Chapter 12

The law has developed which two standards concerning contracts of mentally incompetent​ persons? A. adjudged insane and insane but not adjudged insane B. equitably insane and insane but not adjudged insane C. adjudged insane and insane per se D. adjudged insane and​ quasi-insane E. insane-in-law and insane but not adjudged insane

A. adjudged insane and insane but not adjudged insane

In order to be​ enforceable, a covenant not to compete must be reasonable in three​ aspects: (1) the line of business protected​ (2) the geographic area​ protected, and​ (3) the​ ________________. A. duration of the restriction B. revenue of the business C. number of employees D. size of the business E. number of branches of the business

A. duration of the restriction

A contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust is known as​ a(n) ________. A. unconscionable contracts B. immoral contracts C. contracts of adhesion D. exculpatory clauses E. covenants not to compete

A. unconscionable contracts

Adam, who is insane but not adjudged​ insane, enters into a contract with Indira. A contract entered into by a person who is insane but not adjudged insane is​ ________. A. voidable B. enforceable by Indira C. not enforceable by anyone D. valid E. void

A. voidable

Most states provide that contracts entered into by certain intoxicated persons are​ ______. A. voidable by those persons B. valid C. enforceable by the person contracting with the intoxicated person D. not enforceable by anyone E. void

A. voidable by those persons

__________ is sometimes found where there is a consumer contract that takes advantage of​ uneducated, poor, or elderly people who have been persuaded to enter into an unfair contract. A. An unconscionable contract B. An immoral contract C. An exculpatory clause D. A bilateral contract E. A covenant not to compete

An unconscionable contract

________ is that the courts will refuse to enforce or rescind an illegal contract and will leave the parties where it finds them. A. The effect of contracts with a minor B. The effect of illegal contracts C. The effect of the infancy doctrine D. The effect of contracts with an intoxicated person E. The effect of contracts with an insane but not adjudged insane person

B. The effect of illegal contracts

Which of the following is an INCORRECT statement regarding covenants not to​ compete? A. In order to be​ enforceable, a covenant not to compete must be reasonable regarding the duration of the restriction. B. The reasonableness of covenants not to compete is examined on a uniform basis. C. If a covenant not to compete is​ unreasonable, the courts may​ either: 1) refuse to enforce​ it; or​ 2) change it so that it is​ reasonable; usually, courts choose the first option. D. In order to be​ enforceable, a covenant not to compete must be reasonable regarding the geographic area protected. E. In order to be​ enforceable, a covenant not to compete must be reasonable regarding the line of business protected.

B. The reasonableness of covenants not to compete is examined on a uniform basis.

Automobile sales contracts and​ leases, mortgages, and apartment leases are usually​ _____. A. immoral contracts B. contracts of adhesion C. unconscionable contracts D. covenants not to compete E. exculpatory clauses

B. contracts of adhesion (preprinted form whose terms the consumer cannot negotiate and that they must sign in order to obtain a product or service)

An​ _____ clause is also called a release of liability clause A. inclusionary B. exculpatory C. exclusionary D. inculpatory E. executory

B. exculpatory (AKA release of liability​ clause )

Under the infancy​ doctrine, a contract related to which of the following can be disaffirmed by a​ minor? A. clothing B. health club membership C. food D. medical services E. an apartment

B. health club membership (this is not a necessity of life)

A situation in which both parties are equally at fault in an illegal contract is known as​ ________. A. a contract in violation of a​ state's gambling laws B. in pari delicto C. a contract contrary to public policy. D. a contract to commit a crime E. a contract for an interest right higher than the usury rate

B. in pari delicto (latin equal fault)

A doctrine that allows minors to cancel most contracts they have entered into with adults is known as which of the​ following? A. the intoxicated persons doctrine B. the infancy doctrine C. illegal contracts doctrine D. the insanity doctrine E. the childish doctrine

B. the infancy doctrine

All of the following are examples of illegal contracts​ EXCEPT? A. a contract in violation of a​ state's gambling laws B. a contract contrary to public policy C. a contract with an intoxicated person D. a contract to commit a crime E. a contract for an interest right higher than the usury rate

C. a contract with an intoxicated person

The infancy doctrine​ ________. A. allows the government to intervene when a minor is involved in a contract B. does not allow minors to cancel most contracts they have entered into with adults C. allows minors to cancel most contracts they have entered into with adults D. means that minors are legally insane E. means that contracts with minors are void

C. allows minors to cancel most contracts they have entered into with adults (minors should be protected from unscrupulous adults. contracts are voidable at minor's option)

