Chapter 14

Evelyn is a minor. As a minor, she a. all of the choices. b. is not usually legally bound by a contract. c. has the capacity to enter into a valid contract. d. has the right to avoid liability under a valid contract.

all of the choices

Quest enters into a contract to buy a thoroughbred from Rancho Mesa. Quest can disaffirm the contract a. none of the choices. b. by words or conduct. c. only by conduct. d. only by words.

by words or conduct

Bern, a minor, signs a contract to buy a Caterwauler jet boat from Dahl, an adult. Dahl a. can avoid as much of the contract as Bern elects to avoid. b. must obtain Bern's consent to avoid the contract. c. can avoid the contract without Bern's consent. d. cannot avoid the contract.

cannot avoid the contract

Among the requirements for a valid contract, courts generally presume the existence of a. none of the choices. b. mental incompetence. c. minority. d. contractual capacity.

contractual capacity

Twig is fifteen. In most states, for contractual purposes, Twig would be considered a minor until she is a. sixteen. b. twenty-one. c. seventeen. d. eighteen.

eighteen

Insurance Company violates a state licensing statute when selling a policy to Jay, in whose state it is not licensed to sell insurance. As a member of the class of persons protected by the statute, Jay can a. collect benefits under the policy immediately. b. enforce the policy and recover from the insurer. c. none of the choices. d. obtain a license to sell insurance and a list of the insurer's customers.

enforce the policy and recover from the insurer

Dari, a minor, wants to disaffirm a contract that she entered into with Echo, a cell service company. The law in Dari's state, as in all states, permits minors to disaffirm a. executory contracts only. b. executory and fully executed contracts. c. none of the choices. d. fully executed contracts only.

executory and fully executed contracts

Horse racing, video poker games, and charity-sponsored bingo are a. forms of gambling allowed and regulated by many states. b. forms of gambling not allowed or regulated by any state. c. not forms of gambling. d. forms of gambling allowed and regulated by all states.

forms of gambling allowed and regulated by many states

Owen, the owner of Parts Company, pays Quint to obtain a competitor's design patent. Quint keeps the money but does not deliver. Owen can a. none of the choices. b. recover from Quint. c. enforce the contract with Quint. d. recover from the competitor.

none of the choices

Accepting and giving legal force to an obligation that previously was not enforceable is a. ratification. b. disaffirmance. c. emancipation. d. illegal.

ratification

Bianca, a minor, enters into a contract to buy two all-season passes from Chalet Ski Park. The contract will be made enforceable if Bianca a. voids it. b. disaffirms it. c. ratifies it. d. nullifies it

ratifies it

The state of Nevada enacts a usury statute. With respect to different types of transactions, including ordinary loans, the purpose of the statute is to a. set a maximum rate of interest. b. specify clauses that must be included in certain contracts. c. prohibit certain contracts based on their subject matter. d. regulate certain forms of gambling.

set a maximum rate of interest.

Foy, a minor, misrepresents his age when entering into a contract to buy a car from Gas Hogs Inc. Foy takes possession of the car, but makes no payments on the contract and tries to disaffirm it. Most likely, Gas Hogs can recover a. the car, but not any of the balance due on the contract. b. nothing. c. the balance due on the contract. d. an amount equal to the wholesale value of the car.

the balance due on the contract

In determining procedural unconscionability, a court is most likely to consider whether a. any provision left one party without a remedy for nonperformance. b. any provision deprived one party of the benefits of the agreement. c. none of the choices. d. the buyer had an opportunity to ask questions about the contract

the buyer had an opportunity to ask questions about the contract

A contract to do something that is prohibited by statute is a. unenforceable. b. enforceable if the parties are aware of the prohibition. c. enforceable if the parties are ignorant of the prohibition. d. enforceable if the contract does not negatively affect society.

unenforceable

A lease between Mia and Niles for residential property contains an exculpatory clause. This clause is most likely a. enforceable if an event occurs to which the clause applies. b. enforceable if either party is in a business important to the public. c. unenforceable. d. enforceable as a matter of public policy.

unenforceable

Oscar owns Payroll Company, a bookkeeping service. Oscar pays Remy $5,000 to steal a list of a competitor's clients. This deal is a. voidable at the option of the party having less bargaining power. b. voidable at the option of either party. c. void. d. enforceable

void

Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar, competing store anywhere. This promise is most likely a. invalid because it is part of a sale of an ongoing business. b. valid if both parties are justifiably ignorant of the facts. c. valid because it is part of a sale of an ongoing business. d. invalid because of the unreasonable terms of area and time.

invalid because of the unreasonable terms of area and time

Les, a minor, enters into a contract to buy a dirt bike from Motocross LLC. Les can ordinarily disaffirm the contract a. all of the choices. b. for a reasonable time after coming of age. c. in a timely manner. d. at any time during minority

all of the choices

Opal is a minor. In at least some states, Opal can enter into a legally binding contract when she a. gets married. b. all of the choices. c. reaches the age of majority. d. is emancipated from her parents

all of the choices

Intoxicated, Efron enters a contract for the sale of his business, Freight Dispatch, to Gretel for less than its market value. This contract is enforceable if, at the time, a. Gretel fraudulently induced Efron to become intoxicated. b. Efron's intoxication was purely voluntary. c. Gretel was also intoxicated. d. Efron understood the legal consequences.

