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Exam 10: Consideration

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Question 31

Multiple Choice

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Because their contracts are _____________, minors have the right, until a reasonable time after reaching the age of majority, to __________, or avoid, their contracts.

A) Void; disaffirm
B) Void; affirm
C) Void; resist
D) Voidable; disaffirm
E) Voidable; affirm

F) A) and B)
G) B) and D)

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Question 32

Multiple Choice

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Which of the following is a term for laws that limit the types of business activities in which parties may legally engage on Sundays?

A) Sabbath laws only
B) Blue laws only
C) True laws only
D) Sabbath and blue laws, but not true laws
E) Sabbath laws, blue laws, and true laws

F) D) and E)
G) None of the above

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Question 33

Multiple Choice

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A person who has legal _____________ to contract is one who has the mental ability to understand his or her rights and obligations under a contract and, therefore, will presumably be able to understand how to comply with the terms of the agreement.

Historically, which of the following were considered people with limited or no capacity?

Reference - Cheap Motorcycle. Tony, a hateful, disgruntled, business law teacher notices that a student, Peter, who is past the age of majority, has bought a new motorcycle. Peter has struggled through school, is in his last semester, and needs to pass business law in order to graduate. Tony tells Peter that he would like to see Peter pass; and, in the next sentence, Tony says that he wants to buy the motorcycle for $100, a price far below the value of the motorcycle. Peter asks if Tony is serious about the price, and Tony replies, "I have the power here!" Tony proceeds to draw up a contract for the sale of the motorcycle for $100 with lots of fine print by which he can sue Peter and recover any maintenance costs for the next five years. Seeing that he is at an advantage, Tony also throws into the deal that Peter will mow Tony's one acre yard for $5 all summer long. After Tony tells Peter to either take the contract or leave it, Tony reluctantly signs. Which of the following is true if Peter seeks to rescind the contractual agreement to sell the motorcycle?

Bob is hired to do computer sales for an electronics store. He agrees that if he leaves his employment, he will not work for another computer store within 25 miles for a period of two years. That type of agreement is called a[n] _____________.

John and Joan enter a contract whereby John will feed Joan's cat for $100 while Joan is on vacation. Another part of the contract provides that John will mow Joan's whole yard for the summer for $500. Just before Joan leaves for vacation, John discovers that Joan's cat is not a domesticated cat, but a lion rescued from the circus. John tells Joan to forget it, that she misrepresented the nature of the animal, and that she can forget about the contract, including the lawn mowing deal. Joan, being a somewhat reasonable person, feels bad about not telling John the whole truth about the cat; and she is willing to give in on that issue. She does, however, want to enforce the yard mowing agreement. What is her best argument?

If a person's mental deficiencies have resulted in his being adjudicated insane and a guardian has been appointed for him, he has no capacity to enter into contracts, and any contract he attempts to enter into is void.

What was the result in Swalberg v. Hannegan, the case in the text in which the minor attempted to disaffirm a contract for the purchase of an automobile?

Reference - Irresponsible Teen. At age 17, in a state in which the age of majority is 18, Sally purchased a prom dress from Formal Stuff. She wore it to the prom and then attempted to return it to the store claiming that she was a minor and that she was entitled to a refund. The dress had clearly been worn and had a purple stain which Sally claimed was from grape juice. Additionally, a few days before she turned 18, Sally purchased a used car from Dings and Dents used cars. She had a deal whereby she paid $100 per month on the car. She drove the car and made payments for fourteen months after she turned 18. Then, she returned the car to Dings and Dents and told them that she wanted all her money back. Dings and Dents claimed the car was a necessity. Sally and her parents claimed that the parents were ready and willing to provide a car to Sally and that she only purchased the car from Dings and Dents because she liked that particular style and color. When purchases of the dress and car were made, the sellers knew that Sally was under the age of 18. In the dispute between Sally and the owner of Dings and Dents, which of the following is true regarding any claim that Sally affirmed the contract?

Which of the following is true regarding an agreement to commit a crime or a tort?

A statement releasing one of the parties to an agreement from all liability, regardless of who is at fault or what the injury suffered is, would be referred to as a[n] _____________.

Which of the following is the majority rule regarding a minor's misrepresentation of his or her age?

