Question 1

Intoxicated,Clio agrees to sell her restaurant,Diners Café,to Evan for half of its real market value. This deal is most likely void if

Accepted Answer

A) Clio appeared intoxicated to Evan. 
B) Clio disaffirms the contract after becoming sober. 
C) Clio was so intoxicated as to have no memory of the deal. 
D) Evan fraudulently induced Clio to become intoxicated. 
A) Clio appeared intoxicated to Evan. 
B) Clio disaffirms the contract after becoming sober. 
C) Clio was so intoxicated as to have no memory of the deal. 
D) Evan fraudulently induced Clio to become intoxicated. D

Question 2

Presley agrees to sell his Omni Sports Center facility to Nola. As part of the sale,Presley promises never to open a similar,competing business anywhere. This promise is most likely

Accepted Answer

A) invalid because it is part of a sale of an ongoing business. 
B) invalid because of the unreasonable terms of area and time. 
C) valid because it is part of a sale of an ongoing business. 
D) valid if Presley and Nola are reasonably intelligent. 
A) invalid because it is part of a sale of an ongoing business. 
B) invalid because of the unreasonable terms of area and time. 
C) valid because it is part of a sale of an ongoing business. 
D) valid if Presley and Nola are reasonably intelligent. B

Question 3

If a contract is fully performed by all parties to it,then it is presumed to have been ratified.

Accepted Answer

A) True 
 B)False  True

Question 4

A contract with an unlicensed person is enforceable if the person is otherwise of good moral character.

Accepted Answer

A) True 
 B)False

Question 5

Fay is mentally incompetent but has not been so adjudged by a court. Any contract Fay enters into is

Accepted Answer

A) voidable if Fay has a lucid interval at the time of contracting. 
B) voidable if Fay lacks the capacity to comprehend the consequences. 
C) voidable if the other party does not realize that Fay is incompetent. 
D) unavoidable. 
A) voidable if Fay has a lucid interval at the time of contracting. 
B) voidable if Fay lacks the capacity to comprehend the consequences. 
C) voidable if the other party does not realize that Fay is incompetent. 
D) unavoidable.

Question 6

A covenant not to compete is enforceable only if it is necessary to restrain trade.

Accepted Answer

A) True 
 B)False

Question 7

To avoid a contract,an intoxicated person's judgment must be proved to have been so severely impaired that he or she could not comprehend the legal consequences of entering into a contract.

Accepted Answer

A) True 
 B)False

Question 8

Cray,a minor,returns a digital music player that he bought from Discount City,which refunds the price. Their exchange involves

Accepted Answer

A) emancipation. 
B) ratification. 
C) restitution. 
D) misrepresentation. 
A) emancipation. 
B) ratification. 
C) restitution. 
D) misrepresentation.

Question 9

A contract entered into by an intoxicated person is never valid.

Accepted Answer

A) True 
 B)False

Question 10

William obtains a loan from a bank at 4.5 percent interest. The state where he obtains the loan has a usury statute that limits interest rates to a 3.5 percent maximum. William's contract with the bank is

Accepted Answer

A) enforceable only if William does not attempt to disaffirm it. 
B) enforceable only if the bank does not attempt to disaffirm it. 
C) enforceable only if both William and the bank knew of the statute whenthe contract was signed. 
D) not enforceable. 
A) enforceable only if William does not attempt to disaffirm it. 
B) enforceable only if the bank does not attempt to disaffirm it. 
C) enforceable only if both William and the bank knew of the statute whenthe contract was signed. 
D) not enforceable.

Question 11

Games Galore Corporation hires Haley,a minor,to create new customized game software for certain clients. Haley signs a contract that requires her to work for Games Galore for eighteen months. Before beginning work,however,Haley tells Games Galore that she will not create new software for Games Galore and that she is going to work for Ideal Worldcraft,Inc.,a Games Galore competitor. Is Games Galore's contract with Haley en-forceable? Why or why not?

Accepted Answer

The contract is not enforceable. Haley i

Question 12

Intoxicated but fully aware of the consequences,Cory agrees to a two-year service contract with Signal Maintenance,Inc.,at more than the average market price. This contract is

Accepted Answer

A) enforceable. 
B) notenforceable because contracting parties can change their minds. 
C) notenforceable because the contract clearly favors Signal. 
D) notenforceable because Cory was intoxicated when he agreed to it. 
A) enforceable. 
B) notenforceable because contracting parties can change their minds. 
C) notenforceable because the contract clearly favors Signal. 
D) notenforceable because Cory was intoxicated when he agreed to it.

