Question 1

Orin enters into a contract with Natalie.Later,Orin is adjudged mentally incompetent and Moseby is appointed Orin's guardian.Lila,Orin's daughter,attempts to void Orin's contract with Natalie on the ground of Orin's incompetency.The contract is

Accepted Answer

A)  enforceable if Orin does not attempt to disaffirm it.
B)  enforceable if Natalie is also incompetent.
C)  enforceable if Moseby knew of the contract when he was appointed.
D)  void.E) None of the above
F) A) and B)

Question 2

Inadequate consideration may indicate undue influence.

Accepted Answer

A) True 
 B)False

Question 3

A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian.Later,without Inez's knowledge,Huck signs a contract to sell his farm to Kyle for its real market value.The contract is

Accepted Answer

A)  enforceable if Huck comprehended the consequences.
B)  enforceable if Huck knew the market value of the farm.
C)  enforceable if Huck was the record owner of the farm.
D)  void.E) All of the above
F) C) and D)

Question 4

Fay is mentally incompetent but has not been so adjudged by a court.Any contract Fay enters into is

Accepted Answer

A)  voidable if Fay has a lucid interval at the time of contracting.
B)  voidable if Fay lacks the capacity to comprehend the consequences.
C)  voidable if the other party does not realize that Fay is incompetent.
D)  unavoidable.E) All of the above
F) C) and D)

Question 5

An adult may avoid any contract with a minor.

Accepted Answer

A) True 
 B)False

Question 6

A release does not require consideration to be legally binding.

Accepted Answer

A) True 
 B)False

Question 7

Elmo,a minor,misrepresents his age to be twenty-one and contracts to buy a car from Fine New Autos.Ordinarily,Elmo can disaffirm the contract

Accepted Answer

A)  only if he can prove that Fine New Autos did not know his true age.
B)  only if he can prove that Fine New Autos knew his true age.
C)  under any circumstances.
D)  under no circumstances.E) None of the above
F) A) and D)

Question 8

A usurious contract involves the purchase and sale of usable goods.

Accepted Answer

A) True 
 B)False

Question 9

Boyd is a minor.As a minor,Boyd has the capacity to enter into

Accepted Answer

A)  an invalid contract.
B)  an unavoidable contract.
C)  a valid contract.
D)  no contract.E) C) and D)
F) B) and C)

Question 10

Unforeseen difficulties that justify a demand for additional compensation include risks ordinarily assumed in business.

Accepted Answer

A) True 
 B)False

Question 11

Fact Pattern 9-2 
Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal—a student loan accruing interest at a certain rate and payable beginning on a certain date—was unfair because the consideration for their contract was inadequate.
-Refer to Fact Pattern 9-2."Adequacy" of consideration refers to

Accepted Answer

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.E) A) and B)
F) A) and C)

Question 12

Webline Retail Sales,Inc. ,promises its salaried employees a bonus at the end of the year if management thinks it is warranted.This promise is

Accepted Answer

A)  enforceable.
B)  unenforceable because it is not supported by consideration.
C)  unenforceable because the dollar amount is missing.
D)  unenforceable because the employees are paid salaries.E) C) and D)
F) B) and D)

Question 13

If the purpose of a licensing statute is to protect the public from unlicensed practitioners,a contract with an unlicensed professional is illegal.

Accepted Answer

A) True 
 B)False

Question 14

If there is a statute that prohibits a certain action,a contract to do it is unenforceable.

Accepted Answer

A) True 
 B)False

Question 15

Through fraudulent means,Fred induces Gail to sign a contract to build resort cabins on land that Fred does not own.Gail performs,but Fred does not pay.When Gail learns the truth,she may

Accepted Answer

A)  do nothing with respect to the contract.
B)  recover for the performance or its value.
C)  recover for the performance only.
D)  recover the value of the performance only.E) B) and C)
F) All of the above

Question 16

An illegal contract is valid if the parties to it were unaware of the illegality.

Accepted Answer

A) True 
 B)False

Question 17

Fact Pattern 9-1 
Dave’s Hobby Town and Eva’s Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave’s store if Eva will not tow the cars of Dave’s customers who park in Eva’s lot.

-Refer to Fact Pattern 9-1.Eva's forbearance from towing is legally sufficient consideration

Accepted Answer

A)  because it is a promise of something of value.
B)  only if Dave's customers park in Eva's lot.
C)  only if Eva's customers cannot park in her lot because it is full.
D)  under no circumstances.E) All of the above
F) A) and B)

Question 18

Neil represents himself as a contractor in Ohio,but he is not licensed in that state.A contract between Pam and Neil by which Neil agrees to build a warehouse for Pam in Ohio is

Accepted Answer

A)  enforceable only if Pam does not object after learning of Neil's status.
B)  enforceable only if Pam knows that Neil is unlicensed.
C)  enforceable only if the outcome is successful.
D)  not enforceable.E) All of the above
F) B) and C)

Question 19

A promise to do something that one has a prior legal duty to do is not consideration.

