Exam 12: Capacity and Legality

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If an intoxicated person enters into a contract to purchase dinner and drinks for everyone in a restaurant, may that person disaffirm the contract and refuse to pay for the restaurant bill after becoming sober?

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Question 1

Correct Answer:

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The intoxicated person can disaffirm the contract after becoming sober, but only if the person was so intoxicated when the contract was entered into that he or she was incapable of understanding or comprehending the nature of the transaction. The intoxicated person generally must return all consideration received under the contract to the other party and make restitution that returns the other party to status quo.
In this case, the food and beverages cannot be returned as they have already been consumed. To return the restaurant owner to status quo would require paying a reasonable value for food and beverages consumed.

If a minor entered into a contract, and then ratified the contract after reaching the age of majority, which of the following is he or she exempt from?

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Question 2

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The state of Transas has set a maximum interest rate of 12 percent on loans. Matt borrows $10,000 from Tony to pay off a gambling debt. Both are residents of Transas. They sign a contract, which states that Matt would have to pay $1,500 as interest in one year to pay off the loan. Later, Matt gets to know about the state usury limit and sues Tony. What is the nature of the contract between Matt and Tony?

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Question 3

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An exculpatory clause must be reciprocal to be considered enforceable.

(True/False)

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Question 4

The duty of restitution states that a competent party should be placed in status quo by the minor upon disaffirmance of a contract.

(True/False)

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Question 5

Ashley's employment contract contains a covenant not to compete. It states that when she leaves her current employment, she must not work in a similar business or start a similar business in Georgia, Alabama or Florida for a period of twelve years. If Ashley leaves her current job, could her employer enforce this covenant not to compete? Why or why not?

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Question 6

________ is a rule that states that if a minor has transferred money, property, or other valuables to the competent party before disaffirming the contract, that party must place the minor in status quo.

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Question 7

Unlicensed persons cannot recover payment for services where they do not have the required license.

(True/False)

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Question 8

________ set an upper limit on the interest rate that can be charged on certain types of loans.

(Multiple Choice)

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Question 9

________ is a rule that states that a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance.

(Multiple Choice)

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Question 10

Contracts entered into by intoxicated persons are ________.

(Multiple Choice)

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Question 11

Damien, a first-year law student, offers his services to Mr. Jenkins to help draft his will. Mr. Jenkins agrees to Damien's offer, and promises to pay him $400 for his services. Damien completes the draft of the will. But when Damien goes to collect his payment, Mr. Jenkins refuses payment. Damien knew that he had no legal recourse to enforce the contract. What statute had Damien violated in his contract with Mr. Jenkins?

(Multiple Choice)

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Question 12

According to the regulatory licensing statute, ________.

(Multiple Choice)

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Question 13

A person who was legally insane at the time of entering a contract is relieved of his or her duties from the contract.

(True/False)

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Question 14

According to a minor's duty of restoration, the goods received from an adult should be returned in status quo after the contract has been disaffirmed by the minor.

(True/False)

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Question 15

Which of the following is true of the ratification of a contract by a minor?

(Multiple Choice)

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Question 16

________ is the act of a minor to rescind a contract under the infancy doctrine, either orally, in writing, or by the minor's conduct.

(Multiple Choice)

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Question 17

The equitable doctrine of ________ obligates a minor to pay only reasonable value for goods or services received that are necessaries of life.

(Multiple Choice)

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Question 18

The term ________ refers to a doctrine that states that the courts will refuse to enforce or rescind an illegal contract and will leave the parties where it finds them.

(Multiple Choice)

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Question 19

Which of the following is true of a contract, the object of which has become unlawful after the creation of the contract?

(Multiple Choice)

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Question 20

Showing 1 - 20 of 83

Exam 12: Capacity and Legality

If an intoxicated person enters into a contract to purchase dinner and drinks for everyone in a restaurant, may that person disaffirm the contract and refuse to pay for the restaurant bill after becoming sober?

If a minor entered into a contract, and then ratified the contract after reaching the age of majority, which of the following is he or she exempt from?

An exculpatory clause must be reciprocal to be considered enforceable.

The duty of restitution states that a competent party should be placed in status quo by the minor upon disaffirmance of a contract.

________ is a rule that states that if a minor has transferred money, property, or other valuables to the competent party before disaffirming the contract, that party must place the minor in status quo.

Unlicensed persons cannot recover payment for services where they do not have the required license.

________ set an upper limit on the interest rate that can be charged on certain types of loans.

________ is a rule that states that a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance.

Contracts entered into by intoxicated persons are ________.

According to the regulatory licensing statute, ________.

A person who was legally insane at the time of entering a contract is relieved of his or her duties from the contract.

According to a minor's duty of restoration, the goods received from an adult should be returned in status quo after the contract has been disaffirmed by the minor.

Which of the following is true of the ratification of a contract by a minor?

________ is the act of a minor to rescind a contract under the infancy doctrine, either orally, in writing, or by the minor's conduct.

The equitable doctrine of ________ obligates a minor to pay only reasonable value for goods or services received that are necessaries of life.

The term ________ refers to a doctrine that states that the courts will refuse to enforce or rescind an illegal contract and will leave the parties where it finds them.

Which of the following is true of a contract, the object of which has become unlawful after the creation of the contract?

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