Question 1

Courts may sometimes be sympathetic to an adult who has suffered losses due to a minor who misrepresented his age.How so?

Accepted Answer

State law today is fairly evenly divided among those states that take the position that the minor who misrepresents his age will be estopped from asserting his infancy as a defense and those that will allow a minor to disaffirm regardless of his misrepresentation of age.Among the states that allow disaffirmance despite the minor's misrepresentation,most hold the disaffirming minor responsible for the losses suffered by the adult,either by allowing the adult to counterclaim against the minor for the tort of deceit or by requiring the minor to reimburse the adult for use or depreciation of his property.

Question 2

The right of minors to avoid a contract as a means of protecting themselves against their own improvidence and against overreaching adults is called:

Accepted Answer

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

Question 3

At 17 years old,Otto signed a contract to purchase a new Hummer by advancing a payment of $50,000.However,when Otto turned 20,he wished to disaffirm this contract.Does the law permit this?

Accepted Answer

A) Yes,because he was a minor when he signed the contract. 
B) Yes,because he is not yet 21 years of age. 
C) No,because a car is a "necessary." 
D) No,because Otto implied his ratification. 
A) Yes,because he was a minor when he signed the contract. 
B) Yes,because he is not yet 21 years of age. 
C) No,because a car is a "necessary." 
D) No,because Otto implied his ratification. D

Question 4

Ratification of a contract with a minor has to be expressly made only in written form.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not considered when a court determines whether an incapacitated party can disaffirm a contract?

Accepted Answer

A) Whether the contract was fair and bargained for in good faith. 
B) Whether the other party had reasonable cause to know of the incapacity. 
C) Whether the contract was for goods or services. 
D) Whether the other party can be placed in status quo. 
A) Whether the contract was fair and bargained for in good faith. 
B) Whether the other party had reasonable cause to know of the incapacity. 
C) Whether the contract was for goods or services. 
D) Whether the other party can be placed in status quo.

Question 6

In January 2002,a court with the necessary subject-matter jurisdiction holds Marvin mentally incompetent and appoints a guardian for him.In November 2002,Marvin escapes his guardian's care and takes off on his own.While eating lunch with Clara,who knows about Marvin's condition,Marvin signs an agreement to sell a valuable property he owns.When he signs the contract,Marvin believes that he is the President of the United States signing an important treaty.The agreement between Marvin and Clara is best described as:

Accepted Answer

A) void. 
B) voidable. 
C) unenforceable. 
D) perfectly valid,if the price Clara pays for the property is fair. 
A) void. 
B) voidable. 
C) unenforceable. 
D) perfectly valid,if the price Clara pays for the property is fair.

Question 7

When a person asserts he lacked capacity as the basis for a claim or defense,it is his responsibility for alleging and proving it.

Accepted Answer

A) True 
 B)False

Question 8

The general rule is that,contracts entered into during minority can be disaffirmed as soon as they are formed.Which of the following is an EXCEPTION to the rule?

Accepted Answer

A) Contracts affecting investment. 
B) Contracts affecting the title to real estate. 
C) Contracts affecting necessary supplies to be provided to the minor. 
D) Contracts affecting his/her employment as a child actor. 
A) Contracts affecting investment. 
B) Contracts affecting the title to real estate. 
C) Contracts affecting necessary supplies to be provided to the minor. 
D) Contracts affecting his/her employment as a child actor.

Question 9

Shelly,aged 15,sells a car to Fiona,aged 25.Fiona in turn sells the car to Raphael.Under section 2-403 of the Uniform Commercial Code,if Shelly chooses to disaffirm the contract with Fiona:

Accepted Answer

A) Shelly can get the car back from Raphael. 
B) Raphael will have to sell it back to Shelly. 
C) Shelly can do so,since she is a minor. 
D) Shelly needs to file a breach of contract against both Fiona and Raphael. 
A) Shelly can get the car back from Raphael. 
B) Raphael will have to sell it back to Shelly. 
C) Shelly can do so,since she is a minor. 
D) Shelly needs to file a breach of contract against both Fiona and Raphael.

Question 10

A minor has the right to recover any consideration,including goods transferred to third parties.This includes even good faith purchasers.

Accepted Answer

A) True 
 B)False

Question 11

A minor can disaffirm agreements to support their children.

Accepted Answer

A) True 
 B)False

Question 12

Mike,a minor,buys some real estate as an investment.The contract obligates Mike to make monthly installment payments for 10 years.Mike reaches the age of majority one month after making the contract.After this,Mike makes 25 monthly payments under the contract,but then decides that he wants to rescind the deal.Which of the following is most true?

Accepted Answer

A) Mike can disaffirm. 
B) Mike cannot disaffirm because contracts for the sale of land can only be disaffirmed before the age of majority. 
C) Mike cannot disaffirm because contracts for the sale of land must be disaffirmed within one year of the age of majority. 
D) Mike cannot disaffirm because he has already ratified the contract. 
A) Mike can disaffirm. 
B) Mike cannot disaffirm because contracts for the sale of land can only be disaffirmed before the age of majority. 
C) Mike cannot disaffirm because contracts for the sale of land must be disaffirmed within one year of the age of majority. 
D) Mike cannot disaffirm because he has already ratified the contract.

