Question 1

The state of Illinois enacts a usury statute. The purpose is to

Accepted Answer

A)  ​establish a maximum rate of interest that may be charged for loans. 
B)  ​establish a minimum rate of interest that may be charged for loans. 
C)  ​prevent the misuse of money advanced as loans. 
D)  ​prevent the misuse of money paid back on loans. 
A)  ​establish a maximum rate of interest that may be charged for loans. 
B)  ​establish a minimum rate of interest that may be charged for loans. 
C)  ​prevent the misuse of money advanced as loans. 
D)  ​prevent the misuse of money paid back on loans. A

Question 2

Chet, a minor, signs a contract with Denise, an adult. The contract is voidable at the option of

Accepted Answer

A)  ​neither party. 
B)  ​Chet only. 
C)  ​either party. 
D)  ​Denise only. 
A)  ​neither party. 
B)  ​Chet only. 
C)  ​either party. 
D)  ​Denise only. B

Question 3

Gina, a minor, enters into a contract to buy a tractor from Herb, an adult. The deal is set aside. Restoring Herb to the position he held before the contract is the duty of

Accepted Answer

A)  ​ratification. 
B)  ​emancipation. 
C)  ​disaffirmance. 
D)  ​restitution. 
A)  ​ratification. 
B)  ​emancipation. 
C)  ​disaffirmance. 
D)  ​restitution. D

Question 4

In contract law, ratification is the act of accepting and giving legal force to an obligation that was previously not enforceable.

Accepted Answer

A) True 
 B)False

Question 5

Omni Insurance Company violates a state licensing statute when selling a policy to Petra, in whose state Omni is not licensed to sell insurance. As a member of the class of persons protected by the statute, Petra can

Accepted Answer

A)  ​do nothing with respect to the policy. 
B)  ​enforce the policy or recover the amount of the premiums paid. 
C)  ​only enforce the policy. 
D)  ​only recover the amount of the premiums paid. 
A)  ​do nothing with respect to the policy. 
B)  ​enforce the policy or recover the amount of the premiums paid. 
C)  ​only enforce the policy. 
D)  ​only recover the amount of the premiums paid.

Question 6

Gambling involves the distribution of property by chance.

Accepted Answer

A) True 
 B)False

Question 7

Bobbie is a minor subject to her parents' care and control. She signs a contract to rent a lake cabin from Cleve for one year. Before the end of the term, Bobbie moves out. She can

Accepted Answer

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. 
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.

Question 8

Elena, a minor, obtains fruits and vegetables on credit from Fred at Growers' Market. Later, Elena disaffirms the purchase. She owes Fred

Accepted Answer

A)  ​the reasonable value of the goods. 
B)  ​the retail value of the goods. 
C)  ​the goods. 
D)  ​nothing. 
A)  ​the reasonable value of the goods. 
B)  ​the retail value of the goods. 
C)  ​the goods. 
D)  ​nothing.

Question 9

A contract to commit a tortious act is unenforceable.

Accepted Answer

A) True 
 B)False

Question 10

A court adjudicates Henry mentally incompetent and appoints Inez to be his guardian. Later, without Inez's knowledge, Henry signs a contract to sell his farm to Jason for its real market value. The contract is

Accepted Answer

A)  ​enforceable if Henry comprehended the consequences. 
B)  ​enforceable if Henry knew the market value of the farm. 
C)  ​enforceable if Henry was the record owner of the farm. 
D)  ​void. 
A)  ​enforceable if Henry comprehended the consequences. 
B)  ​enforceable if Henry knew the market value of the farm. 
C)  ​enforceable if Henry was the record owner of the farm. 
D)  ​void.

Question 11

Fagin and Gage agree to hijack a truck carrying a load of almonds. If Fagin later refuses to go through with the crime, Gage can

Accepted Answer

A)  ​enforce the agreement. 
B)  ​obtain damages in the amount of his partner's share of the illegal profits. 
C)  ​obtain damages in the amount of his own share of the illegal profits. 
D)  ​none of the choices. 
A)  ​enforce the agreement. 
B)  ​obtain damages in the amount of his partner's share of the illegal profits. 
C)  ​obtain damages in the amount of his own share of the illegal profits. 
D)  ​none of the choices.

Question 12

A contract involving an unlicensed practitioner is generally illegal and unenforceable.