Efron understood the legal consequences.

Intoxicated, Hans enters a contract for the sale of ten acres of timberland to Ira for less than its market value. Later, Hans seeks to cancel the deal. In determining whether Hans can avoid his duties under the contract, a court is most likely to look at a. only factors other than the Hans's intoxicated mental state. b. Hans's intoxicated mental state and other factors. c. none of the choices. d. only Hans's intoxicated mental state.

Hans's intoxicated mental state and other factors

Intoxicated, Obo enters a contract for the sale of his business, Precision Parts, to Quad for less than its market value. This contract is voidable if, at the time, a. Obo understood the legal consequences. b. Obo's intoxication was purely voluntary. c. Quad fraudulently induced Obo to become intoxicated. d. Quad was also intoxicated.

Quad fraudulently induced Obo to become intoxicated

Through fraudulent means, Duke induces Emma to sign a contract to invest with him the profits from her business. When Emma learns the truth, she may a. recover what she invested. b. enforce the contract. c. any of the choices. d. withdraw from the deal.

any of the choices

Gretchen is adjudged by a court to be mentally incompetent. Gretchen a. can enter into a valid contract and cannot avoid liability under it. b. cannot form a legally binding contract with another party. c. is presumed to have contractual capacity. d. can enter into a valid contract but has the right to avoid liability under it.

cannot form a legally binding contract with another party

Von, a minor, wants to return a set of skis that he bought from Winter Sports. He used—and wrecked—the skis. In a state in which a duty of restitution is imposed, Von most likely a. must return the skis and pay for the damage. b. can return the skis "as is" and avoid further liability. c. is not required to return the skis due to his or her minority. d. cannot return the skis unless they can be fully restored

must return the skis and pay for the damage

Ada agrees in writing to pay Bob to damage Ada's car, which is fully insured. Bob damages the car, but Ada's insurer refuses to pay for the damage. In Ada and Bob's suit against each other for breach of contract, the court is most likely to a. none of the choices. b. allow Bob to recover. c. enforce the contract. d. allow Ada to recover.

none of the choices

Fagin and Gretel agree to hijack a truck carrying a load of almonds. If Fagin later refuses to go through with the crime, Gretel can a. obtain damages in the amount of her own share of the illegal profits. b. none of the choices. c. obtain damages in the amount of her partner's share of the illegal profits. d. enforce the agreement

none of the choices

At Mattress Store, Nate signs a contract to buy bedroom furniture. The contract sets a schedule of $500 monthly payments, subject to a late fee of 150 percent. Nate finds the language of the contract difficult to understand. This is most likely a. procedural unconscionability. b. an enforceable contract. c. substantive unconscionability. d. an exculpatory contract.

procedural unconscionability

The purpose of the right to disaffirm a contract is to a. restore persons to positions they held before contracting. b. recognize the legitimate interests of those who contract with minors. c. protect minors. d. ratify a contract and make it enforceable.

protect minors

Cass agrees to sell her Daily Donut shop to Ernie. In the agreement, there is a covenant not to compete that prohibits Cass from operating a donut shop within a certain distance. If the restriction is unreasonable, a court will most likely a. reform the covenant. b. order Ernie to stop doing business. c. prohibit both parties from operating donut shops. d. award Cass damages

reform the covenant

Deb is a minor. She can enter into any contract an adult can, provided a. Deb is willing to disaffirm the contract. b. the contract is not one prohibited by law for minors. c. the adult is willing to enter into contracts with minors. d. an adult is willing to ratify the contract.

the contract is not one prohibited by law for minors

Jac enters into a contract with Knut, an unlicensed contractor. This contract may be enforceable if a. the lack of a license in Knut's occupation bars the enforcement of work-related contracts. b. the statute expressly affirms the barring of a contract's enforceability. c. the statute does not expressly affirm the barring of a contract's enforceability. d. the statute's purpose is to protect the public from unauthorized practitioners.

the statute does not expressly affirm the barring of a contract's enforceability.

Seth is mentally incompetent but has not been adjudged by a court to be incompetent. Seth enters into a contract with Toby for the cleaning and maintenance of Seth's warehouse. Most likely, the contract is a. enforceable if Toby did not know that Seth was mentally incompetent. b. voidable if Seth did not comprehend the consequences. c. void. d. enforceable if the warehouse needs cleaning and maintenance.

voidable if Seth did not comprehend the consequences

Lazlo and Mac bet illegally on the outcome of a sporting event. Before the event is held, Lazlo changes his mind about the wager. Lazlo can a. withdraw from the deal by giving notice. b. not withdraw from the deal without Mac's consent. c. not withdraw from the deal without paying Mac's expenses. d. not withdraw from the deal under any circumstances

withdraw from the deal by giving notice