Q&A Hero

Q: When a minor disaffirms a contract, he or she cannot keep whatever he or she has received as a result of the contract without paying for it.

Q: All states' laws permit minors to disaffirm contracts.

Q: If a contract is fully performed by all parties to it, then it is presumed to have been ratified.

Q: If a minor disaffirms a contract, he or she must disaffirm the entire contract.

Q: The age of majority in most states is eighteen years.

Q: A minor has a reasonable time, after the minor reaches the age of majority, to disaffirm a contract.

Q: For a minor to disaffirm a contract, he or she must present the contract to a court.

Q: When both parties to a contract are minors, both of them may disaffirm the contract.

Q: Contractual capacity includes the financial ability to pay for the benefits of a contract.

Q: Best Products, Inc., hires Cole to develop and implement an e-commerce strategy for marketing Best's products. Cole signs a contract that includes a clause prohibiting him from competing with Best during and after the employment. Before the strategy is implemented, Cole resigns from Best's employ and opens a business to compete with Best. In Best's suit against Cole, what is the most important factor the court should consider in determining whether Cole should be allowed to compete with Best?

Q: J.T., a minor, is a motocross competitor. At Monster Mountain MX Park, he signs a waiver of liability to "hold harmless the park for any loss due to negligence." Riding around the Monster Mountain track, J.T. rides over a blind jump, becomes airborne, and crashes into a tractor that he does not see until he is in the air. To recover for his consequent injuries, J.T. files a suit against Monster Mountain, alleging negligence for its failure to remove the tractor from the track. Does the liability waiver bar this claim? Explain.

Q: Omni Insurance Company violates a state licensing statute when selling an insurance policy to Petra, in whose state Omni is not licensed to sell insurance. As a member of the class of persons protected by the statute, Petra can a. do nothing with respect to the policy. b. enforce the policy or recover the amount of the premiums paid. c. only enforce the policy. d. only recover the amount of the premiums paid.

Q: Rolf is an emergency medical technician. Medical personnel such as Rolf are prohibited by state statute from working more than a certain number of consecutive hours. One month, Rolf works more than the legal limit. Rolf can recover for a. the hours up to the statutory maximum but not more. b. the hours up to the statutory maximum and the extra hours. c. the hours up to the statutory maximum or the extra hours. d. nothing.

Q: Frugal Insurance Company sells a policy to Grover Company, insuring the life of one of Grover's key executives. When the executive dies, Frugal refuses to pay, noting that it was not licensed to sell insurance in Grover's state and arguing that thus, its policy cannot be enforced. Grover can recover a. the amount of the policy from Frugal in full. b. the amount of the premiums that Grover paid to Frugal. c. as much of the amount of the policy from Frugal as will cover Grover's costs. d. nothing.

Q: Doug agrees with Elinor to sell methamphetamine to patrons of Elinor's nightclub Garden of Eden for 25 percent of the take. Doug sells the drugs but keeps all of the money. Elinor can a. recover her share of the money only if she did not aid in the crime. b. not enforce the deal. c. recover the total amount of the sales. d. recover her costs but none of the illegal profit.

Q: Jake and John make an illegal contract that unjustly enriches Jake at the expense of John. A court will a. not be concerned with the unjust enrichment of Jake. b. force Jake to pay damages to John. c. reform the contract to prevent undue burdens. d. enforce the contract as it was originally written.

Q: Duffy and Elbert agree to hijack a truck carrying a load of pecans. If Duffy later refuses to go through with the crime, Elbert can a. enforce the agreement. b. obtain damages from Duffy in the amount of Duffy's probable share of the illegal profits. c. recover in quasi contract for the loss of his share of the illegal profits. d. do nothing.

Q: Nancy and Owen negotiate a deal to transfer stolen body building equipment for counterfeit currency that Owen will attempt to spend at Plenty Good! Discount Mart. This contract is a. enforceable. b. void. c. voidable at the option of Nancy or Owen. d. voidable at the option of Plenty Good!

Q: Bay City Mall requires its tenants to sign a lease that includes a clause releasing Metro from liability in the event of monetary or physical injury no matter who is at fault. Coco's Chocolate Creations signs a lease with Bay City that contains the clause. The clause is most likely a. enforceable as a matter of public policy. b. enforceable if either party is considered to be a business for essential services. c. enforceable if the lease also involves residential property. d. unenforceable.

