Legal Chapter 14

Exculpatory clause

A clause that releases a contractual party from liability in the even of monetary or physical injury, no matter who is at fault

Unconscionable contract or clause

A contract or clause that is void on the basis of public policy because one party was forced to accept terms that are unfairly burdensome and that unfairly benefit the stronger party.

Covenant not to compete

A contractual promise of one party to refrain from conducting business similar to that of another party for a certain period of time and within a specified geographical area.

Reformation

A court-ordered correction of a written contract so that it reflects the true intentions of the parties.

Necessaries

Necessities required for life, such as food, shelter, clothing, and medical attention.

Age of Majoriry

The age at which an individual is considered legally capable of conducting himself or herself responsibly and can not dissaffirm a contract.

T or F: In an employment contract, a covenant not to compete can be enforceable.

True.

T or F: Contractual capacity includes the financial ability to pay for the benefits of a contract.

False

Dante enters into a contract with Rosalinda, who does not have contractual capacity. Dante can enforce the contract if Rosalinda a) does not choose to avoid the contract b) is a minor c) can obtain the funds to pay for the benefits of the contract d) is intoxicated or mentally incompetent

A.

Delia enters into, and fails to disaffirm soon after reaching the age of majority, a contract with Electronics Stores, Inc. (ESI). Later Delia attempts to disaffirm the contract. ESI files a suit against her. The court will most likely consider the contract ratified if it is a) executed b) exculpatory c) disaffirmed d) rescinded

A.

Jacquie signs a contract to buy a car just before reaching the age of majority. After reaching the age of majority, Jacquie does not take possession or make payments. Most courts would hold, with respect to the contract, that this is a) disaffirmance b) emancipation c) ratification d) rescission

A.

Olga, a minor, signs a contract to buy a computer from Phil, the owner of Quality Computer Store. Olga's right to disaffirm the contract a) does not change the fact that Phil is bound by the contract b) does not yet exist because Olga is still a minor c) gives Phil, an adult, the right to dissafirm the contract d) is not valid because a computer is a "necessary"

A.

Fay is mentally incompetent but has not been so adjudged by a court. Any contract Fay enters into is a) voidable if Fay has a lucid interval at the time of contracting b) voidable if Fay lacks the capacity to comprehend the consequences c) voidable if the other party does not realize that Fay is incompetent d) unavoidable

B.

Lindsey, an emergency medical technician, is called to an accident scene by Nicole and renders medical care to Marvin, a minor. Lindsey may recover the cost from a) the state b) Marvin c) Nicole d) no one

B.

Orin relinquishes the right to his daughter Neko's control, care, custody, and earnings. This act is a) disaffirmance. b) emancipation. c) ratification. d) severability.

B.

T or F: When both parties to a contract are minors, neither of them may disaffirm the contract.

False

Jenna, a minor acting on her own, signs a contract to buy a horse and its tack from Field Equine Ranch. Later, after taking possession of the horse and tack, Jenna disaffirms the deal. She a) can keep the horse and the tack b) can keep the horse but not the tack c) can keep the tack but not the horse d) must return both the horse and the tack

D.

T or F: A contract is void if one of the parties was intoxicated and the time of its formation

False

T or F: A contract to commit a crime is a contract and therefore enforceable.

False

T or F: All contracts between adults and minors are void.

False

Ratification

The act of accepting and giving legal force to an obligation that previously was not enforceable

Emancipation

The act of being freed from parental control; occurs when a child's parent or legal guardian relinquishes the legal right to exercise control over the child.

Usury

The illegal action or practice of lending money at unreasonably high rates of interest.

Contractual capacity

The legal ability to enter into contracts; the threshold mental capacity require by law for a party who enters into a contract to be bound by that contract.

Dissaffirmance

The legal avoidance, or setting aside, of a contractual obligation.

T or F: Federal law bars electronic payments, such as credit-card transactions, at online gambling sites.

True

T or F: Parents are required by law to provide necessaries for their minor children.

True