INFO 323 - Exam 3 - Cheeseman Chapter 12 Study Questions
Legal Concepts 20) A person who is insane but not adjudged insane is appointed a legal guardian to act on his or her behalf.
FALSE Diff: 1 Topic: Mentally Incompetent Persons
Legal Concepts 23) A contract with an intoxicated person is not voidable by the other party if that party had contractual capacity.
TRUE Diff: 1 Topic: Intoxicated Persons
Legal Concepts 24) A person who disaffirms a contract based on intoxication must be returned to status quo.
TRUE Diff: 1 Topic: Intoxicated Persons
Factual Application 12 Copyright © 2013 Pearson Education, Inc. 61) Which of the following is an example of a contract contrary to statutes by its very existence? A) a usurious loan contract B) a contract between two minors C) a contract where one party is insane but not adjudged insane D) a contract of adhesion
A Diff: 1 Topic: Legality
Legal Concepts 43) ________ is a rule that states that a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance. A) Duty of restoration B) Duty of restitution C) Infancy doctrine D) Emancipation doctrine
A Diff: 1 Topic: Minors
Factual Application 74) A(n) ________ is a contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust. A) unconscionable contract B) contract of adhesion C) contract in restraint of trade D) quasi-contract
A Diff: 1 Topic: Unconscionable Contracts
Legal Concepts 16 Copyright © 2013 Pearson Education, Inc. 76) Preprinted forms whose terms the consumer cannot negotiate, and must sign in order to obtain a product or service are referred to as ________. A) contracts of adhesion B) quasi-contracts C) contracts in restraint of trade D) voidable contracts
A Diff: 1 Topic: Unconscionable Contracts
Legal Concepts 11 Copyright © 2013 Pearson Education, Inc. 57) A person who has alternative periods of sanity and insanity can enter into contracts ________. A) when he or she is in a state of sanity B) when there is a legal guardian appointed by the court for that person C) once he or she has been adjudged to be insane D) only once he or she has been adjudged to be legally insane
A Diff: 2 Topic: Mentally Incompetent Persons
Legal Concepts 47) If a minor ratifies a contract while still being a minor, ________. A) the contract can still be disaffirmed by the minor B) the minor is bound by the terms of the contract C) the minor is exempt from the duty of restitution D) the minor has to hold the adult in status quo in case of disaffirmance
A Diff: 2 Topic: Minors
Legal Concepts 50) Which of the following is true about the ratification of a contract by a minor? A) A minor can only ratify a contract after reaching the age of majority. B) A minor cannot ratify a contract that falls under the necessaries of life doctrine. C) A minor can ratify a contract during the period of minority if he or she so wishes. D) A minor can ratify a contract under the guidance of a parent or legal guardian.
A Diff: 2 Topic: Minors
Legal Concepts 75) How is the doctrine of unconscionability related to public policy? A) The doctrine of unconscionability is derived from public policy. B) All contracts contrary to public policy are considered unconscionable. C) Both are used to save a contracting party from a bad bargain. D) Both are very distinctly defined by law.
A Diff: 2 Topic: Unconscionable Contracts
Legal Concepts 81) What are gambling statutes?
All states either prohibit or regulate gambling, wagering, lotteries, and games of chance via gambling statutes. States provide various criminal and civil penalties for illegal gambling. There are many exceptions to wagering laws. Many states have enacted statutes that permit games of chance under a certain dollar amount, bingo games, lotteries conducted by religious and charitable organizations, and the like. Many states also permit and regulate horse racing, harness racing, dog racing, and state-operated lotteries. Diff: 2 Topic: Legality
Legal Concepts 82) What are licensing statutes?
