledge and experience to judge the wisdom of those contracts.

Question 4

A person could be periodically insane but enter a binding contract during a lucid moment.

Accepted Answer

A person who is periodically insane may have periods of lucidity in which they are able to enter into a binding contract. However, if it can be proven that the person was not of sound mind at the time of the contract, it may be voidable.

Question 5

In a contract made by a minor, _____.

Accepted Answer

The idea behind minors' incapacity is that a minor (a person who is not legally considered to be an adult) may not be able to bargain effectively with older, more experienced persons. The courts responded to this idea by making minors' contracts voidable-that is, the minor is given the right to disaffirm (cancel) his or her contracts.

Question 6

Minors are generally held liable on a quasi contract basis for the reasonable value of necessaries furnished to them.

Accepted Answer

This is because necessaries are considered essential goods and services that a minor needs for their health and welfare. Thus, even though a minor cannot enter into a binding contract, they are still responsible for paying for these goods and services on a quasi contract basis.

Question 7

The law uses the word veracity to describe the ability of a person to do a legally valid act.

Accepted Answer

Veracity refers to truthfulness or honesty. The word used in law to describe the ability of a person to do a legally valid act is "capacity."

Question 8

People lacking mental capacity are liable for the reasonable value of necessaries on the same basis and for the same reasons as minors.

Accepted Answer

This is referred to as the doctrine of necessaries, and it applies to both minors and individuals lacking mental capacity. This means that a person who lacks mental capacity can be held liable for the reasonable value of goods or services that are necessary for their well-being, just like a minor can.

Question 9

The minor who does not disaffirm within a reasonable time after attaining majority is held to have rescinded the contract.

Accepted Answer

The statement is incorrect. The minor who does not disaffirm within a reasonable time after attaining majority is held to have ratified the contract, not rescinded it.

Question 10

The idea behind minors' incapacity is that a minor may not be able to bargain effectively with older, more experienced persons. The courts responded to this idea by making minors' contracts void.

Accepted Answer

The courts generally hold that contracts entered into by minors are voidable at the minor's option, not automatically void. This means that the minor has the right to either enforce or void the contract, providing them protection while still allowing them to enter into contracts.

Question 11

Adults who contract with minors are bound to the agreement unless the minor chooses to disaffirm.

Accepted Answer

This is the principle of minor's contractual disaffirmance, which states that a minor has the right to void a contract at any time before reaching the age of majority or within a reasonable time after turning 18. However, if the adult is unaware of the minor's age or if the contract is for necessities (such as food, clothing, and shelter), the minor may not be able to disaffirm the contract.

Question 12

Chuck Olson, age 16, buys a used car from Bobby Duncan Used Cars Center on September 15, 2006. Olson agrees to pay $200 a month for 12 months. A month after the purchase, Olson is involved in an accident that wrecks the car. He immediately calls Duncan Cars and informs them that he is disaffirming the contract. According to traditional common laws, which of the following is most likely to be true?

Accepted Answer

According to traditional common laws, Olson does not have a duty to place Duncan in status quo ante. A difficult problem arises when the minor is no longer in possession of the consideration the adult gave, or when the consideration has been partially consumed or damaged, or has otherwise declined in value. The traditional common law answer is that the minor who no longer has the consideration the adult gave does not have any duty to place the adult in status quo.

Question 13

Minors are liable for the value of necessaries they have purchased under a contract but have not received at the time they disaffirm.

Accepted Answer

Minors are generally not liable for contracts they enter into, except for contracts for necessaries (like food, clothing, shelter). However, if they disaffirm a contract before receiving the necessaries, they are not liable for the value of what they have not received. The liability typically applies to necessaries they have already received and used.

Question 14

If either party entering a contract lacks the capacity to contract, the contract is void or voidable, depending on the kind of incapacity involved.

Accepted Answer

This is true. If one or both parties lack the capacity to contract, the contract may be considered legally void or voidable depending on the type of incapacity involved. Examples of lack of capacity may include mental illness, intoxication, minority, or duress.

Question 15

Generally, a minor may disaffirm by doing anything that clearly indicates to the other party an intent not to be bound by the terms of the contract.

Accepted Answer

A minor has the right to disaffirm a contract and can do so by any action that communicates their intent not to be bound by the contract. This can include actions such as returning the goods received under the contract or simply informing the other party that they do not wish to be bound by the terms of the agreement.

Question 16

As a general rule, minors may disaffirm their contracts at any time during their minority and for up to one year after attaining majority.

Accepted Answer

The answer of As a general rule, minors may disaffirm...

Question 17

If a person is adjudicated insane after entering into a contract, his or her personal representative cannot ratify the contract.

Accepted Answer

A personal representative can ratify a contract entered into by a person before they were adjudicated insane, as long as the contract was fair and made in good faith at the time of its inception.

Question 18

Which of the following is true of a contract made by a minor?

Accepted Answer

The idea behind minors' incapacity is that a minor (a person who is not legally considered to be an adult) may not be able to bargain effectively with older, more experienced persons. The courts responded to this idea by making minors' contracts voidable-that is, the minor is given the right to disaffirm (cancel) his or her contracts.

Question 19

Emancipation can occur when a minor marries or gets a job and moves away from home and the parent does not object.

Accepted Answer

Emancipation can occur through various means, including marriage or gaining employment and establishing independent living, especially if the parent does not object, as these actions demonstrate the minor's ability to live independently from their parents.

Question 20

Which of the following is true of minors' ability to disaffirm?

Accepted Answer

The general rule is that minors may disaffirm their contracts at any time during their minority and for a reasonable time after attaining majority. What constitutes a "reasonable time" after majority depends on the facts and circumstances of each case.

Quiz 13: Capacity to Contract

In most states, the agreements of persons who have been adjudicated insane are void.

A person could be medically insane but still have the legal capacity to contract.

The idea behind _____ is that adults who indicate an intent to be bound by contracts entered while still minors should be bound to those contracts and denied the right to disaffirm thereafter.

A person could be periodically insane but enter a binding contract during a lucid moment.

In a contract made by a minor, _____.

Minors are generally held liable on a quasi contract basis for the reasonable value of necessaries furnished to them.

The law uses the word veracity to describe the ability of a person to do a legally valid act.

People lacking mental capacity are liable for the reasonable value of necessaries on the same basis and for the same reasons as minors.

The minor who does not disaffirm within a reasonable time after attaining majority is held to have rescinded the contract.

The idea behind minors' incapacity is that a minor may not be able to bargain effectively with older, more experienced persons. The courts responded to this idea by making minors' contracts void.

Adults who contract with minors are bound to the agreement unless the minor chooses to disaffirm.

Minors are liable for the value of necessaries they have purchased under a contract but have not received at the time they disaffirm.

If either party entering a contract lacks the capacity to contract, the contract is void or voidable, depending on the kind of incapacity involved.

Generally, a minor may disaffirm by doing anything that clearly indicates to the other party an intent not to be bound by the terms of the contract.

As a general rule, minors may disaffirm their contracts at any time during their minority and for up to one year after attaining majority.

If a person is adjudicated insane after entering into a contract, his or her personal representative cannot ratify the contract.

Which of the following is true of a contract made by a minor?

Emancipation can occur when a minor marries or gets a job and moves away from home and the parent does not object.

Which of the following is true of minors' ability to disaffirm?