Question 1

At common law,parties to an illegal contract are considered in pari quantum.

Accepted Answer

A) True 
 B)False

Question 2

If a minor does not disaffirm a contract either during the period of minority or within a reasonable time after reaching the age of majority,the contract is considered clarified.

Accepted Answer

A) True 
 B)False

Question 3

The level of intoxication allowing a party to disaffirm a contract is the same as that considered too intoxicated to legally operate a motor vehicle.

Accepted Answer

A) True 
 B)False

Question 4

Automobile sales contracts are usually contracts of adhesion.

Accepted Answer

A) True 
 B)False

Question 5

Zora is a hairdresser at "Abandon All Hope" beauty salon.Although Zora is not the best hairdresser in town,she is cheap and has a loyal following.When Zora started to work at "Abandon All Hope" she signed a covenant not to compete agreeing with the owner that for a period of six months after she leaves "Abandon All Hope" she will not work as a hairdresser in the same town.One day Zora decided that she had enough customers to do well on her own and that she was tired of paying commissions to the owner.Zora moved out and opened her own shop down the street called "Hair for Hire." The owner of "Abandon All Hope" sues Zora.Who should win and why?

Accepted Answer

The owner of "Abandon All Hope" should w

Question 6

Through what method(s)can a minor disaffirm a contract?

Accepted Answer

A)  orally 
B)  in writing 
C)  through his or her conduct 
D)  orally, in writing, or through the minor's conduct 
E)  A contract involving a minor is automatically disaffirmed. 
A)  orally 
B)  in writing 
C)  through his or her conduct 
D)  orally, in writing, or through the minor's conduct 
E)  A contract involving a minor is automatically disaffirmed.

Question 7

One of the main reasons that contracts involving minors are voidable at the minor's option is:

Accepted Answer

A)  to protect the minor from unscrupulous adults. 
B)  to reduce the amount of litigation in the courts. 
C)  to support the policy of not enforcing gift promises. 
D)  to punish adults for entering into contracts with minors. 
E)  to prevent minors from entering into contracts. 
A)  to protect the minor from unscrupulous adults. 
B)  to reduce the amount of litigation in the courts. 
C)  to support the policy of not enforcing gift promises. 
D)  to punish adults for entering into contracts with minors. 
E)  to prevent minors from entering into contracts.

Question 8

The minor's duty of restitution is based on the rationale that if a minor had to place the adult in status quo upon disaffirmance of a contract,there would be no incentive for an adult not to deal with a minor.

Accepted Answer

A) True 
 B)False

Question 9

When a contract involves the purchase of items by a minor,what is the effect of these items being considered a necessary of life?

Accepted Answer

A)  The minor's right to disaffirm will end immediately upon reaching majority. 
B)  The minor will be obligated to perform the terms of the contract. 
C)  The minor will be obligated to pay for the items, but will only be obligated to pay the fair value. 
D)  The minor will owe the duty of restoration upon disaffirmance. 
E)  The minor must pay full price for the items. 
A)  The minor's right to disaffirm will end immediately upon reaching majority. 
B)  The minor will be obligated to perform the terms of the contract. 
C)  The minor will be obligated to pay for the items, but will only be obligated to pay the fair value. 
D)  The minor will owe the duty of restoration upon disaffirmance. 
E)  The minor must pay full price for the items.

Question 10

Which of the following is not one of the types of contracts that many states have enacted statutes to make enforceable against minors?

Accepted Answer

A)  medical care 
B)  psychological counseling 
C)  agreements for educational loans 
D)  purchases of computer software 
E)  contracts to enlist in the military 
A)  medical care 
B)  psychological counseling 
C)  agreements for educational loans 
D)  purchases of computer software 
E)  contracts to enlist in the military

Question 11

Exculpatory clauses often are found illegal because they violate state statutes.

Accepted Answer

A) True 
 B)False

Question 12

You and Gary enter a contract where you will receive $1,000 if you tamper with a slot machine in the "Bye-bye Bucks Casino" in Las Vegas so that Gary can make it pay out a jackpot whenever he wants it to.Assume it is illegal to tamper with the machine.You perform your part of the contract,but Gary doesn't pay.In your breach of contract suit against Gary,the court will:

Accepted Answer

A)  find you guilty of tampering with a gaming device. 
B)  make him pay you if he has benefited from making the machine pay out. 
C)  make him pay you regardless of whether he has received any payouts because you have performed your part of the contract. 
D)  ignore the contract and dismiss the case. 
E)  make him pay you half the amount because there would be a 50% reduction due to the illegality. 
A)  find you guilty of tampering with a gaming device. 
B)  make him pay you if he has benefited from making the machine pay out. 
C)  make him pay you regardless of whether he has received any payouts because you have performed your part of the contract. 
D)  ignore the contract and dismiss the case. 
E)  make him pay you half the amount because there would be a 50% reduction due to the illegality.

Question 13

The infancy doctrine protects very young children from contracts entered into on their behalf by their parents.

Accepted Answer

A) True 
 B)False

Question 14

The law has developed two (2)standards concerning contracts of mentally incompetent persons:

Accepted Answer

A)  legal insanity and equitable insanity. 
B)  express insanity and implied insanity. 
C)  adjudged insane and insane but not adjudged insane. 
D)  formal insanity and informal insanity. 
E)  adult insanity and minor insanity. 
A)  legal insanity and equitable insanity. 
B)  express insanity and implied insanity. 
C)  adjudged insane and insane but not adjudged insane. 
D)  formal insanity and informal insanity. 
E)  adult insanity and minor insanity.

