Question 1

[Beauty Shop Woes] When Giuseppe hired Ines to work in his beauty shop as a hair stylist,she entered into an agreement with Giuseppe whereby if she left his employment she would not work for another beauty shop within 50 miles for 2 years.Giuseppe trained Ines in a number of new techniques.After nine months,Ines was offered a great job down the street at a new beauty shop.She quit Giuseppe's shop and a number of customers followed her down the street to her new job.Giuseppe claimed that she had signed a contract and had no right to go to work at the new shop.Ines disagreed and told Giuseppe that no judge in the country would enforce such an agreement.Ines then told Giuseppe that she was more worried about a customer who was threatening to sue her because her hair turned green after Ines worked on it.Ines said that she knew that the customer's hair was damaged;but that she told the customer that odd results could result from a dye attempt,and had the customer sign a contract that she released Ines from all liability and would not sue.The customer,however,sued anyway.
-Which is the correct term for the agreement Giuseppe and Ines entered?

Accepted Answer

A)  A covenant not to compete
B)  A covenant not to misappropriate
C)  A competition agreement
D)  A prohibited competition agreement
E)  A policy agreementF) B) and E)
G) A) and B) A

Question 2

Which of the following is the correct timeframe during which a disaffirmance of a contract based on minority must occur?

Accepted Answer

A)  Within 30 days of the minor's reaching the age of majority.
B)  Within 60 days of the minor's reaching the age of majority.
C)  Within 90 days of the minor's reaching the age of majority.
D)  Within one year of the minor's reaching the age of majority.
E)  Before or within a reasonable time of the minor's reaching the age of majority.F) C) and D)
G) A) and B)

Question 3

What is the maximum interest rate in the United States?

Accepted Answer

A)  12%
B)  15%
C)  20%
D)  10%
E)  It varies depending on the state involved.F) C) and D)
G) A) and C)

Question 4

Which statement applies in the dispute between Rose and Sal's Car Savings,considering that she waited to turn 18 before attempting to disaffirm the contract?

Accepted Answer

A)  An implied ratification occurs when parents agree to accept the debt entered into by a minor.
B)  If Rose caused any damage whatsoever to the car,she was said to have impliedly ratified the contract.
C)  Rose was required to expressly ratify the contract before she could be bound to it.
D)  Rose was required to expressly ratify the contract before she could be bound to it so long as no damage was done;but if she did any damage to the car,as a matter of law,she is said to have impliedly ratified it.
E)  So long as,after reaching the age of majority,Rose did not state orally or in writing that she intended to be bound by the contract,then she did not commit an express ratification.F) A) and D)
G) A) and E)

Question 5

Someone who has been adjudicated insane has no capacity to enter into contracts,and any contract he attempts to enter into is void,even if he has an appointed guardian.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

[Useless Friend] Antoine and Tevis,are roommates.Antoine has Tevis sign a contract promising to wash Antoine's car once a week for $80 per month in payment.The contract incorporated by reference terms on the back.The terms on the back were in very small print and required Tevis to cook dinner for Antoine,do his laundry,and clean their apartment.Antoine is also very angry with his former girlfriend,Flora,and decides to start rumors that would constitute the tort of defamation.He spreads via SnapChat that Flora cheated on tests and stole from friends.Antoine wants to enlist the help of Tevis in smearing Flora but knows that Tevis would be hesitant to assist in his endeavors.One evening,however,Tevis comes home clearly intoxicated - a fact apparent to Antoine.Antoine has him sign a contract agreeing to defame Flora for $50.When he sobers up,Tevis tells Antoine that he was drunk and that he has no intention of defaming Flora,who also happens to be the best friend of Tevis's new girlfriend.He also finally takes a look at the contract involving work for Antoine and tells Antoine that the contract is outrageous.
-Tevis's assertion that he should be able to avoid the contract involving Flora because he was intoxicated,is best supported by which of the following statements,under the Restatement of Contracts,Section 16?

Accepted Answer

A)  Contracts of an intoxicated person are voidable only if it can be proven that the other party was involved in encouraging the abuse of alcohol by the intoxicated person rendering the intoxicated person unable to understand the nature and consequences of the transaction or unable to act in a reasonable manner in relation to the transaction.
B)  Contracts of an intoxicated person are void only if it can be proven that the other party was involved in encouraging the abuse of alcohol by the intoxicated person rendering the intoxicated person unable to understand the nature and consequences of the transaction or unable to act in a reasonable manner in relation to the transaction.
C)  Contracts of an intoxicated person are voidable if the other party had reason to know that because of the intoxicated person's condition,that person was unable to understand the nature and consequences of the transaction or was unable to act in a reasonable manner in relation to the transaction.
D)  Contracts of an intoxicated person are void if the other party had reason to know that because of the intoxicated person's condition,that person was unable to understand the nature and consequences of the transaction or was unable to act in a reasonable manner in relation to the transaction.
E)  Contracts of an intoxicated person are enforceable because a person should be bound by his or her actions.F) A) and D)
G) All of the above

Question 8

Which of the following statements is true about the legality of contracts?