Q: Bay City Mall requires its tenants to sign a lease that includes a clause releasing Metro from liability in the event of monetary or physical injury no matter who is at fault. Coco's Chocolate Creations signs a lease with Bay City that contains the clause. This clause is a. a covenant not to compete. b. an adhesion contract. c. an exculpatory clause. d. an illusory promise.

Q: SuperBumperCars, Inc. requires all customers to sign a release that contains a clause that releases SuperBumperCars from all liability in the event of an injury occurring during a bumper car ride, no matter who is at fault. This is an example of a. a covenant not to compete. b. an adhesion contract. c. an exculpatory clause. d. an illusory promise.

Q: Betty is selling her used clothing shop on Main Street. In the sale agreement, there is a covenant not to compete that prohibits Betty from opening another used clothing shop within 300 miles of the shop she is selling. A court will most likely conclude that this restriction on competition is a. reasonable. b. unreasonable and order Betty's successor to stop doing business. c. unreasonable and may reform the covenant . d. unreasonable and prohibit both parties from opening used clothing shops.

Q: Odina signs a covenant not to compete with her employer, Penultimate Sales Corporation. A court decides that the covenant is overly restrictive. The court will likely a. enforce it as written so as not to undercut the freedom of contract. b. enforce it but evaluate its effects over time. c. reform its terms to prevent any undue burden. d. refuse to enforce it unless Penultimate pays additional consideration.

Q: Brasilia, a real estate broker licensed only in Connecticut, concludes a land sale in Delaware. She can a. collect the commission if it has not been paid. b. keep the commission if it has already been paid. c. foreclose on the property to obtain any unpaid amount. d. not collect the commission, keep it, or foreclose on the property.

Q: Jolie signs a contract with Keaton, an unlicensed physician, to perform a medical procedure. This contract is enforceable by a. Jolie. b. Jolie's medical insurance company. c. Keaton. d. no one.

Q: The state of Illinois enacts a usury statute. The purpose is to a. establish a maximum rate of interest that may be charged for loans. b. establish a minimum rate of interest that may be charged for loans. c. prevent the misuse of money advanced as loans. d. prevent the misuse of money paid back on loans.

Q: John obtains a loan from Liberty Credit Bank at an interest rate that exceeds the state's maximum. Liberty has a. created a risk for the purpose of assuming it. b engaged in a restraint of trade. c. violated a licensing statute. d. committed usury.

Q: A court adjudicates Jimi mentally incompetent and appoints Krispin to be his guardian. Later, without Krispin's knowledge, Jimi signs a contract to sell his lake cabin to Lazar for its real market value. The contract is a. enforceable if Jimi comprehended the consequences. b. enforceable if Jimi knew the market value of the farm. c. enforceable if Lazar has been recorded to be the owner of the cabin. d. void.

Q: A court has not previously judged Ace to be mentally incompetent. Any contract Ace enters into is a. voidable if Ace has a lucid interval at the time of contracting. b. voidable if Ace lacks the capacity to comprehend the consequences. c. voidable if other party does not realize that Ace is incompetent. d. valid.

Q: Vijay enters into a contract to sell his laptop to Winnie. Winnie takes possession of the laptop as a minor and continues to use it well after reaching the age of majority. Winnie has a. expressly ratified the contract. b. impliedly ratified the contract. c. disaffirmed the contract. d. none of the choices.

Q: Colleen is intoxicated, but still mentally capable of understanding the consequences of her actions when she signs a contract to sell the rights to her latest phone app design to Addie. The contract is a. enforceable only if Colleen does not attempt to disaffirm it. b. enforceable even if Colleen attempts to disaffirm it. c. unenforceable if Addie attempts to disaffirm it. d. enforceable only if Addie does not attempt to disaffirm it.

Q: Carly is a minor. Without her parents' knowledge, she signs a contract to buy an airplane ticket to Hawaii for spring break. Carly's parents are a. liable for the contract. b. not liable for the contract. c. liable for up to half the value of the goods in the contract. d. liable for up to one third of the value of the goods in the contract.

Q: Lucy, a minor, disaffirms a contract for necessaries without returning the goods. To Manny's Food Mart, the seller, Lucy is required to pay a. nothing. b. the reasonable value of the goods. c. the sales price of the goods. d. the ultimate worth of the goods.