Question 15

When can a minor disaffirm a contract?

Accepted Answer

A)  until reaching a final agreement 
B)  until a reasonable time after forming the contract 
C)  until a reasonable time after beginning performance of the contract 
D)  until reaching the age of majority 
E)  until the expiration of a reasonable period of time after reaching the age of majority 
A)  until reaching a final agreement 
B)  until a reasonable time after forming the contract 
C)  until a reasonable time after beginning performance of the contract 
D)  until reaching the age of majority 
E)  until the expiration of a reasonable period of time after reaching the age of majority

Question 16

A court-appointed guardian is the only person who has the legal authority to enter into contracts on behalf of a person adjudged insane.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is generally true about exculpatory clauses?

Accepted Answer

A)  They are not valid with respect to intentional acts. 
B)  The test is if they are reasonable in time, scope and geographic area. 
C)  They are always found to be valid. 
D)  They are not valid for ordinary negligence. 
E)  They are never valid. 
A)  They are not valid with respect to intentional acts. 
B)  The test is if they are reasonable in time, scope and geographic area. 
C)  They are always found to be valid. 
D)  They are not valid for ordinary negligence. 
E)  They are never valid.

Question 18

In most states today the period of minority ends:

Accepted Answer

A)  upon reaching the age of 18 for both males and females. 
B)  upon reaching age 18 for females and age 21 for males. 
C)  upon reaching the age of 21 for both males and females. 
D)  upon marrying or reaching age 21, whichever occurs first. 
E)  upon reaching the legal driving age of 16 for both males and females. 
A)  upon reaching the age of 18 for both males and females. 
B)  upon reaching age 18 for females and age 21 for males. 
C)  upon reaching the age of 21 for both males and females. 
D)  upon marrying or reaching age 21, whichever occurs first. 
E)  upon reaching the legal driving age of 16 for both males and females.

Question 19

Which of the following can be a result under state law for violating a usury statute?

Accepted Answer

A)  the interest rate in the contract will be adjusted down to the maximum legal rate 
B)  the court will not enforce the payment of any interest at all 
C)  the court will not enforce payment of the principal or the interest 
D)  the interest rate in the contract will be adjusted down to the maximum legal rate, or the court will not enforce the payment of any interest at all 
E)  the interest rate in the contract will be adjusted down to the maximum legal rate, the court will not enforce the payment of any interest at all, or the court will not enforce payment of the principal or the interest 
A)  the interest rate in the contract will be adjusted down to the maximum legal rate 
B)  the court will not enforce the payment of any interest at all 
C)  the court will not enforce payment of the principal or the interest 
D)  the interest rate in the contract will be adjusted down to the maximum legal rate, or the court will not enforce the payment of any interest at all 
E)  the interest rate in the contract will be adjusted down to the maximum legal rate, the court will not enforce the payment of any interest at all, or the court will not enforce payment of the principal or the interest

Question 20

Mike works as a bartender at a local bar.Under state law,bartenders are required to be licensed.The licensing requires the completion of an application and the submission of a $50.00 application fee.The application does not require any special education,training or experience,just the payment of the fee.Kathy enters Mike's bar and orders a round of drinks for the house.She then notices that Mike's license is not on display behind the bar.Kathy learns that Mike is not licensed and refuses to pay for the round of drinks.If the bar sues,what will be the result?

Accepted Answer

A)  Since this is an illegal contract, the courts will not enforce it. 
B)  Since Mike violated a regulatory license requirement, the contract is unenforceable. 
C)  Since this is a revenue-producing statute, the bar wins. 
D)  Since this is a revenue-producing statute, the licensing law is illegal because it has no legitimate requirements, so Kathy wins. 
E)  Kathy wins because dram shop laws require bartenders to have special training and obtain a regulatory license. 
A)  Since this is an illegal contract, the courts will not enforce it. 
B)  Since Mike violated a regulatory license requirement, the contract is unenforceable. 
C)  Since this is a revenue-producing statute, the bar wins. 
D)  Since this is a revenue-producing statute, the licensing law is illegal because it has no legitimate requirements, so Kathy wins. 
E)  Kathy wins because dram shop laws require bartenders to have special training and obtain a regulatory license.

Exam 11: Capacity and Legality

At common law,parties to an illegal contract are considered in pari quantum.

If a minor does not disaffirm a contract either during the period of minority or within a reasonable time after reaching the age of majority,the contract is considered clarified.

The level of intoxication allowing a party to disaffirm a contract is the same as that considered too intoxicated to legally operate a motor vehicle.

Automobile sales contracts are usually contracts of adhesion.

Through what method(s)can a minor disaffirm a contract?

One of the main reasons that contracts involving minors are voidable at the minor's option is:

The minor's duty of restitution is based on the rationale that if a minor had to place the adult in status quo upon disaffirmance of a contract,there would be no incentive for an adult not to deal with a minor.

When a contract involves the purchase of items by a minor,what is the effect of these items being considered a necessary of life?

Which of the following is not one of the types of contracts that many states have enacted statutes to make enforceable against minors?

Exculpatory clauses often are found illegal because they violate state statutes.

The infancy doctrine protects very young children from contracts entered into on their behalf by their parents.

The law has developed two (2)standards concerning contracts of mentally incompetent persons:

When can a minor disaffirm a contract?

A court-appointed guardian is the only person who has the legal authority to enter into contracts on behalf of a person adjudged insane.

Which of the following is generally true about exculpatory clauses?

In most states today the period of minority ends:

Which of the following can be a result under state law for violating a usury statute?

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