BLAW Chapter 14

A mental illness or defect of one of the parties to a contract automatically makes a contract void

False

A minor can ratify part of a contract and disaffirm another part of it

False

All furniture, television sets, and appliances purchased by a minor for her apartment would be considered necessaries

False

All states agree that a minor who has fraudulently misrepresented her age when entering into a contract has no power to disaffirm the contract

False

Beth, at age 17, sells an antique pin she inherited. Even if the buyer resells the pin to someone who did not know that it was purchased from a minor, Beth can recover the pin from the third person if she changes her mind about wanting to sell it.

False

Darrell goes to lunch with an office equipment salesman. After drinking two beers and eating a Reuben sandwich, Darrell signs a contract to purchase a $1200 machine for the office. Two hours later, he has second thoughts and decides a different machine might be a better buy, so he calls the salesman and wants to disaffirm the contract based upon intoxication. Darrell can avoid the contract on this basis.

False

Disaffirmance may be express, but it may not be implied

False

Emancipated minors have no ability to avoid contracts based upon their minority

False

If Carrie, age 14, contracted to buy a fir coat by mail, the coat manufacturer would not have to send it since the contract was void

False

In a contract to sell necessaries to a minor, these goods and services are limited to medical care, food, and shelter

False

In general, a contract made by a mentally incompetent person is void when no guardian has been appointed

False

In general, a minor may only disaffirm a contract after he has reached the age of majority

False

In general, if a minor lies about her age in order to induce the seller to contract with her, she cannot disaffirm that contract

False

Jessica at the age of 15 entered into a contract to sell five acres of land to her uncle. She may disaffirm this contract at any time before reaching her majority

False

Kris, age 17, who looks 18 or older, makes a contract to buy a car from Maisie, who is the age of majority. Maisie finds out Kris's age. Maisie may avoid the contract even if Kris did not misrepresent his age.

False

Lydia makes a contract to purchase a used car on her seventeenth birthday. Six months later, her ratification of the contract can be effectively implied by her continuing payments

False

Michael, a minor, rents a car to attend the senior prom at his high school. He signs an agreement stating that he will not take the car more than 100 miles from the rental agency. At 2:00 a.m., after he has had a few beers, his friends talk him into driving 200 miles to Chicago for the weekend. On the way, the car is involved in a minor traffic accident that damages the vehicle. Because the tort of negligence is related to the rental contract for the vehicle, Michael has no liability to the rental agency

False

Ratification makes a contract void from the beginning

False

Sean had two beers and felt tipsy. He made a deal with Yoko to buy her stereo. He can avoid the contract because of lack of capacity

False

A mental condition that impairs a person's ability to act in a reasonable manner is one type of mental incompetence

True

A person taking a prescription medication will be treated the same as an incompetent under the cognitive ability test

True

A person under guardianship by court order has no contractual capacity

True

An automobile may be considered a necessary item for a minor

True

An incompetent person who lacks understanding of a contract and its consequences can avoid it even if the other party had no reason to know of the incompetent's mental condition

True

An intoxicated person must have been so intoxicated as to have been unable to understand the consequences of his actions or have been unable to act in a reasonable manner in order to avoid a contract.

True

At common law, a minor was a person who was under twenty-one years of age

True

By the majority view, a minor need only return any property he has received from the other party if the minor wishes to disaffirm the contract. He has no duty to return the property in the same condition in which he received it.

True

Courts treat contracts of incompetents and intoxicated persons essentially the same, except they are stricter with intoxicated persons because of intoxication's voluntary nature

True

If a person is adjudicated insane and placed in care of a guardian, that person's contracts are void

True

If a person is unable to understand the nature and effect of entering into a contract, he or she can avoid it

True

In general, minors have liability for their torts

True

In some states, minors are liable for contracts involving bank accounts and student loans and cannot avoid these contracts even though they can avoid other types of contracts

True

Intoxicated persons are liable in quasi contract for necessaries purchased during their incapacity

True

John is 17 years old and earns extra money by repairing cars. Nathan, who is 21, brings his car to John for repairs, and John ruins the brake system of the car, because of his inexperience. If Nathan sues John for negligence in performing the auto repair contract, in most states John will have no liability, because the tort of negligence and the auto repair contract are connected.

True

Persons to lack mental capacity at the time they enter into a contract may avoid liability under the agreement

True

Ratification need not be express; it may be implied from the minor's conduct

True

Ratification of a contract, once effected, is final and cannot be withdrawn

True

Sally goes away to college at 17, lives on her own, and pays her own rent and electric bills. If she makes a contract to buy a television set, in most jurisdictions, she may assert her minority status and set aside the contract.

True

Seventeen-year-old Teresa wants to disaffirm her student loan agreements. Most states will not allow her to avoid such contracts.

