Question 1

Which of the following is true of the test of incapacity?

Accepted Answer

A)  A medically insane person does not have the legal capacity to contract. 
B)  Emancipated in this context means a general hearing was held on the person's mental competency, and the court determined that the person was of unsound mind. 
C)  A person could be periodically insane but can enter a binding contract during a lucid moment. 
D)  In most states, the agreements of persons who have been adjudicated insane are not void. 
A)  A medically insane person does not have the legal capacity to contract. 
B)  Emancipated in this context means a general hearing was held on the person's mental competency, and the court determined that the person was of unsound mind. 
C)  A person could be periodically insane but can enter a binding contract during a lucid moment. 
D)  In most states, the agreements of persons who have been adjudicated insane are not void. C

Question 2

Jessica, a minor, rented an apartment in Greenwich Village for $500 a month. She signed a one-year lease. After living there for three months, Jessica decided to move to another apartment complex. She is liable for the reasonable value of three months' rent at Greenwich Village, but not for the remaining nine months' rent. This is in accordance with the _____ provision of capacity to contract by minors.

Accepted Answer

A)  disaffirmation 
B)  necessaries 
C)  emancipation 
D)  adjudication 
A)  disaffirmation 
B)  necessaries 
C)  emancipation 
D)  adjudication B

Question 3

_____ are generally defined as those things that are essential to a minor's continued existence and general welfare.

Accepted Answer

A)  Considerations 
B)  Emancipations 
C)  Forbearances 
D)  Necessaries 
A)  Considerations 
B)  Emancipations 
C)  Forbearances 
D)  Necessaries D

Question 4

Adults who contract with minors are bound to the agreement unless the minor chooses to disaffirm.

Accepted Answer

A) True 
 B)False

Question 5

Chuck Olson, age 16, buys a used car from Bobby Duncan Used Cars Center on September 15, 2006. Olson agrees to pay $200 a month for 12 months. A month after the purchase, Olson is involved in an accident that wrecks the car. He immediately calls Duncan Cars and informs them that he is disaffirming the contract. According to traditional common laws, which of the following is most likely to be true?

Accepted Answer

A)  Olson does not have a duty to place Duncan in status quo ante. 
B)  Olson can ask Duncan to pay for the damages as he hasn't made the full payment for the car. 
C)  Olson has to pay for the damages and then return the car to Duncan. 
D)  Olson can successfully press charges and force Duncan to take care of the damages caused to the car. 
A)  Olson does not have a duty to place Duncan in status quo ante. 
B)  Olson can ask Duncan to pay for the damages as he hasn't made the full payment for the car. 
C)  Olson has to pay for the damages and then return the car to Duncan. 
D)  Olson can successfully press charges and force Duncan to take care of the damages caused to the car.

Question 6

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

Accepted Answer

A)  A minor is given the right to disaffirm his or her contract. 
B)  If a minor's contract involves title to real estate, the minor can disaffirm before reaching majority. 
C)  Adults who contract with minors are bound to the agreement unless the adult chooses to disaffirm. 
D)  A minor's capacity to contract is never presumed. 
A)  A minor is given the right to disaffirm his or her contract. 
B)  If a minor's contract involves title to real estate, the minor can disaffirm before reaching majority. 
C)  Adults who contract with minors are bound to the agreement unless the adult chooses to disaffirm. 
D)  A minor's capacity to contract is never presumed.

Question 7

Under the Uniform Commercial Code, minors who disaffirm their contracts involving goods:

Accepted Answer

A)  can reclaim the goods from third parties. 
B)  can no longer reclaim those goods from innocent third parties. 
C)  have to return consideration even if the goods have been consumed. 
D)  have to return consideration even if the goods have been stolen from them. 
A)  can reclaim the goods from third parties. 
B)  can no longer reclaim those goods from innocent third parties. 
C)  have to return consideration even if the goods have been consumed. 
D)  have to return consideration even if the goods have been stolen from them.

Question 8

What are the exceptions, created by the courts, to the general rule that minors can disaffirm their contracts?

Accepted Answer

Due to the potential unfairness to adult

Question 9

The idea behind minors' incapacity is that a minor may not be able to bargain effectively with older, more experienced persons. The courts responded to this idea by making minors' contracts void.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true of emancipation?

Accepted Answer

A)  Emancipation is the term used to describe the termination of a parent's right to receive services and wages from a child and to generally control him. 
B)  Emancipation occurs when a minor does not disaffirm within a reasonable time after attaining majority and thereafter loses the right to disaffirm. 
C)  Emancipation occurs when a minor moves away from home and the parents object to his or her actions. 
D)  Emancipation always gives a minor the capacity to contract. 
A)  Emancipation is the term used to describe the termination of a parent's right to receive services and wages from a child and to generally control him. 
B)  Emancipation occurs when a minor does not disaffirm within a reasonable time after attaining majority and thereafter loses the right to disaffirm. 
C)  Emancipation occurs when a minor moves away from home and the parents object to his or her actions. 
D)  Emancipation always gives a minor the capacity to contract.

Question 11

Which of the following is relevant in determining whether an item is a necessary?

