Exam 14: Capacity and Legality

Parents who sign a contract made by their minor child with an adult have the same option to disaffirm as the child.

Justin is mentally incompetent but has not been so adjudged by a court. Any contract Justin enters into is voidable if, at the time of contracting, Justin

Even in states that permit certain types of gambling, courts find that gambling contracts are illegal.

If one of the wrongdoers in an illegal contract is unjustly enriched at the expense of the other, the courts are usually not concerned.

Orin signs a covenant not to compete with his employer, Product Distribution, Inc. The covenant will be enforced if it

A person who is intoxicated can avoid liability on any contract due to the intoxication.​

If an illegal contract is executory, either party can always enforce it.

All gambling contracts are legal but voidable.

A contract entered into by a mentally incompetent person can be valid if the person had capacity at the time the contract was formed.

For a minor to disaffirm a contract, he or she must present the contract to a court.

Bay City Mall requires its tenants to sign a lease that includes a clause releasing Metro from liability in the event of monetary or physical injury no matter who is at fault. Coco's Chocolate signs a lease with Bay City that contains the clause. This is

Rosa, a seventeen-year-old, signs a contract to sell her car to Street Fleet Cars. Later, Rosa decides not to sell the car. Rosa is liable to Street Fleet for

A usurious contract involves the purchase and sale of usable goods.

Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar, competing store anywhere. This promise is most likely

Floyd signs a contract to buy a drum kit just before reaching the age of majority. After reaching the age of majority, Floyd does not take possession or make payments. With respect to the contract, most courts would hold that this is

Leon relinquishes the right to his daughter Meredith's control, care, custody, and earnings. This is

Oscar owns Payroll Company, a bookkeeping service. Oscar pays Remy $5,000 to steal a list of a competitor's clients, to whom Oscar will aggressively market Payroll's services. This deal is

A contract entered into by an intoxicated person is always valid.

Contractual capacity refers to the legal ability to enter into a contract.

Baylor obtains a loan from City Bank at 4.5 percent interest. Their state's usury statute limits interest rates to a 3.5 percent maximum. Baylor's contract with the bank is enforceable only if