Question 1

If a minor buys an item and then disaffirms the contract,and a court orders the minor to merely return the item in its present condition in order to get a refund,this minor has the duty of:

Accepted Answer

A)   restoration.
B)   resuscitation.
C)   revocation.
D)   restitution.
E)   quasi-payment. A

Question 2

Any age below the statutory age of majority is called the period of plurality.

Accepted Answer

A) True 
 B)False  False

Question 3

Justin is 17 years old,but looks several years older.He bought a motorcycle several months ago from Steve.Justin was able to convince Steve that he was over age 18,the age of majority in his state.In the time that he has owned it,he has been in one minor accident and the motorcycle has fallen over several times while parked.Justin,while still 17,notifies Steve that he is disaffirming the contract.What is true in this situation under today's law in most states?

Accepted Answer

A)   Justin has no right to disaffirm, because by claiming to be an adult he will be treated as an adult.
B)   Justin can disaffirm and must only return the motorcycle in its present condition to Steve and will then receive a refund of what he paid for the motorcycle.
C)   Justin can disaffirm and must only return the motorcycle in its present condition to Steve and then be entitled to receive the fair market value (at the time of purchase)  of the motorcycle from Steve.
D)   Justin can disaffirm, but has an obligation to return Steve to the status quo.
E)   Justin has no right to disaffirm unless he can establish that Steve had actual knowledge of his minority. D

Question 4

A person who has dealt with an insane person must place the insane person in status quo if the contract between them is void; however,a person who has dealt with an insane person need not place the insane person in status quo if their contract is voided by the insane person.

Accepted Answer

A) True 
 B)False

Question 5

A minor,unable to live at home,contracts to rent an apartment for one year at $800 per month.After living there for three months,he disaffirms the contract.The reasonable value of that apartment was only $700 per month.Assuming no rent has been paid,the minor must pay:

Accepted Answer

A)   nothing, because the contract has been disaffirmed.
B)   $2,400, which is the contract rate for three months.
C)   $2,100, which is the reasonable value for three months.
D)   $9,600, which is the contract rate for the one-year lease term.
E)   $8,400, which is the reasonable rate for the one-year lease term.

Question 6

If a minor is extremely mature and of above-average intelligence,her contract will be valid.

Accepted Answer

A) True 
 B)False

Question 7

Mabel is 84 years old and on most days is mentally incompetent although she has not been adjudged insane.She has some days when she is fully aware mentally.On one of her good days,Mabel agreed to buy a five-year subscription to a wrestling magazine.Can Mabel avoid this contract?

Accepted Answer

A)   no, because it was entered into at a time when Mabel was mentally competent
B)   no, because it is for necessary educational purposes
C)   yes, but only if she disaffirms when she is not mentally competent
D)   yes, because this contract is void and never came into existence
E)   yes, because this contract is voidable at Mabel's election

Question 8

A person who provides services pursuant to a contract without the appropriate license required by a revenue-raising statute can enforce the contract and recover payment for services rendered.

Accepted Answer

A) True 
 B)False

Question 9

To avoid misunderstanding,a minor's ratification of a contract must be done in writing in order to be effective.

Accepted Answer

A) True 
 B)False

Question 10

Frank entered into a loan agreement to lend a friend $10,000 at an agreed interest rate of 18 percent.However,the state in which they both live has a statute that limits the interest rate on loans of this type to 15 percent.The friend then made the first three payments on the loan in accordance with the agreement,but has made no further payments and now has several unpaid back payments.Discuss the different approaches that a court might take in this situation.

Accepted Answer

The answer of Frank entered into a loan agreement to...

Question 11

Kathy purchased a used car from Mint Motors,Inc.on her sixteenth birthday and will be making 48 monthly payments to Mint.Thirteen months later,the car was stolen and was never recovered.Which of the following statements is correct?

Accepted Answer

A)   The car's theft is an automatic ratification of the contract because it is now impossible to return the car.
B)   Kathy ratified the contract by driving the car for thirteen months.
C)   Kathy may disaffirm the contract because she is a minor.
D)   Kathy may not disaffirm the contract if she ratified the contract either orally or in writing prior to the theft.
E)   Kathy may demand a new car from Mint as a penalty for dealing with a minor.

Question 12

State ________ laws set a(n)________ limit on the annual interest rate that can be charged on certain types of loans.

Accepted Answer

A)   pecuniary; upper
B)   pecuniary; lower
C)   usury; upper
D)   usury; lower
E)   usury; sliding-scale

Question 13

Most states use the subjective cognitive comprehension test to determine legal insanity.

Accepted Answer

A) True 
 B)False

Question 14

All states have licensing statutes that require members of certain professions and occupations to be licensed by the state in which they practice.

Accepted Answer

A) True 
 B)False

Question 15

A person who provides contract services without the appropriate license required by a revenue-raising statute cannot enforce the contract or recover payment for services rendered pursuant to the contract.