All states have licensing statutes that require members of certain professions and occupations to be licensed by the state in which they practice. In most instances, a license is granted to a person who demonstrates that he or she has the proper schooling, experience, and moral character required by the relevant statute. Sometimes, a written examination is also required. Some statutes expressly provide that unlicensed persons cannot enforce contracts to provide these services. Diff: 2 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 59) ________ set an upper limit on the interest rate that can be charged on certain types of loans. A) Federal banking reforms B) State usury laws C) Congressional committees D) Chambers of commerce
B Diff: 1 Topic: Legality
Legal Concepts 58) Which of the following groups is legally deprived from directly entering into contracts? A) minors B) persons adjudged insane C) persons with alternating states of sanity and insanity D) intoxicated persons
B Diff: 1 Topic: Mentally Incompetent Persons
Legal Concepts 42) ________ is the act of a minor to rescind a contract under the infancy doctrine, either orally, in writing, or by the minor's conduct. A) Ratification B) Disaffirmance C) Sanction D) Adherence
B Diff: 1 Topic: Minors
Legal Concepts 51) The act or process of a minor voluntarily leaving home and living apart from his or her parents is referred to as ________. A) restitution B) emancipation C) restoration D) adhesion
B Diff: 1 Topic: Minors
Legal Concepts 14 Copyright © 2013 Pearson Education, Inc. 69) A(n) ________ is a contractual provision that relieves one or both of the parties to a contract from tort liability. A) contract of adhesion B) exculpatory clause C) duty of restitution D) fundamental breach
B Diff: 1 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 55) Which of the following is true of a contract with an adjudged insane person? A) The adjudged insane person is bound by the terms of the contract. B) The contract is void. C) Only the competent party can enforce the contract. D) The competent party is legally obligated to uphold the contract.
B Diff: 2 Topic: Mentally Incompetent Persons
Legal Concepts 56) Which of the following is true of a contract where one of the parties is insane but not adjudged insane? A) The contract is voidable by the competent party. B) The contract is only voidable by the insane person. C) Only the court appointed legal guardian to the insane person can modify contracts. D) The non-insane person must be placed in status quo if the insane person voids the contract.
B Diff: 2 Topic: Mentally Incompetent Persons
Legal Concepts 40) Which of the following is true for a minor under the infancy doctrine? A) A minor is bound to the adult's decisions in a contract between them. B) A minor can disaffirm contracts he or she has entered into with adults. C) A minor cannot enter into a legal contract with another minor. D) A minor cannot choose to enforce a contract at his or her whim.
B Diff: 2 Topic: Minors
Legal Concepts 8 Copyright © 2013 Pearson Education, Inc. 45) 16-year-old Frank bought a video game console from John for $150. Frank is a minor, while John is a competent adult. A month later, the console started malfunctioning on its own. Frank returned the console to John. If Frank disaffirms his contract with John for buying the console, which of the following will be considered true? A) John is not bound by the contract any more as the exchange has been completed. B) Frank can reclaim full refund of the amount he paid. C) Frank can only ask for full refund once he has reached the age of majority. D) Frank is legally obligated to fix the console before returning it to John.
B Diff: 2 Topic: Minors
Factual Application 68) According to the regulatory licensing statute, ________. A) unlicensed persons can recover payment for services B) only licensed persons can recover payment for services C) persons breaching a revenue-raising statute cannot recover payment for services D) all government-licensed persons have to pay an annual fee to renew their licenses
B Diff: 2 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 67) Damien, a first-year law student, offers his services to Mr. Jenkins to help draft his will. Mr. Jenkins agrees to Damien's offer, and promises to pay him $400 for his services. Damien completes the draft of the will. But when Damien goes to collect his payment, Mr. Jenkins refuses payment. Damien knew that he had no legal recourse to enforce the contract. What statute had Damien violated in his contract with Mr. Jenkins? A) revenue-raising statute B) regulatory licensing statute C) usury statute D) ratification statute
B Diff: 2 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 70) Bobby voluntarily enrolls in a skydiving course at OpenSkies Pvt. Ltd., an adventure firm. He signs a contract that relieves OpenSkies of liability. After receiving proper instruction, he jumps from an airplane. Unfortunately, Bobby is injured when he could not steer his parachute toward the target area while landing. He sues the parachute center for damages. But the court found that the contract protected OpenSkies from damages, as Bobby had voluntarily joined the course knowing all the risks involved. What kind of contractual provision protected OpenSkies from having to pay Bobby damages? A) noncompete clause B) exculpatory clause C) duty of restitution D) disaffirmance
B Diff: 2 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts Darren is a certified interior designer with a lucrative client list in the city of Kelsa, situated in the state of Touslon. His business affords him a substantial amount of goodwill from his clients. Darren sells his accounting interior designing business to Glenda. When he sells his business to Glenda, Darren agrees not to open another interior designing firm in the city of Kelsa for a 25- year period. 15 Copyright © 2013 Pearson Education, Inc. 72) What kind of agreement exists between Darren and Glenda in this case? A) contract in restraint of trade B) covenant not to compete C) unconscionable contract D) quasi-contract
B Diff: 2 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 13 Copyright © 2013 Pearson Education, Inc. 65) In which of the following situations would the effect of illegality be an exception? A) when both parties of an illegal contract execute their agreements B) when both parties of an illegal contract are considered in pari delicto C) when person is justifiably ignorant of the law or fact that made the contract illegal D) when a person completes his act of an illegal contract but is not paid for his consideration.