A contractual provision that relieves one​ (or both) of the parties to a contract from tort liability for ordinary negligence is known as which of the​ following? A. a covenant not to compete B. a contract of adhesion C. an exculpatory clause D. an immoral contract E. an unconscionable contract

C. an exculpatory clause

An ____ clause is also called a release of liability clause. A. subrogation B. indemnification C. exculpatory D. subordination E. executory

C. exculpatory

​A(n) _____ contract is a contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust. A. implied B. illusory C. unconscionable D. unilateral E. conscionable

C. unconscionable

An agreement between two companies to engage in price fixing in violation of federal antitrust statutes is illegal and therefore​ _____. A. only unilaterally enforceable B. only partially enforceable C. void D. only conditionally enforceable E. voidable

C. void

Which of the following is an INCORRECT statement regarding the infancy​ doctrine? A. Generally, contracts for the necessaries of life are exempt from the scope of the infancy doctrine. B. If both parties to a contract are​ minors, both parties have the right to disaffirm the contract. C. A minor may not affirm one part of a contract and disaffirm another part. D. In most​ states, the infancy doctrine is a subjective standard. E. Under the infancy​ doctrine, a minor has the option of choosing whether to enforce a contract.

D. In most​ states, the infancy doctrine is a subjective standard. (its an objective standard)

A person who is under contractual incapacity because of ingestion of alcohol or drugs to the point of incompetence is considered to be​ ________. A. insane but not adjudged insane B. a minor C. adjudged insane D. an intoxicated person E. an emancipated minor

D. an intoxicated person

Laurie who is adjudged insane enters into a contract with Leo. A contract entered into by a person adjudged insane is​ ________. A. valid B. enforceable by Laurie C. voidable D. void E. enforceable by Leo

D. void (a contract entered into by someone who is adjudged insane is void)

A contract that is based on sexual favors is an immoral contract and​ _____ as against​ _____. A. voidable; commonly-held religious beliefs B. void; unconscionability C. void; commonly-held religious beliefs D. void; public policy E. voidable; public policy

D. void; public policy

A contract that has a negative impact on society or that interferes with the​ public's safety and welfare is known as which of the​ following? A. a contract for an interest right higher than the usury rate B. a contract in violation of a​ state's gambling laws C. a contract to commit a crime D. a contract with an intoxicated person E. a contract contrary to public policy

E. a contract contrary to public policy

Which of the following is an element that must be shown to prove that a contract or a clause in a contract is​ unconscionable? A. The contracting parties entered into an​ "arm's-length" transaction. B. One party reasonably used his or her bargaining power. C. The parties gave mutual consideration. D. The parties possessed equal bargaining power. E. The adhering party had no reasonable alternative.

E. The adhering party had no reasonable alternative

Which of the following is an INCORRECT statement regarding the enforceability of contracts entered into by intoxicated​ persons? A. A person who disaffirms a contract based on intoxication generally must return the consideration received under the contract to the other party and make restitution that returns the other party to status quo. B. The amount of alcohol or drugs that must be consumed for a person to be considered legally intoxicated to disaffirm contracts varies from case to case. C. A person who disaffirms a contract based on intoxication generally must be returned to the status quo. D. Intoxicated persons are liable in quasi contract to pay the reasonable value for necessaries they receive. E. Under the majority​ rule, all contracts entered into by intoxicated persons are void.

E. Under the majority​ rule, all contracts entered into by intoxicated persons are void.

A contract that provides that a seller of a business or an employee will not engage in a similar business or occupation within a specified geographical area for a specified time following the sale of the business or termination of employment is known as​ ________. A. an exculpatory clause B. an immoral contract C. an unconscionable contract D. a contract of adhesion E. a covenant not to compete

E. a covenant not to compete

Exculpatory clauses that either affect the public interest or result from superior bargaining power are usually found to be​ _______ as against public policy. A. contract of adhesion B. enforceable C. valid D. voidable E. void

E. void

Under the infancy​ doctrine, a minor has the option to do all of the following​ EXCEPT? A. void the contract B. enforce the contract C. disaffirm the contract D. ratify the contract E. void the contract only if it is for necessaries of life

E. void the contract only if it is for necessaries of life (food, clothing, shelter, medical services, etc.)

To protect​ minors, the law recognizes the​ _____ doctrine, which gives minors the right to disaffirm most contracts they have entered into with adults. A.substantial performance B.frustration of purpose C.commercial impracticability D.minority E.infancy

E.infancy