Exam 11: Capacity and Legality

Courts have broad discretion in deciding whether or not a contract is illegal because it is contrary to public policy.Often,a court will treat a contract as being against public policy even though there is nothing called for in the contract that is illegal.Should a court be able to do this? What are the consequences to the parties?

As a general rule,in order to disaffirm a contract,a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance.

After becoming sober,an intoxicated person can ratify a contract he or she entered into while intoxicated.

Under the infancy doctrine,a court will not generally inquire into the particular minor's actual knowledge or sophistication.

Under which of the following circumstances are parents liable on a contract entered into by their child?

Under the infancy doctrine,a contract is ________ by a minor.

Because what constitutes morality is personal and subjective,immorality is not a basis to find that a contract violates public policy.

Because adults deal with a minor at their peril,in most states today a minor who has misrepresented her age has the same rights and duties as a minor who did not do so.

If a court finds that a contract clause is unconscionable,it may refuse to enforce the unconscionable clause but enforce the remainder of the contract.

What is an unconscionable contract?

Intoxicated persons are liable ________ to pay for the reasonable value of necessaries they receive.

Any contract entered into by a person who has been adjudged insane is void.

The most prevalent age of majority is 21 years of age for both males and females.

Some states have changed the in pari delicto rule and permit the less-at-fault party to recover restitution of the consideration they paid under an illegal contact from the more-at-fault party.

If the object of a contract becomes illegal after the contract is entered into because the government has enacted a statute that makes it unlawful,the parties must still perform their contractual obligations pursuant to the grandfather clause.

An exculpatory clause is not valid if one,but not the other,party is released from liability for negligence.

When a contract includes an interest rate that exceeds the maximum rate that can be charged,all states will allow interest at the maximum legal rate to be collected.

Many contracts involving gambling are considered to be illegal contracts.

Any contract in which the parties possessed severely unequal bargaining power is an unconscionable contract.

All states have usury law prohibiting the charging of illegal interest rates on all loans.