True

The doctrine of necessaries applies in the same way to minors and mental incompetents

True

Which of the following is least likely to be classified as a necessary for which a minor will be held liable on a contract? a. A camera b. School supplies c. Boots for a snowy climate d. An automobile

a. A camera

Donald, a minor, makes a contract with Albert, an adult, to buy a computer. One week later, Donald has his eighteenth birthday and shortly thereafter tells Albert he will pick up the computer next week. a. Donald has expressly ratified the contract. b. The contract must be renegotiated, because Donald was a minor when it was made. c. Donald can change his mind and avoid the contract, because it was made when he was a minor. d. The contract is void ab initio, because Donald was a minor at the time it was made.

a. Donald has expressly ratified the contract.

Robert is 17 years old. He lies to Bouyers Auto in order to induce it to sell him a new pickup. Bouyers falls for this lie and sells him the pickup. In most jurisdictions, which of the following is correct? a. Robert may disaffirm and get his money back. b. Robert may not disaffirm since he lied. c. Robert must restore Bouyers to its position before contracting with him. d. Robert will receive his money less depreciation.

a. Robert may disaffirm and get his money back.

Tim, who is a minor, enters into a contract with Violet, who is an adult. Which of the following is correct? a. Violet may not disaffirm the contract. b. Violet may disaffirm the contract at any time. c. Violet may disaffirm the contract when Tim becomes an adult. d. Tim may ratify the contract at any time during his minority.

a. Violet may not disaffirm the contract.

Sixteen-year-old Laura's disaffirmance of a contract: a. for a sale of land by her is not effective until after she reaches the age of majority. b. is only effective if expressed in words in the particular form required by statute. c. can only be effective if she is an "emancipated" minor. d. must take place after she reaches the age of majority, regardless of the type of contract, since only then does she have capacity.

a. for a sale of land by her is not effective until after she reaches the age of majority.

Wanda at age 17 purchased an expensive stereo system from Stereo Sales. If Wanda wishes to ratify this contract, Wanda: a. must reach the age of majority and ratify the contract as a whole. b. may do so by express notification at any time before reaching the age of majority. c. may at any time keep the stereo but avoid any remaining debt owed on the stereo. d. may do so at any time by express or implied action before or after reaching the age of majority.

a. must reach the age of majority and ratify the contract as a whole.

A contract by which of the following is void? a. A fourteen-year-old girl. b. A thirty-six-year-old man under a court-ordered guardianship for mental incompetency. c. A thirty-year-old woman who, because of intoxication, is unable to understand the nature and consequences of signing the contract. d. A twenty-five-year-old woman who is unable to understand the nature and effect of signing a contract because of a mental illness.

b. A thirty-six-year-old man under a court-ordered guardianship for mental incompetency.

Fay, age 17, ordered a pair of skis on the installment plan. She paid $20 every month until she turned 18, the age of majority. The next day, she sold them to Sharon and disaffirmed the contract. What result? a. Fay is still liable since she had to disaffirm before her 18th birthday. b. Fay is still liable because selling the skis amounts to a ratification. c. Fay is not liable because she disaffirmed the contract. d. Fay is not liable because skis are not necessaries.

b. Fay is still liable because selling the skis amounts to a ratification.

Which of the following is correct regarding the contractual liability of incompetent persons? a. An incompetent person's responsibility upon disaffirmance is the same as for a minor. b. For executed, fair contracts with a mentally incompetent person who understands but cannot control his behavior to act rationally, the incompetent must restore the competent party to the status quo before the transaction by a return of the consideration received or its equivalent in money. c. The contracts of a person under guardianship by court order are voidable. d. The contracts of a ward are binding without the approval of the guardian.

b. For executed, fair contracts with a mentally incompetent person who understands but cannot control his behavior to act rationally, the incompetent must restore the competent party to the status quo before the transaction by a return of the consideration received or its equivalent in money.

Randy, a minor, buys a new four-wheel drive truck from the Jones Dealership. Randy sells this truck to his cousin, Steve, who is an adult. Steve conveys this vehicle to Arthur Smith. Arthur does not personally know Steve or Randy. Which of the following expresses the status of this situation? a. Randy may recover the vehicle from Mr. Smith. b. Randy may not recover the vehicle from Mr. Smith. c. Randy may hold Steve liable in tort. d. Randy may recover the reasonable value of the vehicle from Mr. Smith but not the vehicle itself.

b. Randy may not recover the vehicle from Mr. Smith.

Which of the following is not true regarding the contracts of incompetent persons? a. An incompetent person is liable for necessaries. b. Unlike a minor, an incompetent person can never ratify a contract. c. To avoid a contract, a person need not be permanently incompetent. d. A person is competent unless he is unable to understand the nature and effect of his act.

b. Unlike a minor, an incompetent person can never ratify a contract.

In which of the following situations would a minor be unable to disaffirm a contract which he had made? a. Upon restoring the consideration received in a situation involving a fully executed contract b. Where the minor wishes to affirm part of a contract and disaffirm another part of the same contract c. During the time of his minority or for a reasonable time thereafter d. None of the above.

b. Where the minor wishes to affirm part of a contract and disaffirm another part of the same contract

Ann, a minor, disaffirmed her agreement to buy $127 worth of cosmetics from Facial Glo Company. She had used up all the eye shadows, lipsticks, and powders. The general rule is that she may: a. disaffirm, but she must pay the asking price of the cosmetics used. b. disaffirm, but she has to return the makeup that is not used up. c. not disaffirm without paying the value of used makeup. d. not disaffirm because she has used the goods.

b. disaffirm, but she has to return the makeup that is not used up.

