Business Law Chapter 14
Ratification of a contract made by a minor must be express (in words). -True -False
False
Ratification of a contract made by a minor must be express (in words). T/F
False
Ordinarily, an item is not considered to be a necessary if a parent or guardian already supplies the minor with similar items. T/F
True
Which of the following contracts is void? -A contract made by an unemancipated minor. -A contract made by a person who has been adjudicated insane and institutionalized or put under a guardian's care. -A contract made by a person under the influence of mind-altering drugs. -A contract made by a minor who receives no support from a parent or guardian.
A contract made by a person who has been adjudicated insane and institutionalized or put under a guardian's care
Which of the following cannot be disaffirmed until after the age of majority? -A contract that affects title to real estate. -A contract for a necessary. -A contract that is fully executed. -A contract for the sale of goods.
A contract that affects title to real estate
A contract made by a mentally impaired person: -Can only be disaffirmed after the person has regained his mental capacity. -Can only be ratified after the person has regained his mental capacity. -Normally is void rather than voidable. -a and b are true.
Can only be ratified after after the person has regained his mental capacity
In general, contracts made by insane (mentally impaired) persons: -Can sometimes be ratified. -Are always void. -Are always voidable. -Are voidable only if they involve necessaries.
Can sometimes be ratified
.Contracts made by severely intoxicated people: -Are void rather than voidable. -Cannot be disaffirmed until the person has regained his mental faculties. -Cannot be ratified until the person has regained his mental faculties. -Are always binding, because the law does not want to reward drug or alcohol abuse.
Cannot be ratified until the person has regained this mental faculties
Cindy Smith, age 16, buys a 1973 Chevy Camaro from Mike Mason, age 23, for $400. Cindy's indulgent 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? -Cindy cannot disaffirm because the car is a necessary. -Cindy cannot disaffirm because she ratified the contract by saying "I'll stick by the deal." -Cindy cannot disaffirm because we have a sale of goods and Article 2 of the UCC says that 16 is the age of contractual capacity. -Cindy can still disaffirm.
Cindy can still disaffirm
Which of the following is least likely to constitute ratification of a contract made by a minor? -Performing one's duties under the contract after reaching the age of majority. -Accepting performance from the other party to the contract after the age of majority. -Failing to disaffirm a completely executory contract within one month after the age of majority. -Making an oral statement that "I ratify the contract."
Failing to disaffirm a completely executory contract within one month after the age of majority
In most states today, minors have the right to disaffirm medical insurance contracts. -True -False
False
In most states today, the age of contractual capacity remains 21. T/F
False
In most states, in order for a minor to have the capacity to contract, he must be emancipated. T/F
False
In virtually all the states today, a minor's misrepresentation of his age has no effect on his ability to disaffirm a contract. True False
False
In virtually all the states today, a minor's misrepresentation of his age has no effect on his ability to disaffirm a contract. T/F
False
Normally, a minor's power to disaffirm a contract ends once he reaches the age of majority. -True -False
False
Normally, a minor's power to disaffirm a contract ends once he reaches the age of majority. T/F
False
Ordinarily, contracts entered into by mentally impaired people are void, while contracts entered into by intoxicated people are voidable. -True -False
False
Ordinarily, contracts entered into by mentally impaired people are void, while contracts entered into by intoxicated people are voidable. T/F
False
Under the Restatement (Second) of Contracts, intoxication will make a contract voidable only if the other party had reason to know that the intoxicated person lacks the mental ability to contract. T/F
False
Under the theory that alcohol and drug use should not be rewarded, today most courts say that contracts made by intoxicated people are perfectly binding, no matter how severe the intoxication. -True -False
False
Under the theory that alcohol and drug use should not be rewarded, today most courts say that contracts made by intoxicated people are perfectly binding, no matter how severe the intoxication. T/F
False
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. -Due to Irma's institutionalization, it is void. -The contract cannot be disaffirmed because it is fully executed. -By paying cash, Irma ratified the contract.
It is voidable
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: -Mary cannot disaffirm, and she is bound to pay the full $50. Mary cannot disaffirm, but she is only bound to pay $25. -Mary can disaffirm, and she can return the dress without paying for it. -Mary can disaffirm, and she can keep the dress without paying for it.