Reference - Irresponsible Teen. At age 17, in a state in which the age of majority is 18, Sally purchased a prom dress from Formal Stuff. She wore it to the prom and then attempted to return it to the store claiming that she was a minor and that she was entitled to a refund. The dress had clearly been worn and had a purple stain which Sally claimed was from grape juice. Additionally, a few days before she turned 18, Sally purchased a used car from Dings and Dents used cars. She had a deal whereby she paid $100 per month on the car. She drove the car and made payments for fourteen months after she turned 18. Then, she returned the car to Dings and Dents and told them that she wanted all her money back. Dings and Dents claimed the car was a necessity. Sally and her parents claimed that the parents were ready and willing to provide a car to Sally and that she only purchased the car from Dings and Dents because she liked that particular style and color. When purchases of the dress and car were made, the sellers knew that Sally was under the age of 18. Which of the following is true regarding Sally's attempt to return the damaged dress?

As a general rule, most states will not allow a minor to disaffirm contracts for which of the following?

Reference - Useless Friend. Charles, who is very gullible, is friends with Bobby. Bobby, who cannot be trusted, decides to try to bind Charles to a contract in Bobby's favor. Bobby has Charles sign a contract promising to wash Bobby's car once a week for a month for $80. The contract incorporated by reference terms on the back. The terms on the back were in very small print and required Charles for one year to cook dinner for Bobby, do his laundry, and clean his apartment. Bobby is also very angry with his former girlfriend, Tessa, and decides to start rumors, that would constitute the tort of defamation, such as that she has a vile disease, cheated on tests, and stole from friends. Bobby wants to enlist the help of Charles but knows that Charles would be hesitant to assist in his endeavors. One evening, however, Charles drank too much beer and was clearly intoxicated - a fact apparent to Bobby. Bobby had him sign a contract agreeing to defame Tessa for $50. When he sobers up, Charles tells Bobby that he was drunk and that he has no intention of defaming Tessa, who also happens to be Charles' new girlfriend. He also finally takes a look at the contract involving work for Bobby and tells Bobby that the contract is outrageous and that he has no intentions of going through with any of it. Which of the following is true under the Restatement of Contracts, Section 16, regarding the claim of Charles that he should be able to avoid the contract involving Tessa because he was intoxicated?

Which of the following is some sort of mental or physical defect that prevents a person from being able to enter into a legally binding contract?

Set forth in detail the test that most states follow regarding the treatment of the capacity of intoxicated persons to enter into contracts.

Reference - Beauty Shop Woes. When Janice went to work as a hair stylist in Rick's beauty shop, she entered into an agreement with Rick, whereby, if she left she would not work for another beauty shop within 50 miles for 2 years. Rick trained Janice in a number of new techniques. After nine months, Janice was offered a great job down the street at a new beauty shop, quit Rick, and had a number of customers follow her down the street to her new job. Rick claimed that she had signed a contract and had no right to go to work at the new shop. Janice disagreed and told Rick that no judge in the country would enforce such an agreement. Janice told Rick that she was more worried about a customer, Treena, who was threatening to sue her because her hair turned green after Janice worked on it. Janice agreed that Treena's hair was damaged. Janice pointed out, however, that she told Treena that odd results could result from a dye attempt, and she required that Treena sign a contract releasing Janice from all liabilities before she did anything with Treena's hair. Treena, however, sued anyway. The agreement Rick and Janice entered into is referred to as which of the following?

Reference - Useless Friend. Charles, who is very gullible, is friends with Bobby. Bobby, who cannot be trusted, decides to try to bind Charles to a contract in Bobby's favor. Bobby has Charles sign a contract promising to wash Bobby's car once a week for a month for $80. The contract incorporated by reference terms on the back. The terms on the back were in very small print and required Charles for one year to cook dinner for Bobby, do his laundry, and clean his apartment. Bobby is also very angry with his former girlfriend, Tessa, and decides to start rumors, that would constitute the tort of defamation, such as that she has a vile disease, cheated on tests, and stole from friends. Bobby wants to enlist the help of Charles but knows that Charles would be hesitant to assist in his endeavors. One evening, however, Charles drank too much beer and was clearly intoxicated - a fact apparent to Bobby. Bobby had him sign a contract agreeing to defame Tessa for $50. When he sobers up, Charles tells Bobby that he was drunk and that he has no intention of defaming Tessa, who also happens to be Charles' new girlfriend. He also finally takes a look at the contract involving work for Bobby and tells Bobby that the contract is outrageous and that he has no intentions of going through with any of it. Which of the following would be a possible defense to the contract as far as the harsh and lopsided requirements involving chores is concerned?