Accepted Answer

A) True 
 B)False

Question 16

In order for a contract to be considered against public policy,it must be in violation of a statute.

Accepted Answer

A) True 
 B)False

Question 17

For what period of time may a minor disaffirm a contract after reaching the age of majority?

Accepted Answer

A)   three (3)  months
B)   six (6)  months
C)   one (1)  year
D)   three (3)  years
E)   a reasonable period of time

Question 18

No special formalities are required for a minor to disaffirm a contract.

Accepted Answer

A) True 
 B)False

Question 19

Most states provide civil,but not criminal,penalties for making usurious loans.

Accepted Answer

A) True 
 B)False

Question 20

The doctrine of unconscionability is based on public policy.

Accepted Answer

A) True 
 B)False

Exam 11: Capacity and Legality

If a minor buys an item and then disaffirms the contract,and a court orders the minor to merely return the item in its present condition in order to get a refund,this minor has the duty of:

Any age below the statutory age of majority is called the period of plurality.

A person who has dealt with an insane person must place the insane person in status quo if the contract between them is void; however,a person who has dealt with an insane person need not place the insane person in status quo if their contract is voided by the insane person.

A minor,unable to live at home,contracts to rent an apartment for one year at $800 per month.After living there for three months,he disaffirms the contract.The reasonable value of that apartment was only $700 per month.Assuming no rent has been paid,the minor must pay:

If a minor is extremely mature and of above-average intelligence,her contract will be valid.

Mabel is 84 years old and on most days is mentally incompetent although she has not been adjudged insane.She has some days when she is fully aware mentally.On one of her good days,Mabel agreed to buy a five-year subscription to a wrestling magazine.Can Mabel avoid this contract?

A person who provides services pursuant to a contract without the appropriate license required by a revenue-raising statute can enforce the contract and recover payment for services rendered.

To avoid misunderstanding,a minor's ratification of a contract must be done in writing in order to be effective.

Kathy purchased a used car from Mint Motors,Inc.on her sixteenth birthday and will be making 48 monthly payments to Mint.Thirteen months later,the car was stolen and was never recovered.Which of the following statements is correct?

State laws set a(n) limit on the annual interest rate that can be charged on certain types of loans.

Most states use the subjective cognitive comprehension test to determine legal insanity.

All states have licensing statutes that require members of certain professions and occupations to be licensed by the state in which they practice.

A person who provides contract services without the appropriate license required by a revenue-raising statute cannot enforce the contract or recover payment for services rendered pursuant to the contract.

In order for a contract to be considered against public policy,it must be in violation of a statute.

For what period of time may a minor disaffirm a contract after reaching the age of majority?

No special formalities are required for a minor to disaffirm a contract.

Most states provide civil,but not criminal,penalties for making usurious loans.

The doctrine of unconscionability is based on public policy.

Exam 11: Capacity and Legality

If a minor buys an item and then disaffirms the contract,and a court orders the minor to merely return the item in its present condition in order to get a refund,this minor has the duty of:

Any age below the statutory age of majority is called the period of plurality.

A person who has dealt with an insane person must place the insane person in status quo if the contract between them is void; however,a person who has dealt with an insane person need not place the insane person in status quo if their contract is voided by the insane person.

A minor,unable to live at home,contracts to rent an apartment for one year at $800 per month.After living there for three months,he disaffirms the contract.The reasonable value of that apartment was only $700 per month.Assuming no rent has been paid,the minor must pay:

If a minor is extremely mature and of above-average intelligence,her contract will be valid.

Mabel is 84 years old and on most days is mentally incompetent although she has not been adjudged insane.She has some days when she is fully aware mentally.On one of her good days,Mabel agreed to buy a five-year subscription to a wrestling magazine.Can Mabel avoid this contract?

A person who provides services pursuant to a contract without the appropriate license required by a revenue-raising statute can enforce the contract and recover payment for services rendered.

To avoid misunderstanding,a minor's ratification of a contract must be done in writing in order to be effective.

Kathy purchased a used car from Mint Motors,Inc.on her sixteenth birthday and will be making 48 monthly payments to Mint.Thirteen months later,the car was stolen and was never recovered.Which of the following statements is correct?

State ________ laws set a(n) ________ limit on the annual interest rate that can be charged on certain types of loans.

Most states use the subjective cognitive comprehension test to determine legal insanity.

All states have licensing statutes that require members of certain professions and occupations to be licensed by the state in which they practice.

A person who provides contract services without the appropriate license required by a revenue-raising statute cannot enforce the contract or recover payment for services rendered pursuant to the contract.

In order for a contract to be considered against public policy,it must be in violation of a statute.

For what period of time may a minor disaffirm a contract after reaching the age of majority?

No special formalities are required for a minor to disaffirm a contract.

Most states provide civil,but not criminal,penalties for making usurious loans.

The doctrine of unconscionability is based on public policy.

State laws set a(n) limit on the annual interest rate that can be charged on certain types of loans.