Mary cannot disaffirm, but she is only bound to pay $25
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 rescind (disaffirm) the deal. Which of the following is most true? -Mike can disaffirm. -Mike cannot disaffirm because contracts for the sale of land can only be disaffirmed before the age of majority. -Mike cannot disaffirm because contracts for the sale of land must be disaffirmed within one year of the age of majority. -Mike cannot disaffirm because he has already ratified the contract.
Mike cannor disaffirm because he has already ratified the contract
A person who is older than the age of majority may disaffirm a contract if: -The other party is a minor who lied about his age. -The other party is an emancipated minor. -The contract is for necessaries. -None of the above.
None of the above
Which of the following is true about situations where a minor or former minor tries to disaffirm an executed contract in which the consideration furnished to the minor has been lost, stolen, or dissipated? -The traditional rule here is that the minor cannot disaffirm because the minor has nothing to give back to the other party. -The traditional rule here is that the minor cannot disaffirm because the contract is executed, and only executory contracts can be disaffirmed. -Today, the courts all agree that a minor can disaffirm here--without giving anything back to the adult. -None of the above.
None of the above
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. -Percy cannot disaffirm the contract, but he only is liable for the reasonable value of the coat. -Percy cannot disaffirm the contract, and he is liable for the full price of the coat ($5000). -Percy can disaffirm the contract and he need not return the coat.
Percy can disaffirm the contract and he must return the coat
Which of the following is true about situations where a minor misrepresents his age to get an adult to contract with him? -Today, some courts let a minor disaffirm despite the misrepresentation. -Traditionally, the courts would not let a minor disaffirm in such cases, since to allow disaffirmance would be to reward dishonesty. -Today, the courts all agree that a minor can disaffirm despite the misrepresentation. -Today, the courts all agree that a minor cannot disaffirm where the minor has misrepresented his age.
Today, some courts let a minor disaffirm despite the misrepresentation
A contract made by a person who has been adjudicated to be insane and institutionalized or put under a guardian's care is void rather than voidable. -True -False
True
A contract made by a person who has been adjudicated to be insane and institutionalized or put under a guardian's care is void rather than voidable. T/F
True
A minor's contract for necessaries makes the minor liable for the reasonable value of the necessaries furnished to him. -True -False
True
A minor's contract for necessaries makes the minor liable for the reasonable value of the necessaries furnished to him. T/F
True
A person who at the time of the contract lacked capacity due to mental impairment can ratify the contract once he regains his normal mental faculties. -True -False
True
A person who at the time of the contract lacked capacity due to mental impairment can ratify the contract once he regains his normal mental faculties. T/F
True
Contracts that affect title to real estate cannot be disaffirmed until the age of majority. -True -False
True
Contracts that affect title to real estate cannot be disaffirmed until the age of majority. T/F
True
Once a contract made by a minor has been effectively ratified, it cannot be disaffirmed. -True -False
True
Once a contract made by a minor has been ratified, it cannot be disaffirmed. T/F
True
Ordinarily, an item is not considered to be a necessary if a parent or guardian already supplies the minor with similar items. -True -False
True
The majority of courts do not enforce exculpatory clauses signed by parents releasing a party from negligence liability for future harm to their minor children. -True -False
True
The traditional rule is that, where the consideration given a minor under a minor's contract has been lost, stolen, or dissipated, the minor can disaffirm without compensating the adult for the loss in any way. -True -False
True
The traditional rule is that, where the consideration given a minor under a minor's contract has been lost, stolen, or dissipated, the minor can disaffirm without compensating the adult for the loss in any way. T/F
True
Under the Restatement (Second) of Contracts, intoxication will make a contract voidable if the other party had reason to know that the intoxicated person was so intoxicated that he/she did not understand the transaction. -True -False
True
In October of 1988, a court with the necessary subject-matter jurisdiction holds Rodney Doodle mentally incompetent and appoints a guardian for him. Rodney, a former business law professor, is the victim of a debilitating mental illness brought on by teaching the law of contractual capacity for too many years. In November of 1997, Rodney escapes his guardian's care and takes off on his own. While eating lunch with Ed Sleaze, who knows about Rodney's condition, Rodney signs an agreement to sell a valuable property he owns. When he signs the contract, Rodney believes that he is a movie star signing an autograph for an adoring female fan. The agreement between Rodney and Ed is best described as: -Void. -Voidable. -Unenforceable. -Perfectly valid, if the price Ed pays for the property is fair.
Void