Q: Ruthie, a minor, charges the cost of an expensive leather jacket at a Girl's Trend store. Two nights later, Ruthie loses the jacket at Minors Only Club. She disaffirms the jacket's purchase. Ruthie owes Girl's Trend the reasonable value of the jacket a. if it is deemed a "necessary." b. if it is deemed unnecessary. c. under any circumstances. d. under no circumstances.

Q: Chris promises Dina $40,000 if she graduates from Eagle College. Dina enrolls in Eagle, attends full-time for four years, and graduates. When Dina asks Chris for $40,000, Chris says, "I don"t remember promising you $40,000. But if there was a promise, it's not enforceable, because we didn"t bargain for it. And even if there was a promise that would otherwise be enforceable, I revoke it now." Can Dina enforce Chris's "promise"? Why or why not?

Q: Centre City Properties, Inc., owns and manages a warehouse. DIY Home Improvement Stores agrees to lease the warehouse for six years. Under the lease, DIY is obligated to pay all of the utility costs. Two years into the term, DIY asks Centre City to modify the lease to provide that the utility costs will be split equally between them. The landlord agrees, but later decides it does not want to share the costs and refuses to pay. Is Centre City bound to its agreement to share the utility costs? Why or why not?

Q: Claudia pledges to donate $10,000 to Disaster Relief & Recovery Inc. (DR&R). On the basis of the pledge, DR&R orders additional supplies. If Claudia does not fulfill the pledge, a court may enforce it a. under the preexisting duty rule. b. on the basis of unforeseen difficulties. c. as a requirement contract. d. under the doctrine of promissory estoppel.

Q: Lea signs a contract with Metro Business Loans, Inc., to borrow $25,000 to remodel Lea's Hair Care Salon. Lea does not repay the loan. Metro fails to sue within the time prescribed by the applicable statute of limitations. Later Lea promises to pay the debt. To be enforceable, this promise needs a. bargained-for consideration. b. no consideration. c. legally sufficient consideration. d. adequate consideration.

Q: Rudy files a suit against Shakes & Shingles, Roofing Contractor, Inc., under the doctrine of promissory estoppel. Rudy must show that a. he justifiably refused to fulfill a promise to Shakes & Shingles. b. he justifiably relied on Shakes & Shingles' promise to his detriment. c. Shakes & Shingles justifiably refused to fulfill a promise to him. d. Shakes & Shingles justifiably relied on his promise to its detriment.

Q: Marketing Solutions Inc. promises to employ Niki as a software engineer. In reliance on the promise, Niki quits her job with Online Ad Company, but Marketing Solutions does not hire her. Most likely, Marketing Solutions is a. liable to Niki under the concept of accord and satisfaction. b. liable to Niki under the doctrine of promissory estoppel. c. liable to Niki under the preexisting duty rule. d. not liable to Niki.

Q: Twyla's dock is damaged in an accident caused by Ulric's negligence. Twyla agrees not to sue him if he will pay for the damage. If Ulric fails to pay, Twyla can bring an action for breach of contract. This agreement is a. a covenant not to sue. b. an accord and satisfaction. c. unliquidated. d. a release.

Q: After an accident with a driver for Onyx Security Company, Paul signs a covenant not to sue Onyx for damages in a tort action if it pays for the damage to his car. This covenant a. bars recovery only if Onyx pays. b. is an illusory contract. c. is barred by the preexisting duty rule. d. is unconscionable.

Q: Franzea is injured in an accident caused by Gentry. Gentry agrees to pay Franzea $2,500 if she agrees to release him from further liability. She agrees. If Franzea's damages ultimately exceed $2,500, she can collect a. the balance from Gentry in a breach-of-contract suit. b. the balance from Gentry in a tort suit. c. the balance from Gentry on the ground of unforeseen difficulties. d. nothing more from Gentry.

Q: Qiana writes a check to Payday Loans, Inc., in an amount that represents half of her debt to the lender. On the back of the check, Qiana includes the words "payment in full." Payday agrees to accept the lesser sum and cashes the check. This discharges the entire debt a. if the debt is liquidated. b. if the debt is past due. c. if the debt is unliquidated. d. under no circumstances.

