Business law final (Chapter 14)
A female attains the age of majority at what age?
18
Which of the following cannot be disaffirmed until after the age of majority
A contract that affects title to real estate sold by a minor
Which of the following would likely be considered a non-necessary item for a minor?
A miniature television set to watch the soaps during lunch
Which of the following is ordinarily competent to give binding assent to a contract
Convicts
Ratification
Can only be of the whole and not part of the contract
When a minor falsely advises the other party that he is of the age of majority and based upon that misrepresentation, the other party enters into a contract with the minor:
Can ratify the contract only as a whole
Mike Minor buys some real estate for investment purposes. The contract obligates Mike to make monthly installment payments for ten years. Mike reaches the age of majority one month after making the contract. After this, Mike makes 25 monthly payments under the contract, but then decides that he wants to disaffirm the deal. Which of the following is MOST true?
Cannot disaffirm because he has already ratified the contract
Which of the following is least classifiable as a necessity for which a minor will be held liable on a contract
Cassette Tapes
The exercise of the power to avoid a contract is known as ____________.
Disaffirmance
Don, a minor, contracts to sell 100 acres of land to Jerry who is also a minor. Don reaches the age of 18 as does Jerry. Don takes no action to avoid the contract for several months. Which of the following most accurately describes the status?
Don ratifies the contract
Donald, a minor, makes a contract to sell a motorcycle to Albert, an adult. One week later, Donald has his eighteenth birthday and shortly thereafter Albert picks up the motorcycle.
Donald has expressly ratified the contract
Three days before she was judicially declared mentally incompetent and institutionalized, Irma bought a $50,000 automobile for cash and took delivery of it. Which of the following is true about this contract? Assume that Irma was pretty far gone when she bought the car.
It is voidable
Which of the following is necessary for the existence of an offer?
Facts and circumstances that reasonably indicate the offeror's intent to contract
Which of the following is LEAST likely to constitute ratification of a contract made by a minor?
Failing to disaffirm a completely executory contract within one month after the age of majority
A minor is liable for necessities and for the agreed price.
False
A minor may disaffirm a conveyance of land prior to reaching majority or within a reasonable time after doing so
False
The Uniform Commercial Code has not changed the traditional common law view that a minor could avoid her contract and recover property, even though a third party may have given value for it and had no notice that it was the property of a minor.
False
Today, under the UCC, a person buying goods from a minor may not transfer valid title to a good faith purchaser for value.
False
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?
Fay is still liable because selling the skis amounts to a ratification
Seventeen-year-old Tim Teenager decides he would like a new car, so he brings his 1972 Ford Maverick to the local Ford dealer as a trade-in on a new Thunderbird. He turns over his Maverick to the dealer and drives away with a new Thunderbird. Two days later, Tim decides he cannot afford the payments for the new car on his salary as a burgermaker, so he returns the car and asks for his Maverick back. The dealer says he will take the Thunderbird and rescind the contract, but that he is unable to return the Maverick because he sold it to another buyer.
If the dealer sold the car to a good faith purchaser, then Tim has no right to get his Maverick back
When Lynx, Inc. hired Parr, Parr signed an employment contract prohibiting Parr from competing with Lynx during and after employment. While employed, Parr acquired knowledge of many of Lynx's trade secrets. Which of the following statements is correct?
In determining whether Parr may compete with Lynx, the court should consider, among other factors, whether the agreement is necessary to protect Lynx's legitimate business interests.
Rail, who was 16 years old, purchased an $800 computer from Elco Electronics. Rail was unhappy with the computer. Two days after reaching the age of 18, Rail was still frustrated with the computer's reliability. He returned it to Elco, demanding an $800 refund. Elco refused, claiming that Rail no longer had a right to disaffirm the contract. Elco's refusal is
Incorrect, because Rail disaffirmed the contract within a reasonable period of time after reaching the age of 18
If a tort and a contract are so intertwined that to enforce the tort, the court must enforce the contract, the minor is not liable in tort. This is the definition of:
Liability for tort connected with contract
Toni Minor purchased an automobile from Majority Motors on September 17. She attained the age of majority on October 5. In the early morning of October 6, she was involved in an accident that destroyed the vehicle, which was not insured. On November 1, she informed Majority Motors that she would make no further payments. If Majority Motors sues, it would
Lose because disaffirmance is permitted even though the property has been destroyed
Kent, a 16-year-old, purchased a used car from Mint Motors, Inc. Ten months later, the car was stolen and never recovered. Which of the following statements is correct?
