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Law
Q:
Fletcher signs a contract to buy a new electric guitar and amplifier just before reaching the age of majority. After reaching the age of majority, Fletcher does not take possession or make payments. With respect to the contract, most courts would hold that this is
a. disaffirmance.
b. emancipation.
c. ratification.
d. rescission.
Q:
Gabriella and Esteban are emancipated minors who, after their emancipation, marry each other. Later, they enter into a contract to buy a condominium. In this sequence of events, most likely, their minority status
a. terminated on their emancipation.
b. terminated on their marriage.
c. terminated on entering into the contract to buy a condominium.
d. has not yet terminated.
Q:
Olivia, a minor, signs a contract to buy a bike from Phil, the owner of SuperCycles Bike Store. Olivia's right to disaffirm the contract
a. does not change the fact that Phil is bound by the contract.
b. does not yet exist because Olivia is still a minor.
c. gives Phil, an adult, the right to disaffirm the contract.
d. is not valid because a bike is a "necessary."
Q:
At age seventeen, Daryl enters into a contract to buy a dozen movies from eHD TV Stream, Inc., an online video service. Soon after reaching the age of majority, Daryl attempts to disaffirm the contract. eHD files a suit against him. The court will most likely consider the contract ratified if it is
a. executed.
b. exculpatory.
c. express or implied.
d. emancipated.
Q:
Katie buys a car when she is seventeen. When she is twenty-five, Katie tries to disaffirm the contract and recover all her car payments. A court will likely find that the contract was
a. ratified and Katie cannot recover her payments.
b. not ratified and Katie can recover her payments.
c. not a valid contract because Katie was a minor when she entered into it and she can recover her payments.
d. ratified, but Katie can still recover her payments because she was a minor when she entered into the contract.
Q:
Chris, a minor, signs a contract to purchase alcoholic beverages for Dine & Drink, his parents' restaurant. The contract is
a. valid but may be disaffirmed.
b. valid but may not be disaffirmed.
c. void as a matter of law.
d. void unless it is also signed by Edie, the manager of Dine & Drink.
Q:
Richard is an adult. He enters into a contract to sell sixteen-year-old Jane his car for $3,000. The next day Richard receives an offer of $4,000 for his car from twenty-year-old Bill. Richard
a. cannot disaffirm his contract with Jane because he is an adult.
b. can disaffirm his contract with Jane because Bill is an adult and contracts with adults take precedence over contracts with minors.
c. cannot disaffirm his contract with Jane because she is a minor.
d. can disaffirm his contract with Jane because the contract has not been ratified.
Q:
When one party uses fraud to induce another party to enter into an illegal bargain, the second party will be allowed to recover for the performance or its value.
Q:
When a statute protects a certain class of people, a member of that class cannot enforce an illegal contract.
Q:
In most illegal contracts, both parties are considered to be equally at fault, and neither party can enforce it or recover damages under it.
Q:
In general, if a contract is illegal, a court will not enforce it.
Q:
An exculpatory clause in an employment contract is not enforceable if it removes the employer's potential liability for injuries to employees.
Q:
In a contract, an exculpatory clause releases a party from liability in the event of monetary or physical injury no matter who is at fault.
Q:
In certain circumstances, bargains are so oppressive that the courts relieve innocent parties of part or all of their duties.
Q:
All adhesion contracts are unconscionable.
Q:
Uunconscionability can involve the lack of an opportunity to read a contract or ask questions about its meaning.
Q:
An adhesion contract is a contract drafted by one party and presented to another on a take-it-or-leave-it basis.
Q:
A covenant not to compete is never enforceable.
Q:
Whether a contract with an unlicensed professional is legal and enforceable depends on the purpose of the licensing statute.
Q:
All states require that members of certain professions to have licenses.
Q:
Any contract entered into with an unlicensed party is unenforceable.
Q:
Gambling involves the distribution of property by chance among persons who have paid valuable consideration for the opportunity to receive it.
Q:
All forms of gambling are legal in all states.
Q:
It is legal to charge any interest rate for an ordinary loan.
Q:
Statutes often set forth rules specifying the terms of contracts.
Q:
Any contract to commit a crime is in violation of a statute and thus is unenforceable.
Q:
Contracts entered into by mentally incompetent persons can be valid.
Q:
A person who enters into a contract when he or she is intoxicated can void the contract under any circumstances.
Q:
A person who enters into a contract when he or she is intoxicated can void the contract if he or she did not comprehend the legal consequences.
Q:
Parents who sign a contract made by their minor child with an adult have the same option to disaffirm as the child.
Q:
In general, minors are personally liable for their contracts.
Q:
In some states, misrepresentation of age by a minor is enough to prohibit disaffirmance.
Q:
Some states impose a duty on a minor who disaffirms a contract to restore the adult party to the position he or she held before the contract was made.
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.