Q: Apple & Pear Orchards contracts to hire Brigit for one year to tend the fruit in its commercial orchards but reserves the right to cancel the employment on thirty days' notice at any time after Brigit begins work. This promise is a. enforceable. b. illusory. c. unliquidated. d. unforeseen.

Q: Gustaf and Hilltop Country Club disagree as to the exact amount Hilltop owes Gustaf for his landscaping work. They form a new agreement that, on fulfillment, will discharge the prior obligation. This is a. a covenant not to sue. b. an accord and satisfaction. c. a release. d. promissory estoppel.

Q: Produce Packaging Company promises its employees a 10 percent raise at the end of the year if productivity has increased and management feels the raise is warranted. Produce Packaging must a. do nothing. b. give the employees a 10 percent raise only at the end of the year. c. give the employees a 10 percent raise only if productivity increases. d. give the employees a 10 percent raise under any circumstances.

Q: Sully signs a contract to borrow $200,000 from Riverside Bank to buy a house. In the contract, Sully agrees to pay a certain rate of interest on the amount of borrowed funds at monthly intervals for thirty years. This debt is a. an illusory promise. b. liquidated. c. past consideration. d. unliquidated.

Q: Dave's uncle tells Dave that if "he feels that Dave deserves it," he will give Dave $1,000 when Dave graduates from college. Dave's uncle's promise is a. illusory. b. enforceable. c. a forbearance. d. a preexisting duty.

Q: Mobile Media Company contracts to hire Nada for one year at $35 per hour, reserving the right to cancel the contract at any time after Nada begins performance by giving two weeks' notice. This promise is a. an enforceable contract. b. an illusory promise. c. an option-to-cancel clause. d. a requirement contract.

Q: Industrial Engineering, Inc., promises to give stock options to Jasmine for processes she has already designed for the firm. This promise is enforceable a. because it is a new contract. b. because it is an illusory promise. c. because it is supported by past consideration. d. under no circumstances.

Q: Mariah promises to pay her assistant Nadine $10,000 in consideration of the services she provided over the years. Mariah never pays Nadine. Mariah is a. liable for payment of the $10,000. b. liable only if Nadine still works for Mariah. c. not liable, because the consideration is in the past. d. not liable, because the consideration was unintentional.

Q: Sally contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. Sally and Tasty a. may rescind their entire contract. b. may rescind their contract to the extent that it is executory. c. must perform their entire contract. d. must perform the part of their contract that is executory.

Q: Sally contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. The next day, Sally changes her mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sally and Tasty a. may agree to a new contract, but it cannot include a new price. b. may agree to a new contract that includes the new price. c. must perform their original contract. d. must perform the part of their original contract that is executory.

Q: Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay. If Teatro says it is asking for the extra $250,000 because it has encountered extraordinary unforeseen difficulties that will add considerable cost to the project, the agreement isa. enforceable as the consideration is past.b. enforceable because of unforeseen difficulties.c. unenforceable as an illusory promise.d. unenforceable due to the preexisting duty rule.

Q: Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay. If Teatro says it is asking for the extra $250,000 because ordinary business expenses have increased, the agreement isa. enforceable as the consideration is past.b. enforceable because of unforeseen difficulties.c. unenforceable as an illusory promise.d. unenforceable due to the preexisting duty rule.

Q: Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay. If Teatro offers no reason for the extra $250,000, but says only that it will stop work if it is not paid, the agreement isa. enforceable as the consideration is past.b. enforceable because of unforeseen difficulties.c. unenforceable as an illusory promise.d. unenforceable due to the preexisting duty rule.

Q: Frisco offers to buy a Gibson guitar owned by Hayden for twice what she paid for it. She accepts and hands the guitar to Frisco. Her delivery of the guitar isa. not consideration because her voluntary consent may be lacking.b. not consideration because the exchange is not a bargain.c. consideration.d. not consideration because the value is not legally sufficient.

Q: Under a contract with Valley Vineyard, Walsh begins grading a terraced hillside for the planting of grapes. Halfway through the project, Walsh asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." Valley agrees but later refuses to pay. Their agreement is a. unenforceable because Walsh's performance was a preexisting duty. b. unenforceable because Valley's promise was illusory. c. enforceable. d. unenforceable because Walsh's request modified the contract.