Accepted Answer

A) True 
 B)False

Question 13

First Business Solutions, Inc., develops and implements online sales strategies for its clients. First Business hires Gideon to plan and execute an e-commerce strategy for marketing Western Skye Company's products. Gideon signs a contract that includes a clause prohibiting him from competing with First Business during and after the employment. After the plan is formed but before it is implemented, Gideon resigns from First Business's employ and opens a competing business. In First Business's suit against Gideon, what is the most important factor the court should consider in determining whether Gideon should be allowed to compete with First Business?

Accepted Answer

In determining whether Gideon may compet

Question 14

Ordinarily, minors can disaffirm contracts even when they have misrepresented their age.

Accepted Answer

A) True 
 B)False

Question 15

If a minor disaffirms a contract, he or she must disaffirm the entire contract.

Accepted Answer

A) True 
 B)False

Question 16

If a person has been determined by a court to be mentally incompetent, any contract entered into by that person is void.

Accepted Answer

A) True 
 B)False

Question 17

Laurel enters into a contract to sell her bike to Melanie. Melanie takes possession of the bike as a minor and continues to use it well after reaching the age of majority. She has

Accepted Answer

A)  ​expressly ratified the contract. 
B)  ​impliedly ratified the contract. 
C)  ​expressly disaffirmed the contract. 
D)  ​impliedly disaffirmed the contract. 
A)  ​expressly ratified the contract. 
B)  ​impliedly ratified the contract. 
C)  ​expressly disaffirmed the contract. 
D)  ​impliedly disaffirmed the contract.

Question 18

At age seventeen, Eve enters into a contract with Fit Health Club. Two years later, when Eve attempts to disaffirm the contract, Fit files a suit against her. The court will most likely consider the contract ratified if it is

Accepted Answer

A)  ​executed. 
B)  ​executory. 
C)  ​disaffirmed. 
D)  ​rescinded. 
A)  ​executed. 
B)  ​executory. 
C)  ​disaffirmed. 
D)  ​rescinded.

Question 19

Some states impose a duty on a minor who disaffirms a contract to restore the adult party to the position he or she held before the contract was made.

Accepted Answer

A) True 
 B)False

Question 20

Kevin obtains a loan from Liberty Credit Bank at an interest rate that exceeds the state's maximum. Liberty has

Accepted Answer

A)  ​created a risk for the purpose of assuming it. 
B)  ​engaged in a restraint of trade. 
C)  ​violated a licensing statute. 
D)  ​committed usury. 
A)  ​created a risk for the purpose of assuming it. 
B)  ​engaged in a restraint of trade. 
C)  ​violated a licensing statute. 
D)  ​committed usury.

Exam 14: Capacity and Legality

The state of Illinois enacts a usury statute. The purpose is to

Chet, a minor, signs a contract with Denise, an adult. The contract is voidable at the option of

Gina, a minor, enters into a contract to buy a tractor from Herb, an adult. The deal is set aside. Restoring Herb to the position he held before the contract is the duty of

In contract law, ratification is the act of accepting and giving legal force to an obligation that was previously not enforceable.

Omni Insurance Company violates a state licensing statute when selling a policy to Petra, in whose state Omni is not licensed to sell insurance. As a member of the class of persons protected by the statute, Petra can

Gambling involves the distribution of property by chance.

Bobbie is a minor subject to her parents' care and control. She signs a contract to rent a lake cabin from Cleve for one year. Before the end of the term, Bobbie moves out. She can

Elena, a minor, obtains fruits and vegetables on credit from Fred at Growers' Market. Later, Elena disaffirms the purchase. She owes Fred

A contract to commit a tortious act is unenforceable.

A court adjudicates Henry mentally incompetent and appoints Inez to be his guardian. Later, without Inez's knowledge, Henry signs a contract to sell his farm to Jason for its real market value. The contract is

Fagin and Gage agree to hijack a truck carrying a load of almonds. If Fagin later refuses to go through with the crime, Gage can

A contract involving an unlicensed practitioner is generally illegal and unenforceable.

Ordinarily, minors can disaffirm contracts even when they have misrepresented their age.

If a minor disaffirms a contract, he or she must disaffirm the entire contract.

If a person has been determined by a court to be mentally incompetent, any contract entered into by that person is void.

Laurel enters into a contract to sell her bike to Melanie. Melanie takes possession of the bike as a minor and continues to use it well after reaching the age of majority. She has

At age seventeen, Eve enters into a contract with Fit Health Club. Two years later, when Eve attempts to disaffirm the contract, Fit files a suit against her. The court will most likely consider the contract ratified if it is

Some states impose a duty on a minor who disaffirms a contract to restore the adult party to the position he or she held before the contract was made.

Kevin obtains a loan from Liberty Credit Bank at an interest rate that exceeds the state's maximum. Liberty has

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