May disaffirm the purchase because he is a minor
A minor generally is liable for the reasonable value of
Necessaries
Which of the following is least classifiable as a necessity for which a minor will be held liable on a contract?
New sports car
If a minor enters a contract which is interwoven with a tort, will the minor be held liable in tort?
No
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?
No, if Mark's father bought it without knowing from whom his purchased it
Joanne, a minor, sold her laptop computer to Bruce, an adult. Bruce then sold the laptop to Anna, also an adult, who had no knowledge of the fact that the original owner was a minor. Under the Uniform Commercial Code, Joanne may:
Not avoid her contract to Bruce and may not recover the laptop
Percy is a rich boy whose parents supply him with every conceivable necessity of life. While still a minor, Percy buys a coat on credit from a men's store for $5000. After wearing the coat for a while, Percy decides that it bores him and that he'd like to disaffirm. Which of the following is MOST likely to be true? Assume that Percy is still a minor.
Percy can disaffirm the contract, and he must return the coat
A minor may NOT disaffirm a contract for
Purchase of food and Sale of land
Randy, a minor, buys a new four-wheel-drive truck from Jones Ford. Randy sells this truck to his cousin, Steve, who is an adult. Steve conveys this vehicle to Arthur Smith. Arthur does not personally known Steve or Randy. Which of the following expresses the status of this situation?
Randy may not recover the vehicle from Mr. Smith
Instead of refusing to enforce an unreasonable covenant, some courts will:
Reform the agreement, uphold reasonable restrictions, and delete unreasonable restrictions
Tom Teen, age 16, purchased a radio from an adult. Tom was not asked how old he was. In order to disaffirm the contract, Tom must
Return the radio if he has it
Robert Briscoe is 17 years old. He lies to Belk Ford about his age, saying he is 18 in order to induce them to sell him a new pickup. Belk falls for this lie and sells him the pickup. Which of the following is correct?
Robert may not disaffirm because he lied
Which of the following would be an invalid ratification?
Seventeen year old Tim Teenager ratifies a contract which he signed two months ago.
Cindy Smith, age 16, buys a Chevy Camaro from Mike Mason, age 23, for $4,000. Cindy's parents, who give her everything she wants, loaned her the money for the car. The reason for Cindy's purchase is that all her friends have cars and she feels left out without one. One week after buying the car, however, Cindy changes her mind and told Mike that she wants to disaffirm the contract. When Mike comes to pick up the car and give Cindy her money, though, Cindy changes her mind again, telling Mike that "I'll stick by the deal." But when Cindy's parents gave her a new car for her seventeenth birthday, she finally decides to disaffirm once again. Which of the following is true?
She can still disaffirm
Mary, a self-employed 16-year-old whose parents are dead, buys a dress on credit for $50. After receiving the dress and discovering that its reasonable value is only $25, Mary tries to disaffirm the deal before paying the $50 (and while she is still 16). In this case:
She cannot disaffirm, but she is only bound to pay $25
Ann, a minor, disaffirmed her agreement to buy $127 worth of cosmetics from Mary Kay Company. She had used up all the eye shadows, lipsticks and powders. The general rule is that:
She may disaffirm but she has to return the makeup that is not used up
Which of the following is untrue regarding the contracts of intoxicated persons?
Slight intoxication will destroy one's contractual capacity
Steve purchases a four-wheel-drive truck from Belk Ford. Steve is only 17 years of age. He wrecks the vehicle and attempts to disaffirm the contract and have Belk Ford repay him all that he has paid. What would happen?
Steve may simply return the vehicle and get his money
M, a minor, contracted with A, an adult. The contract has been fully performed by both. M reaches majority plus 3 months.
The contract is ratified because of the failure to disaffirm within a reasonable time
Whether the time within which a minor disaffirms a contract constitutes a reasonable time is determined by:
The facts of the case
Which of the following is correct regarding the contractual liability of incompetent persons
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.
When personal property is transferred to a third person who is unaware that it was originally purchased by minor
The minor cannot get the property back from the third person under the UCC
.Cheryl Cheerleader, a 16-year-old high school junior, orders a new dress to wear to the high school prom. She agrees to pay $200 when the dress arrives. Before the dress comes in, she has a fight with her boyfriend and calls the store to cancel the order.
This is an executory contract The dress is a necessary item
Ratification can occur in three ways
Through express language, as implied from contract, through failure to make a timely disaffirmance.
Which of the following would least likely considered a "necessary" as discussed in class?
Transportation
An incompetent person who lacks understanding of a contract and its consequences can avoid it even if the other party has no reason to know of the incompetent's mental condition.
True
As a general rule, disaffirmance must come either during a minor's minority or within a reasonable time after he reaches majority.