Q: Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deala mortgage loan secured by Bridey's purchase of a housewas unfair because the consideration for their contract was inadequate. If, as Bridey claims, the consideration for this contract is inadequate, it may indicate a lack of a. market value for Bridey's house. b. voluntary consent to the contract on Bridey's part. c. appraisal by a third party on behalf of Continental. d. standards for the granting of credit on Continental's part.

Q: Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deala mortgage loan secured by Bridey's purchase of a housewas unfair because the consideration for their contract was inadequate. The court is most likely to evaluate the adequacy of consideration if a. one of the parties claims that they entered into an unwise contract. b. something exchanged is not of direct economic or financial value. c. the items exchanged are of unequal value. d. there is a large disparity in the amount or value of the consideration exchanged.

Q: Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deala mortgage loan secured by Bridey's purchase of a housewas unfair because the consideration for their contract was inadequate. "Adequacy" of consideration refers to a. "how much" consideration is given. b. legally sufficient value in the eyes of the law. c. the intangible value to a contracting party of a thing exchanged. d. the substantiality of the consideration exchanged.

Q: Mobile Minutes Company offers Nate an unlimited number of monthly phone minutes for $4.50 per month. Nate accepts. If a dispute arises, a court would likely a. enforce the deal after questioning the adequacy of the consideration. b. not question the adequacy of the consideration. c. rewrite the deal after questioning the adequacy of the consideration. d. set aside the deal after questioning the adequacy of the consideration.

Q: Valley Paragliders Association files a suit against Wing Designers, Inc., claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the consideration if a. there is a large disparity in the amount of consideration exchanged. b. the consideration involves the performance of services. c. something of value passed between the parties. d. the consideration is worth less than $100.

Q: Quentin questions whether there is consideration for his contract with Rainey to exchange his performance with the Symphonic Saxophone Sextet for her payment of a certain amount. To constitute consideration, there must be a. a payment. b. a performance. c. a bargained-for exchange. d. serious thought underlying each party's intent to contract.

Q: Sparky offers Teodora $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely a. enforce the deal after questioning the adequacy of consideration. b. not question the adequacy of the consideration. c. rewrite the deal after questioning the adequacy of consideration. d. set aside the deal after questioning the adequacy of consideration.

Q: Aron questions whether there is consideration for his contract with Banquet Hall to exchange his musical performance of country tunes at select social events for Banquet's payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be a. objectively worthy. b. precisely adequate. c. legally sufficient. d. practically sound.

Q: Rollo promises to perform, for a price, shoe repair services in affiliation with Togs "˜n Things, a clothing store. To support a contract, the consideration exchanged by the parties must be a. adequately considerate. b. equally valuable. c. legally sufficient. d. wisely priced.

Q: Henry promises not to open his restaurant before 10:00 a.m. if Suzy, who owns a bakery next door to him, promises to close her bakery by 4:00 p.m. Henry's consideration is a. the destruction of a legal relationship. b. the creation of a legal relationship. c. a forbearance. d. an exchange of money.

Q: Jenilee promises to pay Kyle $500 because "he does not have as much money as other people." Jenilee's promise is a. enforceable because society wants people to keep their promises. b. enforceable because the redistribution of wealth is a valid social goal. c. not enforceable because Jenilee could have paid Kyle more. d. not enforceable because Kyle has not given consideration in return.

Q: Kingston promises to pay Melina $500 to install a sump pump in his warehouse. Melina completes the installation. The act of installing the pump a. imposes a moral obligation on Kingston to pay Melina. b. imposes no obligation on Kingston unless he is satisfied with the job. c. is not sufficient consideration because it is not goods or money. d. is the consideration that creates Kingston's obligation to pay Melina.

Q: Statutes of limitations in all states require a debtor to pay a debt within a specified period of time.

Q: A debtor who promises to pay a previous debt even though recovery is barred by a statute of limitations makes an enforceable promise.

Q: Under the doctrine of promissory estoppel, a promise will not be enforced unless it is supported by consideration.

Q: The doctrine of promissory estoppel does not apply if there exists a clear and definite promise.

Q: A covenant not to sue does not always bar further recovery.

Q: A release does not require consideration to be legally binding.

Q: A covenant not to sue is against public policy.

Q: In many states, a release contract must be in a signed writing.

Q: A release bars any further recovery beyond the terms stated in the release.