Accepted Answer

A)  To be enforceable,contracts must have legal subject matter,they must be able to be performed legally,or they cannot violate either state or federal law.
B)  To be enforceable,contracts must have legal subject matter or they must be able to be performed legally.
C)  Agreements against generally accepted public policy are usually illegal,but are enforceable as long as they do not violate either a state or federal statute.
D)  To be illegal,a contract must violate either a state or federal statute.
E)  To be enforceable,contracts must have legal subject matter,they must be able to be performed legally,and they cannot violate either state or federal law.F) A) and E)
G) A) and D)

Question 9

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

Accepted Answer

A)  That the minor must restore the competent party to that party's precontractual position before obtaining the disaffirmance.
B)  That misrepresentation results in the minor receiving a return of only half the consideration he or she supplied.
C)  That if a competent party relies on a misrepresentation in good faith,the minor gives up the right to disaffirm the agreement.
D)  That the minor may disaffirm but that the competent party has the right to sue the minor in tort and recover damages for fraud.
E)  That misrepresentation does not affect the minor's right to disaffirm the contract.F) C) and E)
G) C) and D)

Question 10

If,after her eighteenth birthday,Cassandra had paid the monthly payment on the financing agreement,would she still have the right to disaffirm the contract?

Accepted Answer

A)  No,because her actions do not constitute a valid ratification.
B)  Yes,as long as the disaffirmance is within a reasonable time after she reached the age of majority.
C)  Yes,although making the payment constitutes an implied ratification of the contract,she may still void the contract as long as the disaffirmance is within a reasonable time after she reached the age of majority.
D)  Yes,because courts recognize a public policy to protect minors who are naïve against others who may take advantage of them.
E)  No,because making the payment constitutes an implied ratification of the contract,and once a contract is ratified,it is no longer voidable.F) A) and D)
G) A) and C)

Question 11

All exculpatory clauses are unlawful.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an element of a legally binding contract?

Accepted Answer

A)  Inquiry
B)  Knowledge
C)  Acknowledgement
D)  Affirmance
E)  CapacityF) B) and D)
G) B) and C)

Question 13

Which of the following is true regarding the obligation of a minor on disaffirmance?

Accepted Answer

A)  The obligations of a minor upon disaffirmance vary from state to state.
B)  In all states,a minor is entitled to a full refund without returning consideration.
C)  In all states,a minor must return any consideration in his control but is entitled to a full refund of any purchase price regardless of the condition of the consideration when returned.
D)  In all states,a minor only receives a return of half the minor's investment.
E)  In all states,a minor must return any consideration in his control,must make restitution,and must pay for any loss in value of the collateral.F) B) and E)
G) A) and C) A

Question 14

Which of the following was the result on appeal in Eric Lucier and Karen Haley v.Angela and James Williams,Cambridge Associates Ltd. ,and Al Vasys,the case in the text in which,after finding significant problems with their roof,the plaintiffs claimed that provisions in a home inspection contract illegally limited the liability of the defendants?

Accepted Answer

A)  The court ruled in favor of the defendants on the basis that no contract of adhesion was involved and that,therefore,by definition the contract satisfied public policy.
B)  The court ruled in favor of the plaintiffs on the basis that the limitation of liability provision in the contract was unconscionable and violated the public policy of the state.
C)  The court ruled in favor of the defendants on the basis that while the court would intervene in appropriate cases,a presumption against a finding of unconscionability exists in home inspection contracts;and the plaintiffs failed to rebut that presumption.
D)  The court ruled in favor of the defendants on the basis that the plaintiffs freely entered into the contract and should,therefore,be bound to its terms.
E)  The court ruled in favor of the plaintiffs on the basis that although the contract was not unconscionable,public policy was violated.F) A) and C)
G) A) and E)

Question 15

In the Case Opener,Apple customers tried to disaffirm purchases of game currency by their children.What was the result?

Accepted Answer

A)  The court dismissed the lawsuit on the basis that no contractual agreement was needed in order for the parents to be bound in regard to purchases of game currency so long as their passwords were used.
B)  The court dismissed the lawsuit on the basis that the parents were bound by the Terms of Service and notifications of their original contracts with Apple binding them to future purchases of game currency regardless of whether passwords were used.
C)  The court refused to dismiss the lawsuit because as a matter of law parents cannot be required to contractually agree to their children's future purchases that are unapproved by the parents.
D)  The court dismissed the lawsuit on the basis that the parents were bound by the Terms of Service and notifications of their original contracts with Apple binding them to future purchases of game currency when their passwords were used.
E)  The court refused to dismiss the lawsuit because no case law was provided to prove that Apple's Terms of Service served as a contract for all subsequent transactions.F) A) and B)
G) A) and D)

Question 16

Which of the following is least likely to be considered a "necessary"?