C Diff: 1 Topic: Legality
Factual Application 46) ________ is the act of a minor after he or she has reached the age of majority, by which he or she accepts a contract entered into when he or she was a minor. A) Exculpation B) Restitution C) Ratification D) Emancipation
C Diff: 1 Topic: Minors
Legal Concepts 44) ________ is a rule that states that if a minor has transferred money, property, or other valuables to the competent party before disaffirming the contract, that party must place the minor in status quo. A) Emancipation doctrine B) Infancy doctrine C) Duty of restitution D) Duty of restoration
C Diff: 1 Topic: Minors
Factual Application 71) A ________ is a contract that provides that a seller of a business or an employee will not engage in a similar business or occupation within a specified geographical area for a specified time following the sale of the business or termination of employment. A) quasi-contract B) contract in restraint of trade C) covenant not to compete D) contract of adhesion
C Diff: 1 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 60) The state of Transas has set a maximum interest rate of 12 percent on loans. Matt borrows $10,000 from Tony to pay off a gambling debt. Both are residents of Transas. They sign a contract, which states that Matt would have to pay $1,500 as interest in one year to pay off the loan. Later Matt finds out the state usury limit and sues Tony. What is the nature of the contract between Matt and Tony? A) It is illegal as it violates gambling statutes. B) It is legal as both parties were competent when the contract was signed. C) The contract is void as it violates usury laws. D) The contract is void as it is a contract to commit a crime.
C Diff: 2 Topic: Legality
Legal Concepts 62) Which of the following is true of a contract, the object of which has become unlawful after the creation of the contract? A) The contract is still legal as the object was legal at the time of creating that contract. B) The contract is illegal even if the parties don't complete the contractual agreement. C) The parties of the contract will be discharged from that contract. D) Both parties are still obligated to complete their contractual agreements.
C Diff: 2 Topic: Legality
Legal Concepts 10 Copyright © 2013 Pearson Education, Inc. 53) Which of the following is true of a minor's duty towards a contract for necessaries of life? A) Minors need to reach the age of majority to enter into contracts for necessaries of life. B) Minors are exempt from paying for contracts of necessaries of life. C) Minors must pay the reasonable value of necessaries of life for which they contract. D) Parents are liable to provide necessaries of life to their minor children if they become emancipated.
C Diff: 2 Topic: Minors
Legal Concepts 38) What is the significance of the age of majority in relation to legal contracts? A) People below the age of majority can directly enter into lawful contracts. B) Mentally incompetent persons need to achieve the age of majority in order to enter into a legal contract. C) It is the age above which people of capacity can enter into a legal contract. D) Minors who have entered the age of majority require his or her parents or guardian's consent to enter into a legal contract with adults.
C Diff: 2 Topic: Minors
Legal Concepts 9 Copyright © 2013 Pearson Education, Inc. 49) In order for a minor to be bound by a contract with an adult after he becomes an adult himself, he must ________. A) disaffirm the contract before reaching the age of majority B) complete his or her contractual duties of restitution and restoration C) ratify the contract after reaching the age of majority D) place the adult in status quo till reaching the age of maturity
C Diff: 2 Topic: Minors
Factual Application 73) Which of the following aspects of the contract would the courts find reasonable? A) the line of business protected B) the geographic area protected C) the duration of the restriction D) the restriction of employment
C Diff: 2 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 63) The term ________ refers to a doctrine that states that the courts will refuse to enforce or rescind an illegal contract and will leave the parties where it finds them. A) disaffirmance B) exculpatory clause C) emancipation D) effect of illegality
D Diff: 1 Topic: Legality
Legal Concepts 64) What is the doctrine of in pari delicto with reference to contracts? A) It is a situation in which both parties are equally at fault in an illegal contract. B) It is a situation where one party has unknowingly signed a contract to commit crimes. C) It gives minors the right to disaffirm a contract. D) It is a special exemption right to circumvent usury laws.
