Chapter 16

The enforceability of covenants not to complete in employment contracts:

Varies from state to state.

When there is limited capacity to a contract, it can become _______.

Voidable.

Which of the following situations are covenants not to complete enforceable?

When it is in conjunction with the sale of a business.

When is a contract voidable?

When the contract is entered into by a minor.

In what situation is a contract enforceable?

A contract that can perform legally and a contract with a legal subject matter.

What business would most likely be able to enforce an exculpatory clause?

A nightclub.

An agreement in which a party is given an offer without the right to negotiate its terms is called a(n) _______ contract.

Adhesion.

In which of the following situations does an express ratification by a minor occur?

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

What statement is incorrect concerning contracts made by intoxicated persons?

Courts tend to allow the intoxicated person to disaffirm the contract if disaffirmance occurs within one month after the person becomes sober.

A "severable" contract is also known as a _______ contract.

Divisible.

Illegal Contracts:

Generally deemed void by court, contracts violating state or federal statutes, agreements in contradiction to public policy, severable contracts, and indivisible contracts.

What is not a recognized purpose of licensing statutes?

Government retribution.

When, after reaching the age of majority, the former minor takes some action consistent with the intent to ratify the contract.

Implied ratification.

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

Legally affirm.

Contractual Capacity:

Mental ability to understand rights and obligations established by contract, with the presumptive ability to understand how to comply with the terms of the agreement.

If the consideration is damaged/destroyed, the other party has no recourse against a _______.

Minor.

Individuals who have limited capacity to contract:

Minors, those suffering from mental deficiency that renders them incapable of understanding the nature and obligations of contracts, and those who are intoxicated.

Sabbath laws typically do not apply to contracts for obtaining _______, including prescription medication, food, and anything else related to health or survival.

Necessitates.

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?

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

Natural persons over the age of majority are:

Presumed to have the full legal capacity to enter into binding legal contracts.

Exception to general rule of illegal contracts:

Protected class, justifiable ignorance, and withdrawal.

Which of the following aspects are guaranteed government protection under licensing statutes?

Public health and public safety.

When a court can void the illegal part of an agreement and enforce the rest if the terms represent the main purpose of the original agreement, it is a (n) _______ contract.

Severable.

Julie, a 16-year-old student, enters a three-year modeling contract with a local ad agency. After two months, she realizes that the modeling schedule is too hectic and interferes with her school and other activities. She does not want to continue modeling. Which of the following statements is true in the given scenario?

She can void the contract immediately.

If someone suffering from dementia has been appointed a guardian, what is true regarding that person's ability to enter into a contract?

That person's contracts are considered void.

If a person who suffers from a mental illness or defect yet still understands the nature of the contract and his or her obligations under the contract, what will result?

The contract will be considered valid.

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

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

What are contracts for necessaries?

Typically enforced against minor, paid by parents. Ex. food, clothing, shelter, and basic medical services.

The term _______ refers to the fact that the agreement in question is so unfair that it is void of conscience.

Unconscionable.

In most states, _______ are liable for a minor's personal torts.

minors, not their parents.

In many state, parents may be liable when a child causes harm if it can be proved that the parents:

Failed to properly supervise the child.

Covenants not to complete in connection with the sale of a business are generally:

Enforceable.

Ratification may either be _______ or _______.

Express or implied.

Capacity on a contract makes it voidable but...

Does not mean the other party will not get paid or get the product.