Steele CH 7

The term _____ means repudiation of a contract.

disaffirmance

Which of the following conditions is a prerequisite for any agreement to be legally enforceable?

the parties entering into the agreement must have the mental capacity to contract.

In most states, if a person has been formally adjudicated mentally incompetent, contracts made by that person are _____ without regard to whether they are reasonable or for necessaries.

void

Ross, a minor, has decided to enroll in the Special Art Training Academy to develop his painting skills. To pay for its tuition, Ross decides to take out a student loan with Kingston Bank. Which of the following is true if Ross receives the loan from the bank?

Depending on the state, the contract for a student loan may not voidable at the minor's option.

Hunter, a minor, contacted Jones Auto, an automobile dealer in Massachusetts, to buy a car. He finalized on buying a Toyota Camry and applied for an auto loan. As Hunter is a minor, his loan documents had to be cosigned by an adult. Hunter's father cosigned the loan documents along with Hunter and the loan was approved. Hunter bought the car. Which of the following will take place if Hunter defaults on the loan?

Hunter's father will be liable for the contract.

Lois is 94 years old and has occasional intervals of dementia and delusion. She recently contracted with Tonya, her long-time hair stylist, to loan Tonya $100,000 as start-up funds to open a new salon. Lois's children, upon hearing of the contract, sought to have Lois dissafirm the contract on the basis of mental incompetency. Under what circumstance may Lois disaffirm the contract?

If Lois entered the contract while suffering from dementia and delusions, she may disaffirm the contract.

Kim, age 17, decided to move out of her parents' house and live on her own. She was employed full-time, so she leased an apartment from Crestwood Apartments. Kim moved in, payed the security deposit and rent, and lived in the apartment for three months. Her parents kept her room waiting for her and repeatedly asked Kim to return. Finally, Kim moved back to her parents' house eight months before the lease expired, and she stopped paying rent to Crestwood Apartments. Crestwood Apartments sued Kim for the unpaid rent, and she argued that she was not bound by the lease, because the apartment was not a necessary. Should Kim be liable for the rent payments?

No. The apartment was not a necessary, because Kim had the ability to move back to her parents' house whenever she wanted

Which of the following is considered the safest way for a businessperson to contract with a minor?

To have an adult join the contract as a cosigner with the minor

With regard to contracts with minors, _____ means indicating one's willingness to be bound by promises made during minority.

ratification

If a minor contracts for necessaries, the minor's liability is quasi-contractual in nature. This means that:

the minor is not required to pay the contract price.