Question 13

For public policy reasons,a minor's contract to enlist in the armed services cannot be avoided.

Accepted Answer

A) True 
 B)False

Question 14

A covenant not to compete included in the sale of an ongoing business is unenforceable.

Accepted Answer

A) True 
 B)False

Question 15

Serenity,a minor,obtains fruits and vegetables on credit from Virgil at Growers' Market. Later,Serenitydisaffirms the purchase. Serenityowes Virgil

Accepted Answer

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

Question 16

Omni Insurance Company violates a state licensing statute when selling an insurance 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 17

Mica,a minor,signs a contract to pay Natural Health Club a monthly fee for twenty-four months to use its facilities. Six months later,after reaching the age of majority,Mica continues to use the club. This act is

Accepted Answer

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

Question 18

Food is a "necessary."

Accepted Answer

A) True 
 B)False

Question 19

Rosalind,a seventeen-year-old,signs a contract to sell her car to Street Fleet Used Cars. The next day,Rosalind tells Street Fleet that she's decided not to sell the car. Rosalind is liable to Street Fleet for

Accepted Answer

A) the cost of a car of comparable value. 
B) the value of her performance under the contract. 
C) the amount of its profit on the deal. 
D) nothing. 
A) the cost of a car of comparable value. 
B) the value of her performance under the contract. 
C) the amount of its profit on the deal. 
D) nothing.

Question 20

A contract between Kim and Larry to lease residential property contains an exculpatory clause. This clause is

Accepted Answer

A) nforceable as a matter of public policy. 
B) enforceable if either party is in a business important to the pub-lic. 
C) enforceable if an event occurs to which the clause applies. 
D) generally unenforceable. 
A) nforceable as a matter of public policy. 
B) enforceable if either party is in a business important to the pub-lic. 
C) enforceable if an event occurs to which the clause applies. 
D) generally unenforceable.

Exam 13: Capacity and Legality

Intoxicated,Clio agrees to sell her restaurant,Diners Café,to Evan for half of its real market value. This deal is most likely void if

Presley agrees to sell his Omni Sports Center facility to Nola. As part of the sale,Presley promises never to open a similar,competing business anywhere. This promise is most likely

If a contract is fully performed by all parties to it,then it is presumed to have been ratified.

A contract with an unlicensed person is enforceable if the person is otherwise of good moral character.

Fay is mentally incompetent but has not been so adjudged by a court. Any contract Fay enters into is

A covenant not to compete is enforceable only if it is necessary to restrain trade.

To avoid a contract,an intoxicated person's judgment must be proved to have been so severely impaired that he or she could not comprehend the legal consequences of entering into a contract.

Cray,a minor,returns a digital music player that he bought from Discount City,which refunds the price. Their exchange involves

A contract entered into by an intoxicated person is never valid.

William obtains a loan from a bank at 4.5 percent interest. The state where he obtains the loan has a usury statute that limits interest rates to a 3.5 percent maximum. William's contract with the bank is

Intoxicated but fully aware of the consequences,Cory agrees to a two-year service contract with Signal Maintenance,Inc.,at more than the average market price. This contract is

For public policy reasons,a minor's contract to enlist in the armed services cannot be avoided.

A covenant not to compete included in the sale of an ongoing business is unenforceable.

Serenity,a minor,obtains fruits and vegetables on credit from Virgil at Growers' Market. Later,Serenitydisaffirms the purchase. Serenityowes Virgil

Omni Insurance Company violates a state licensing statute when selling an insurance 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

Mica,a minor,signs a contract to pay Natural Health Club a monthly fee for twenty-four months to use its facilities. Six months later,after reaching the age of majority,Mica continues to use the club. This act is

Food is a "necessary."

Rosalind,a seventeen-year-old,signs a contract to sell her car to Street Fleet Used Cars. The next day,Rosalind tells Street Fleet that she's decided not to sell the car. Rosalind is liable to Street Fleet for

A contract between Kim and Larry to lease residential property contains an exculpatory clause. This clause is

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