Question 13

After consuming a mind-altering drug,Hal buys some real estate from Edith for $100,000.Hal was completely wrecked when he made the deal,and could not understand what he was doing.Due to the after effects of the drug,Hal goes into a coma that lasts for one year.As soon as he awakes from the coma,Hal tries to disaffirm his contract with Edith.Edith maintains that Hal cannot disaffirm because he has ratified the contract.What should Hal argue in return?

Accepted Answer

Hal should argue that he could not have

Question 14

When a person lacks capacity to contract due to a mental impairment,the contract is void.In contrast,when a person lacks capacity to contract due to intoxication,the contract is voidable.

Accepted Answer

A) True 
 B)False

Question 15

The test to determine whether a person has the mental capacity to contract is a(n)________ one.

Accepted Answer

A) objective 
B) reasonable person 
C) cognitive 
D) intellectual 
A) objective 
B) reasonable person 
C) cognitive 
D) intellectual

Question 16

Three days before she was judicially declared mentally incompetent and institutionalized,Irma bought a $50,000 automobile by cash and took delivery of it.Which of the following is true about this contract?

Accepted Answer

A) It is voidable at the discretion of the seller. 
B) The contract is voidable due to Irma's institutionalization. 
C) The contract cannot be disaffirmed because it was fully executed. 
D) Irma ratified the contract by paying the price of the car. 
A) It is voidable at the discretion of the seller. 
B) The contract is voidable due to Irma's institutionalization. 
C) The contract cannot be disaffirmed because it was fully executed. 
D) Irma ratified the contract by paying the price of the car.

Question 17

A person younger than the legal age of majority is generally held to lack capacity to enter a contract,even if he is married and employed full time.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is true of necessaries?

Accepted Answer

A) The liability for necessaries is quasi-contractual. 
B) A minor is liable for the necessaries that he/she did not receive. 
C) In case of a disaffirmance,the minor need not pay for any necessary. 
D) An item is considered a necessary even if the minor already possesses it. 
A) The liability for necessaries is quasi-contractual. 
B) A minor is liable for the necessaries that he/she did not receive. 
C) In case of a disaffirmance,the minor need not pay for any necessary. 
D) An item is considered a necessary even if the minor already possesses it.

Question 19

When a minor contracts for necessaries,he or she is liable for the ________ of the necessaries actually received.

Accepted Answer

A) reasonable value 
B) actual value 
C) estimated value 
D) depreciated value 
A) reasonable value 
B) actual value 
C) estimated value 
D) depreciated value

Question 20

What is the term for a person who candidly paid valuable consideration without any notice of another's claim or any defects in the seller's ability to sell?

Accepted Answer

A) Good faith purchaser 
B) Holder in due course 
C) Bona fide buyer 
D) Value buyer 
A) Good faith purchaser 
B) Holder in due course 
C) Bona fide buyer 
D) Value buyer

Exam 14: Capacity to Contract

Courts may sometimes be sympathetic to an adult who has suffered losses due to a minor who misrepresented his age.How so?

The right of minors to avoid a contract as a means of protecting themselves against their own improvidence and against overreaching adults is called:

At 17 years old,Otto signed a contract to purchase a new Hummer by advancing a payment of $50,000.However,when Otto turned 20,he wished to disaffirm this contract.Does the law permit this?

Ratification of a contract with a minor has to be expressly made only in written form.

Which of the following is not considered when a court determines whether an incapacitated party can disaffirm a contract?

When a person asserts he lacked capacity as the basis for a claim or defense,it is his responsibility for alleging and proving it.

The general rule is that,contracts entered into during minority can be disaffirmed as soon as they are formed.Which of the following is an EXCEPTION to the rule?

Shelly,aged 15,sells a car to Fiona,aged 25.Fiona in turn sells the car to Raphael.Under section 2-403 of the Uniform Commercial Code,if Shelly chooses to disaffirm the contract with Fiona:

A minor has the right to recover any consideration,including goods transferred to third parties.This includes even good faith purchasers.

A minor can disaffirm agreements to support their children.

When a person lacks capacity to contract due to a mental impairment,the contract is void.In contrast,when a person lacks capacity to contract due to intoxication,the contract is voidable.

The test to determine whether a person has the mental capacity to contract is a(n)________ one.

Three days before she was judicially declared mentally incompetent and institutionalized,Irma bought a $50,000 automobile by cash and took delivery of it.Which of the following is true about this contract?

A person younger than the legal age of majority is generally held to lack capacity to enter a contract,even if he is married and employed full time.

Which of the following is true of necessaries?

When a minor contracts for necessaries,he or she is liable for the ________ of the necessaries actually received.

What is the term for a person who candidly paid valuable consideration without any notice of another's claim or any defects in the seller's ability to sell?

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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