The exercise of the power to avoid a contract is known as: a. ratification. b. disaffirmance. c. ab initio. d. restitution.

b. disaffirmance.

Cheryl, age 16, ordered a new dress to wear to the school prom. She has contracted to pay $500 when the dress arrives. Before the dress arrives, Cheryl decides that the dress is too expensive and now wishes to cancel the order. a. Cheryl must pay $500 for the dress because the dress was specially ordered for Cheryl. b. Cheryl must pay $500 for the dress because clothing is classified as a necessity. c. Cheryl may disaffirm this executory contract. d. Cheryl must accept the dress and pay the reasonable value of the dress.

c. Cheryl may disaffirm this executory contract.

Percy, age 17, purchased a used mobile home from a mobile home dealer for $20,000. This price, however, was twice the reasonable value of the mobile home. One month later, Percy wishes to disaffirm the contract. If the mobile home is considered a necessary, then: a. Percy can disaffirm the contract based on the wrongful act of the dealer. b. Percy can disaffirm the contract because the minor can live in an apartment rather than a mobile home. c. Percy may keep the mobile home but is only liable for the reasonable value of the mobile home. d. Percy must keep the mobile home and abide by the original terms of the contract.

c. Percy may keep the mobile home but is only liable for the reasonable value of the mobile home.

Which of the following is not true regarding the contracts of intoxicated persons? a. If an intoxicated person is unable to understand the nature and consequences of his act, then the contract is voidable. b. The effect of intoxication is generally the same as that given to contracts that are voidable because of incompetency. c. Slight intoxication will destroy one's contractual capacity. d. Contracts made while a person is too intoxicated to act in a reasonable manner may be ratified when the intoxicated person regains his capacity.

c. Slight intoxication will destroy one's contractual capacity.

Anna is 88 years old and under the legal guardianship of her daughter. One day Anna receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy. a. This contract is valid. b. This contract is voidable. c. This contract is void. d. This contract is voidable only at the option of Anna.

c. This contract is void.

In most states, whether the time within which a minor disaffirms a contract constitutes a reasonable time is determined by: a. state statute. b. the UCC. c. the facts and circumstances of the case. d. common law, without regard to the unique facts of the case at hand.

c. the facts and circumstances of the case.

Which of the following would be a valid ratification? a. Two weeks after his eighteenth birthday, Jerry sells the motorcycle he contracted to buy when he was seventeen. b. Two weeks after attaining his eighteenth birthday, Jerry calls the bank to assure them that he will continue making payments on the loan agreement he signed a month before his eighteenth birthday. c. Two weeks after his eighteenth birthday, Jerry makes a payment on the installment contract he signed a month before. d. All of the above

d. All of the above

Ratification can occur in which of the following ways? a. Through express language b. As implied from conduct c. Through failure to make a timely disaffirmance d. All of the above.

d. All of the above.

Todd, a minor, rents an automobile from Rosa, an adult. Todd damages the vehicle when he negligently backs into a pole. Under the majority view, can Rosa recover damages from Todd? a. Yes, Todd breached his duty to exercise reasonable care and diligence to protect the automobile. b. Yes, although Todd is a minor, it is well settled that minors are generally liable for their torts. c. No, minors generally cannot be held liable for their torts. d. No, his contractual immunity protects him from legal action by Rosa.

d. No, his contractual immunity protects him from legal action by Rosa.

Mary, age 17, sold Mark, age 22, the briefcase she got for graduation. Mark's father liked it and bought it from him. If Mary decides to disaffirm the contract, will Mark's father have to return the briefcase to her? a. Yes, the briefcase is not a necessary. b. Yes, if Mark's father still has it. c. No, her contract was with Mark and he cannot return goods he does not have. d. No, if Mark's father bought it without knowing that Mary was a minor.

d. No, if Mark's father bought it without knowing that Mary was a minor.

Steve purchases a four-wheel drive truck from Belk Auto Sales. Steve is only 17 years of age. He wrecks the vehicle and attempts to disaffirm the contract and have Belk repay him all that he has paid. In the majority of jurisdictions, what would happen? a. Steve would be out of luck. b. Steve must have the truck repaired. c. Steve will receive his money less the depreciation in value of the vehicle. d. Steve may simply return the vehicle and get his money.

d. Steve may simply return the vehicle and get his money.

When a minor falsely advises the other party that he is of the age of majority and based upon that misrepresentation, the other party in good faith enters into a contract with the minor: a. the minor has lost his right to disaffirm the contract because of the misrepresentation. b. the adult party can recover damages from the minor in tort. c. the minor is required to restore the other party to the position occupied before the making of the contract. d. There is no uniform rule. States differ, and depending upon the state, any of the above could be correct.

d. There is no uniform rule. States differ, and depending upon the state, any of the above could be correct.