Exam 15: Capacity and Consent

Frank suffers from a mental impairment due to a brain injury from a airplane accident.He contracts with Glena to purchase her dining room furniture.A month later,he tries to void the contract.If he is unable to return the furniture,a court will not rescind the agreement unless Frank can show that Glena acted in bad faith.

Pamela is planning to sell her home decorating store to her daughter.Pamela has

A(n)_______ contract is illegal from the beginning and may not be enforced by either party;a(n)_______ contract is legal but permits one party to escape,if he or she so wishes.

Which of the following terms designates the legal ability of a party to enter into a contract?

Angie,a minor,wants to avoid a contract she made with Cumberland Cycles.Which is a valid way for Angie to disaffirm the contract?

Ryan,a minor,contracted to sell his auto to Ed,a 28-year-old.Ryan later refused to complete the sale.If Ed sues to enforce the contract,Ed will

Duress occurs when

Mark's home had burned to the ground.When he met with his insurance adjuster,she accused him of burning down the house,and said she would have him criminally prosecuted if he didn't settle the claim for much less than the house was worth.Mark agreed to the settlement.If he changed his mind,he can probably rescind the settlement on the basis of

Jeff was a subcontractor,bidding on a contract for ACE Corp.,the general contractor.When adding up the total of materials and labor,Jeff's secretary mistakenly moved the decimal point one place,ending up with a bid of $3500 rather than $35,000.ACE Corp.accepted Jeff's bid,mostly because all the other bids were over $30,000.When Jeff learned of the mistake,he tells ACE Corp.that he cannot do the job for $3500.If ACE Corp.sues to enforce this contract,what is the most likely result?

Discuss the meaning of "material fact" in fraud situations.

Larson entered Forrester's Auto Mart to purchase a used car.Larson found a vehicle with a sales price of $11,000.After Forrester answered all of Larson's questions,Forrester and Larson agreed to a sale.As Larson was leaving to get the money to pay for the car,Forrester told Larson that he thinks Robert Redford formerly owned the car.Larson later learned that Robert Redford had never owned the car.If Larson seeks to rescind the deal based on Forrester's statement,Larson will

Marty,a 16-year-old,contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle.Marty agrees to make monthly payments until the purchase price plus interest are paid in full. -It is three years later and Marty has not disaffirmed the contract and has made regular payments on the cycle since turning 18.Which of the following is correct?

A minor can undo a contract that has already been completed by having a court _______ the contract to formally cancel it.

Courts will not allow the rescission of a contract due to a unilateral mistake.

Which of the following is NOT a true statement about fraud?

Which of the following statements,if made by a seller who knows the statement to be untruthful,would NOT be misrepresentation of material fact resulting in a cause of action for fraud?

After her 18th birthday Lora may,by words or action,ratify a contract she made during the previous year.

When fraud is committed during the sale of goods,all states allow the remedy of rescinding a contract while still allowing the remedy of suing for damages.

If a minor can cancel a contract,it can be done at any time before the minor reaches the age of majority or within a reasonable time after reaching majority age.

Alice offers to sell her car to Barry for $500,and Barry accepts.Alice's car has a market value of $1,000 but this fact is unknown to Alice.The contract is enforceable.