D Diff: 1 Topic: Legality
Legal Concepts 54) Which of the following would constitute legal insanity? A) weakness of intellect B) emotional problems C) slight delusions D) mental retardation
D Diff: 1 Topic: Mentally Incompetent Persons
Legal Concepts 39) The ________ is a legal principle that allows minors to cancel most contracts they have entered into with adults. A) duty of restoration B) duty of restitution C) contract of adhesion D) infancy doctrine
D Diff: 1 Topic: Minors
Legal Concepts 48) If a minor entered into a contract, and then ratified the contract after reaching the age of majority, which of the following is he or she exempt from? A) duty of restoration B) duty of restitution C) necessaries of life D) infancy doctrine
D Diff: 1 Topic: Minors
Legal Concepts 52) The equitable doctrine of ________ obligates a minor to only pay reasonable value for goods or services received. A) emancipation B) restraint of contract C) contract of adhesion D) quasi-contract
D Diff: 1 Topic: Minors
Legal Concepts 7 Copyright © 2013 Pearson Education, Inc. 41) Which of the following is true about a minor's right to disaffirm a contract? A) A minor must reach the age of majority to disaffirm a contract. B) Contracts that come under the necessaries of life can be disaffirmed by minors. C) Minors are exempt from duty of restoration during the period of minority. D) A minor can disaffirm a contract any time prior to reaching the age of majority.
D Diff: 1 Topic: Minors
Legal Concepts 66) ________ is a licensing statute with the primary purpose of increasing earnings for the government. A) Usury statute B) Ratification statute C) Regulatory licensing statute D) Revenue raising statute
D Diff: 1 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 77) Which of the following elements has to be proved for a contract to be deemed unconscionable? A) that the weaker party did not enter the contract under duress B) that the parties had equal bargaining power C) that the dominant party justly used its bargaining power D) that the adhering party had no reasonable alternative
D Diff: 2 Topic: Unconscionable Contracts
Legal Concepts 25) The intoxicated person is not legally obligated to return consideration, received under the contract, to the competent party.
FALSE Diff: 1 Topic: Intoxicated Persons
Legal Concepts 28) Lenders can charge interests set higher than the state limit.
FALSE Diff: 1 Topic: Legality
Legal Concepts 33) Judges can define morality based on their individual views.
FALSE Diff: 1 Topic: Legality
Legal Concepts 17) In a contract involving a competent person and a person adjudged insane, either party can enforce the contract.
FALSE Diff: 1 Topic: Mentally Incompetent Persons
Legal Concepts 21) In a contract involving a competent person and a person who is insane but not adjudged insane, the competent party can void the contract.
FALSE Diff: 1 Topic: Mentally Incompetent Persons
Legal Concepts 4 Copyright © 2013 Pearson Education, Inc. 22) A person who is insane but not adjudged insane cannot void a contract he or she has entered into.
FALSE Diff: 1 Topic: Mentally Incompetent Persons
Legal Concepts 10) The emancipation doctrine helps a minor to enforce the necessaries of life contract on negligent parents.
FALSE Diff: 1 Topic: Minors
Legal Concepts 11) If a minor ratifies a contract while still being a minor, the contract cannot be disaffirmed.
FALSE Diff: 1 Topic: Minors
Legal Concepts 13) Minors are not obligated to pay for the necessaries of life that they contract for.
FALSE Diff: 1 Topic: Minors
Legal Concepts 14) The duty of restitution states that a competent party should be placed in status quo by the minor upon disaffirmance of a contract.
FALSE Diff: 1 Topic: Minors
Legal Concepts 4) The infancy doctrine gives adults the right to disaffirm contracts entered with minors.
FALSE Diff: 1 Topic: Minors
Legal Concepts 6) A minor can disaffirm a contract anytime after reaching the age of majority.
FALSE Diff: 1 Topic: Minors
Legal Concepts 7) According to a minor's right of restoration, the adult should be returned to status quo after a contract has been disaffirmed by the minor.
FALSE Diff: 1 Topic: Minors
Legal Concepts 9) A ratified contract can be disaffirmed even after the minor reaches the age of majority.
FALSE Diff: 1 Topic: Minors
Legal Concepts 35) An exculpatory clause must be reciprocal to be considered enforceable.
FALSE Diff: 1 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 79) What is the minor's duty of restoration in a disaffirmed contract?
Generally, a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance, even if the item has been consumed, lost, or destroyed or has depreciated in value by the time of disaffirmance. This rule, called the duty of restoration, is based on the rationale that if a minor had to place the adult in status quo upon disaffirmance of a contract, there would be no incentive for an adult not to deal with a minor. Diff: 2 Topic: Minors
Legal Concepts 26) After becoming sober, an intoxicated person can ratify the contracts he or she entered into while intoxicated.