Accepted Answer

A)  The minor's age 
B)  The fair market value of the item 
C)  The contract price of the item 
D)  Whether the item is provided by a commercial or non-commercial party 
A)  The minor's age 
B)  The fair market value of the item 
C)  The contract price of the item 
D)  Whether the item is provided by a commercial or non-commercial party

Question 12

Which of the following is the most likely indicator of contractual incapacity?

Accepted Answer

A)  old age 
B)  dementia 
C)  a lucid interval 
D)  ratification 
A)  old age 
B)  dementia 
C)  a lucid interval 
D)  ratification

Question 13

In which of the following situations is a contract considered voidable?

Accepted Answer

A)  When the contract is for necessaries 
B)  When the minor lied about his or her age 
C)  When the contract is ratified on reaching majority 
D)  When there is a lack of capacity because of minority 
A)  When the contract is for necessaries 
B)  When the minor lied about his or her age 
C)  When the contract is ratified on reaching majority 
D)  When there is a lack of capacity because of minority

Question 14

Which of the following terms is used to describe the termination of a parent's right to receive services and wages from a child and to generally control him?

Accepted Answer

A)  Emancipation 
B)  Disaffirmation 
C)  Ratification 
D)  Incapacity 
A)  Emancipation 
B)  Disaffirmation 
C)  Ratification 
D)  Incapacity

Question 15

A person could be medically insane but still have the legal capacity to contract.

Accepted Answer

A) True 
 B)False

Question 16

With respect to property, under the common law, minors:

Accepted Answer

A)  are entitled to the return of their property given as consideration only upon attaining majority. 
B)  are entitled to the return of their property given as consideration even if they have been ratified. 
C)  are entitled to the return of their property given as consideration, even if that property is possessed by a third party at the time of disaffirmance. 
D)  are entitled to the return of their property given as consideration, except in cases where the property is possessed by a third party. 
A)  are entitled to the return of their property given as consideration only upon attaining majority. 
B)  are entitled to the return of their property given as consideration even if they have been ratified. 
C)  are entitled to the return of their property given as consideration, even if that property is possessed by a third party at the time of disaffirmance. 
D)  are entitled to the return of their property given as consideration, except in cases where the property is possessed by a third party.

Question 17

The law uses the word veracity to describe the ability of a person to do a legally valid act.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a correct statement regarding the test of contractual incapacity?

Accepted Answer

A)  The test usually applied in contract law is whether a party, at the time the case is litigated, had sufficient mental capacity to understand the nature and effect of the contract. 
B)  A person could be medically insane but still have the legal capacity to contract. 
C)  A person who is senile cannot enter into a binding agreement. 
D)  A person with less-than-ordinary intelligence cannot enter into a binding agreement. 
A)  The test usually applied in contract law is whether a party, at the time the case is litigated, had sufficient mental capacity to understand the nature and effect of the contract. 
B)  A person could be medically insane but still have the legal capacity to contract. 
C)  A person who is senile cannot enter into a binding agreement. 
D)  A person with less-than-ordinary intelligence cannot enter into a binding agreement.

Question 19

Which of the following is true of minors' ability to disaffirm?

Accepted Answer

A)  Minors may disaffirm their contract for a reasonable time before attaining majority. 
B)  Minors may disaffirm their contracts at any time during their minority. 
C)  Minors may disaffirm by doing anything that clearly indicates to the other party an intent to be bound by the terms of the contract. 
D)  Minors may disaffirm before reaching majority if their contracts involve title to real estate. 
A)  Minors may disaffirm their contract for a reasonable time before attaining majority. 
B)  Minors may disaffirm their contracts at any time during their minority. 
C)  Minors may disaffirm by doing anything that clearly indicates to the other party an intent to be bound by the terms of the contract. 
D)  Minors may disaffirm before reaching majority if their contracts involve title to real estate.

Question 20

_____ means that a general hearing was held on the person's mental competency, and the court determined that the person was of unsound mind and appointed a guardian or conservator of the person's estate.

Accepted Answer

A)  Emancipation 
B)  Adjudication 
C)  Incapacitation 
D)  Ratification 
A)  Emancipation 
B)  Adjudication 
C)  Incapacitation 
D)  Ratification

Exam 13: Capacity to Contract

Which of the following is true of the test of incapacity?

_____ are generally defined as those things that are essential to a minor's continued existence and general welfare.

Adults who contract with minors are bound to the agreement unless the minor chooses to disaffirm.

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

Under the Uniform Commercial Code, minors who disaffirm their contracts involving goods:

What are the exceptions, created by the courts, to the general rule that minors can disaffirm their contracts?

The idea behind minors' incapacity is that a minor may not be able to bargain effectively with older, more experienced persons. The courts responded to this idea by making minors' contracts void.

Which of the following is true of emancipation?

Which of the following is relevant in determining whether an item is a necessary?

Which of the following is the most likely indicator of contractual incapacity?

In which of the following situations is a contract considered voidable?

Which of the following terms is used to describe the termination of a parent's right to receive services and wages from a child and to generally control him?

A person could be medically insane but still have the legal capacity to contract.

With respect to property, under the common law, minors:

The law uses the word veracity to describe the ability of a person to do a legally valid act.

Which of the following is a correct statement regarding the test of contractual incapacity?

Which of the following is true of minors' ability to disaffirm?

_____ means that a general hearing was held on the person's mental competency, and the court determined that the person was of unsound mind and appointed a guardian or conservator of the person's estate.

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