ACCT Ch 16 LS and Quiz

Both parties are discharged from their obligations.

What happens if a legal contract is formed and its subject later becomes illegal under a new statute?

indivisble

A(n) ______ contract must be enforced or rejected in its entirety.

adhesion

A(n) ______ contract is an agreement presented on a take-it-or-leave-it basis.

restrictive covenant

A covenant not to compete is also known as a(n): _______.

severable

A divisible contract is also known as a(n) ______ contract.

divisible

A severable contract is also known as a(n) ______ contract. Multiple choice question. derisive

express

A(n) ______ ratification occurs when, after reaching the age of majority, the person states she intends to be bound by the contract entered into as a minor. (Select BEST answer)

in pari delicto

According to the legal principle of ______ both contracting parties are equally responsible for an illegal agreement.

anticompetitive

Agreements that restrain trade, called ______ agreements, are viewed as being harmful to consumers and against public policy.

One of the parties withdraws from an illegal agreement after an illegality occurs.

As a general rule, when an agreement is deemed illegal, courts will usually label it void, meaning neither party can enforce the agreement, and neither is entitled to recovery. Which of the following is not a recognized exception to this rule?

voidable

Generally, contracts made by intoxicated persons are ______.

unconscionable contracts

Heavily one-sided agreements are known as ______.

not voidable

If intoxication causes a person to exercise poor judgment in making a contract, the contract is ______ unless the other party unfairly capitalized on the impaired judgment.

license, contract

In terms of the effect of entering into an agreement with a person who is unlawfully unlicensed, in some states the rule is "no ______, no ______." These states will not enforce any agreement with an unlawfully licensed professional.

the violated statute is intended to protect the specific class to which the party belongs

In the context of general rules for illegal agreements, a party is allowed to sue for performance if ______.

gaming

Industry officials prefer to use the term ______, rather than gambling, to refer to agreements in which parties pay consideration for the chance, or opportunity, to obtain an amount of money or property.

illegal and unenforceable

Joey's state has a licensing statute that specifically addresses the requirements for salons. Joey, however, decides not to get a license because it is too expensive. If Margaret enters into a contract with Joey for his salon services, this agreement is _______.

legally affirm

Once a person reaches the age of majority, she may ratify, or ______ contracts made as a minor.

express or implied

Ratification may be either ______ or ______.

varies from state to state

The enforceability of covenants not to compete in employment contracts: _______.

fairness of the sale

The public policy argument in favor of supporting the enforceability of a restrictive covenant regarding the sale of a business involves the ______.

indivisible

Which of the following contracts requires complete performance by both parties, even if it appears to contain multiple parts?

The competent party has no recourse against the minor.

Which of the following is a correct statement regarding a competent party's recourse against a minor who disaffirms when the consideration the minor received is damaged or destroyed?

A minor's obligations on disaffirmance vary from state to state

Which of the following is a correct statement regarding a minor's obligations on disaffirmance?

If a minor chooses to disaffirm a contract, he or she must void the entire contract

Which of the following is a correct statement regarding a minor's power to disaffirm or void a contract?

Minors may enter into only voidable contracts.

Which of the following is a correct statement regarding minors and contracts?

After reaching majority, a person states orally or in writing that he or she intends to be bound by the contract entered into as a minor.

Which of the following is a legally-recognized way to expressly ratify a contract?

full

Which of the following is a type of legal capacity a person suffering from a mental illness may have, depending on the nature and extent of their deficiency?

Government retribution

Which of the following is not a recognized purpose of licensing statutes?

They enforce contracts with unlicensed professionals.

Which of the following is true of states where the purpose of licensing is to provide government control over the profession or generate revenue?

Persons suffering from a mental illness may have full, limited, or no legal capacity to enter into a binding contract depending on the nature and extent of their mental deficiency.

Which of the following is true regarding the ability of persons suffering from a mental illness to enter into a binding contract?

exculpatory

Which of the following terms refers to a clause that releases one of the contracting parties from all liability, regardless of who is at fault or what injury is suffered?

procedural

______ unconscionability describes conditions that impair one party's understanding of a contract, as well as the integration of terms into a contract.

substantive

______ unconscionability occurs when an agreement is overly harsh or lopsided.