TRUE Diff: 1 Topic: Intoxicated Persons
Legal Concepts 27) Intoxicated persons are liable in quasi-contract to pay the reasonable value for necessaries they receive.
TRUE Diff: 1 Topic: Intoxicated Persons
Legal Concepts 30) A person can sue for nonperformance even if it is an illegal contract.
TRUE Diff: 1 Topic: Legality
Legal Concepts 31) Persons who entered into an illegal contract but withdraw before the illegal act was performed can sue to recover consideration.
TRUE Diff: 1 Topic: Legality
Legal Concepts 32) At common law, parties to an illegal contract were considered at equal fault.
TRUE Diff: 1 Topic: Legality
Legal Concepts 5 Copyright © 2013 Pearson Education, Inc. 29) If the object of a contract becomes illegal after the contract is entered into, the parties are discharged from the contract.
TRUE Diff: 1 Topic: Legality
Legal Concepts 16) A person who was legally insane at the time of entering a contract is relieved of his or her duties from the contract.
TRUE Diff: 1 Topic: Mentally Incompetent Persons
Legal Concepts 18) Any contract entered into by a person who has been adjudged insane is void.
TRUE Diff: 1 Topic: Mentally Incompetent Persons
Legal Concepts 19) The court-appointed guardian is the only person who has the legal authority to enter into contracts on behalf of a person who has been adjudged insane.
TRUE Diff: 1 Topic: Mentally Incompetent Persons
Legal Concepts 12) The parental duty of support is terminated if a minor becomes emancipated.
TRUE Diff: 1 Topic: Minors
Legal Concepts 2 Copyright © 2013 Pearson Education, Inc. 8) If a minor does not disaffirm a contract upon reaching the age of majority, the contract is considered as ratified.
TRUE Diff: 1 Topic: Minors
Legal Concepts 2) Any age below the statutory age of majority is called the period of minority.
TRUE Diff: 1 Topic: Minors
Legal Concepts 3 Copyright © 2013 Pearson Education, Inc. 15) If both parties to a contract are minors, both parties have the right to disaffirm the contract.
TRUE Diff: 1 Topic: Minors
Legal Concepts 3) The infancy doctrine binds an adult to the minor's decision on a contract.
TRUE Diff: 1 Topic: Minors
Legal Concepts 5) A minor may not affirm one part of a contract and disaffirm another part.
TRUE Diff: 1 Topic: Minors
People below the age of majority are considered minors.
TRUE Diff: 1 Topic: Minors
Legal Concepts 34) Unlicensed persons cannot recover payment for services where he or she does not have the required license.
TRUE Diff: 1 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 6 Copyright © 2013 Pearson Education, Inc. 36) An exculpatory clause that results from superior bargaining power is usually found to be void.
TRUE Diff: 1 Topic: Special Business Contracts and Licensing Statutes
Legal Concepts 37) An unconscionable contract can be enforced if the unconscionable clause is removed from it.
TRUE Diff: 1 Topic: Unconscionable Contracts
Legal Concepts 17 Copyright © 2013 Pearson Education, Inc. 80) What is legal insanity?
The law protects people suffering from substantial mental incapacity from enforcement of contracts against them because such persons may not understand the consequences of their actions in entering into a contract. To be relieved of his or her duties under a contract, a person must have been legally insane at the time of entering into the contract. This state is called legal insanity. The person's mental incapacity must render that person incapable of understanding or comprehending the nature of the transaction. Mental incapacity may arise because of mental illness, brain damage, mental retardation, senility, and the like. Mere weakness of intellect, slight psychological or emotional problems, or delusions does not constitute legal insanity. Diff: 2 Topic: Mentally Incompetent Persons
Legal Concepts 78) Describe the infancy doctrine with reference to legal contracts.
To protect minors, the law recognizes the infancy doctrine, which gives minors the right to disaffirm most contracts they have entered into with adults. This right is based on public policy, which reasons that minors should be protected from the unscrupulous behavior of adults. Under the infancy doctrine, a minor has the option of choosing whether to enforce the contract. The adult party is bound to the minor's decision. If both parties to a contract are minors, both parties have the right to disaffirm the contract. Diff: 2 Topic: Minors