Accepted Answer

A)  Monthly credit card bills for a local book store.
B)  Rent
C)  Raincoat.
D)  Monthly credit card bills for a grocery store.
E)  X-ray technician's fee.F) A) and D)
G) C) and E)

Question 17

Under which of the following scenarios might Zeb's contract with SatTV be voidable?

Accepted Answer

A)  If Zeb's delusions persuaded him to sign the contract with SatTV so he could contact the planet Zaltar and return home.
B)  If Zeb shows that he no longer believes he is from the planet Zaltar.
C)  Zeb's contract with SatTV is voidable because it is a contract with mentally incapacitated persons.
D)  If Zeb shows that he miscalculated his savings with SatTV.
E)  If Zeb provides a spreadsheet of his payments with DigiTV.F) C) and E)
G) A) and D)

Question 18

Depending on the size of the print on the back of the contract,which of the following could Tevis possibly use as a defense?

Accepted Answer

A)  Unclear drafting
B)  Outrageous wording
C)  Procedural unconscionability
D)  Substantive unconscionability
E)  Adhesion conscionabilityF) A) and B)
G) A) and E)

Question 19

In pari delicto is the term for when both parties are equally responsible for an illegal agreement.

Accepted Answer

A) True 
 B)False

Question 20

If a contract contains an illegal part,courts will sever the illegal part and enforce only the legal part.

Accepted Answer

A) True 
 B)False

Exam 16: Capacity and Legality

Correct Answer
verified
A

Which of the following is the correct timeframe during which a disaffirmance of a contract based on minority must occur?

Correct Answer
verified

What is the maximum interest rate in the United States?

Correct Answer
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Which statement applies in the dispute between Rose and Sal's Car Savings,considering that she waited to turn 18 before attempting to disaffirm the contract?

Correct Answer
verified

Someone who has been adjudicated insane has no capacity to enter into contracts,and any contract he attempts to enter into is void,even if he has an appointed guardian.

Correct Answer
verified

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

Correct Answer
verified
E

Correct Answer
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Which of the following statements is true about the legality of contracts?

Correct Answer
verified

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

Correct Answer
verified

If,after her eighteenth birthday,Cassandra had paid the monthly payment on the financing agreement,would she still have the right to disaffirm the contract?

Correct Answer
verified

All exculpatory clauses are unlawful.

Correct Answer
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Which of the following is an element of a legally binding contract?

Correct Answer
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Which of the following is true regarding the obligation of a minor on disaffirmance?

Correct Answer
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A

Correct Answer
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In the Case Opener,Apple customers tried to disaffirm purchases of game currency by their children.What was the result?

Correct Answer
verified

Which of the following is least likely to be considered a "necessary"?

Correct Answer
verified

Under which of the following scenarios might Zeb's contract with SatTV be voidable?

Correct Answer
verified

Depending on the size of the print on the back of the contract,which of the following could Tevis possibly use as a defense?

Correct Answer
verified

In pari delicto is the term for when both parties are equally responsible for an illegal agreement.

Correct Answer
verified

If a contract contains an illegal part,courts will sever the illegal part and enforce only the legal part.

Correct Answer
verified

Exam 16: Capacity and Legality

Correct AnswerverifiedA

Which of the following is the correct timeframe during which a disaffirmance of a contract based on minority must occur?

Correct AnswerverifiedShow Answer

What is the maximum interest rate in the United States?

Correct AnswerverifiedShow Answer

Which statement applies in the dispute between Rose and Sal's Car Savings,considering that she waited to turn 18 before attempting to disaffirm the contract?

Correct AnswerverifiedShow Answer

Someone who has been adjudicated insane has no capacity to enter into contracts,and any contract he attempts to enter into is void,even if he has an appointed guardian.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedE

Correct AnswerverifiedShow Answer

Which of the following statements is true about the legality of contracts?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If,after her eighteenth birthday,Cassandra had paid the monthly payment on the financing agreement,would she still have the right to disaffirm the contract?

Correct AnswerverifiedShow Answer

All exculpatory clauses are unlawful.

Correct AnswerverifiedShow Answer

Which of the following is an element of a legally binding contract?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the obligation of a minor on disaffirmance?

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

In the Case Opener,Apple customers tried to disaffirm purchases of game currency by their children.What was the result?

Correct AnswerverifiedShow Answer

Which of the following is least likely to be considered a "necessary"?

Correct AnswerverifiedShow Answer

Under which of the following scenarios might Zeb's contract with SatTV be voidable?

Correct AnswerverifiedShow Answer

Depending on the size of the print on the back of the contract,which of the following could Tevis possibly use as a defense?

Correct AnswerverifiedShow Answer

In pari delicto is the term for when both parties are equally responsible for an illegal agreement.

Correct AnswerverifiedShow Answer

If a contract contains an illegal part,courts will sever the illegal part and enforce only the legal part.

Correct AnswerverifiedShow Answer

Correct Answer
verified
A

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E

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A

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