True
Courts treat contracts of incompetents and intoxicated persons essentially the same, except they are stricter with intoxicated persons because of its voluntary nature.
True
If Marie, a minor, disaffirms the purchase of her new car that she has recently wrecked, she need only return the damaged vehicle to validly disaffirm the contract.
True
If a person is unable to understand the nature and effect of entering into a contract, he or she can avoid it
True
Ratification of a contract, once effected, is final and cannot be withdrawn
True
Contractual capacity of the parties is a prerequisite to the formation of a binding agreement, but the consequences of different forms of incapacity vary. The contracts of a person are void if (s)he is (188)
Under guardianship of the court
Which of the following is untrue regarding the contracts of incompetent persons?
Unlike a minor, an incompetent person can never ratify a contract
When does acceptance of an offer to enter into a unilateral contract generally occur?
Upon full performance of the offeree
When may a person disaffirm a contract for the sale of real property?
Upon reaching the age of 18
Tim, who is a minor, enters into a contract with Violet, who is an adult. Which of the following is correct?
Violet may not disaffirm the contract
Lee has been declared incompetent by the court and is under the care of his sister. Unknown to his sister, Lee rents the 30,000-seat civic center for his birthday party. Lee's contract to rent the civic center is best described as a:
Void contract
A minor's contract is ordinarily
Voidable
Meed entered into a written agreement to sell a parcel of land to Beel for $80,000. At the time the agreement was executed, Meed had consumed a large amount of alcoholic beverages which significantly impaired Meed's ability to understand the nature and terms of the contract. Beel knew Meed was very intoxicated and that the land had been appraised at $125,000. Meed wishes to avoid the contract. The contract is
Voidable at Meed's option
Except for necessaries, contracts with minors are generally
Voidable only by minor
In which of the following situations would a minor be unable to disaffirm a contract which he had made?
Where the minor wishes to perform part of a contract and disaffirm another part of the same contract
which of the following statements is true
a. A business may require, though it may request, a parent to sign a contract between the business and a minor as a precondition for a sale to a minor. b. A parent who cosigns a loan with his or her minor child becomes obligated under the loan contract. c. As a general rule, parents are not liable for contracts made by their minor children. d. All of the above are true.
Egan, a minor, purchased Baker's used computer for Egan's personal use. Egan paid $200 down on delivery and was to pay $200 thirty days later. Twenty days later, the computer was damaged seriously as a result of Egan's negligence. Five days after the damage occurred and one day after Egan reached the age of majority, Egan attempted to disaffirm the contract with Baker. Egan will
be able to disaffirm despite the fact that Egan was not a minor at the time of disaffirmance
A contract made by a mentally impaired person; who has not been adjudicated incompetent:
can only be ratified after the person has regained his mental capacity.
When a person who just became an adult ratifies a contract made as a minor, he
can ratify the contract only as a whole
Contracts made by severely intoxicated people
cannot be ratified until the person has regained his mental faculties
Exculpatory clauses
cannot relieve a party from liability for battery
Payne entered into a written agreement to sell a parcel of land to Stevens. At the time the agreement was executed, Payne had consumed alcoholic beverages. Payne's ability to understand the nature and terms of the contract was not impaired. Stevens did not believe that Payne was intoxicated. The contract is
legally binding on both parties
Generally, minors are liable for
libel, negligence, fraud
An item considered a necessary is
lodging, medicine, food
A minor, M, has obtained necessaries on credit. It is correct to say that
he is only liable for the reasonable value of the necessaries.
When a person enters into a written agreement while drinking or doing drugs, the agreement
is voidable if the party didnt know the general nature of the agreement due to the alcohol or drugs
Before granting an injunction enjoining a former employee from competing in a described territory, the courts insist that the employer demonstrate that the restriction is ___________ to protect the employer's legitimate interest.
necessary
A person who is OLDER than the age of majority may disaffirm a contract if:
none of the above
Which of the following is true about situations where a minor or former minor tries to disaffirm a completed contract in which the consideration furnished to the minor has been lost, stolen, or dissipated?
none of the above
When a minor disaffirms a contract, he must
notify the other party and return any property he has from the other party provided he has it.
A person may ratify a contract
only after his 18th birthday
When a minor commits a tort while completing a contract and the tort and a contract are so "interwoven" that they cannot be separated, then
the law of contracts will prevail
Sometimes adults who can't sue a minor on the contract will sue in a tort. In order to be successful
the tort must be clearly separate from and independent of the contract
A contract with an intoxicated person is
voidable by intoxicated person.