Accepted Answer

A) True 
 B)False

Question 20

Intoxicated but fully aware of the consequences,Uri agrees to a two-year cell-phone service contract with Wander Talk,Inc. ,at more than the average market price.This contract is

Accepted Answer

A)  enforceable.
B)  not enforceable because contracting parties can change their minds.
C)  not enforceable because the contract clearly favors Wander Talk.
D)  not enforceable because Uri was intoxicated when he agreed to it.E) A) and C)
F) A) and B)

Exam 9: Consideration,capacity,and Legality

Correct Answer
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Correct Answer
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If there is a statute that prohibits a certain action,a contract to do it is unenforceable.

Correct Answer
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Elmo,a minor,misrepresents his age to be twenty-one and contracts to buy a car from Fine New Autos.Ordinarily,Elmo can disaffirm the contract

Correct Answer
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Inadequate consideration may indicate undue influence.

Correct Answer
verified

Neil represents himself as a contractor in Ohio,but he is not licensed in that state.A contract between Pam and Neil by which Neil agrees to build a warehouse for Pam in Ohio is

Correct Answer
verified

A release does not require consideration to be legally binding.

Correct Answer
verified

Fay is mentally incompetent but has not been so adjudged by a court.Any contract Fay enters into is

Correct Answer
verified

Webline Retail Sales,Inc. ,promises its salaried employees a bonus at the end of the year if management thinks it is warranted.This promise is

Correct Answer
verified

A usurious contract involves the purchase and sale of usable goods.

Correct Answer
verified

Unforeseen difficulties that justify a demand for additional compensation include risks ordinarily assumed in business.

Correct Answer
verified

Orin enters into a contract with Natalie.Later,Orin is adjudged mentally incompetent and Moseby is appointed Orin's guardian.Lila,Orin's daughter,attempts to void Orin's contract with Natalie on the ground of Orin's incompetency.The contract is

Correct Answer
verified

An adult may avoid any contract with a minor.

Correct Answer
verified

An illegal contract is valid if the parties to it were unaware of the illegality.

Correct Answer
verified

A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian.Later,without Inez's knowledge,Huck signs a contract to sell his farm to Kyle for its real market value.The contract is

Correct Answer
verified

If the purpose of a licensing statute is to protect the public from unlicensed practitioners,a contract with an unlicensed professional is illegal.

Correct Answer
verified

Intoxicated but fully aware of the consequences,Uri agrees to a two-year cell-phone service contract with Wander Talk,Inc. ,at more than the average market price.This contract is

Correct Answer
verified

A promise to do something that one has a prior legal duty to do is not consideration.

Correct Answer
verified

Boyd is a minor.As a minor,Boyd has the capacity to enter into

Correct Answer
verified

Through fraudulent means,Fred induces Gail to sign a contract to build resort cabins on land that Fred does not own.Gail performs,but Fred does not pay.When Gail learns the truth,she may

Correct Answer
verified

Exam 9: Consideration,capacity,and Legality

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If there is a statute that prohibits a certain action,a contract to do it is unenforceable.

Correct AnswerverifiedShow Answer

Elmo,a minor,misrepresents his age to be twenty-one and contracts to buy a car from Fine New Autos.Ordinarily,Elmo can disaffirm the contract

Correct AnswerverifiedShow Answer

Inadequate consideration may indicate undue influence.

Correct AnswerverifiedShow Answer

Neil represents himself as a contractor in Ohio,but he is not licensed in that state.A contract between Pam and Neil by which Neil agrees to build a warehouse for Pam in Ohio is

Correct AnswerverifiedShow Answer

A release does not require consideration to be legally binding.

Correct AnswerverifiedShow Answer

Fay is mentally incompetent but has not been so adjudged by a court.Any contract Fay enters into is

Correct AnswerverifiedShow Answer

Webline Retail Sales,Inc. ,promises its salaried employees a bonus at the end of the year if management thinks it is warranted.This promise is

Correct AnswerverifiedShow Answer

A usurious contract involves the purchase and sale of usable goods.

Correct AnswerverifiedShow Answer

Unforeseen difficulties that justify a demand for additional compensation include risks ordinarily assumed in business.

Correct AnswerverifiedShow Answer

Orin enters into a contract with Natalie.Later,Orin is adjudged mentally incompetent and Moseby is appointed Orin's guardian.Lila,Orin's daughter,attempts to void Orin's contract with Natalie on the ground of Orin's incompetency.The contract is

Correct AnswerverifiedShow Answer

An adult may avoid any contract with a minor.

Correct AnswerverifiedShow Answer

An illegal contract is valid if the parties to it were unaware of the illegality.

Correct AnswerverifiedShow Answer

A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian.Later,without Inez's knowledge,Huck signs a contract to sell his farm to Kyle for its real market value.The contract is

Correct AnswerverifiedShow Answer

If the purpose of a licensing statute is to protect the public from unlicensed practitioners,a contract with an unlicensed professional is illegal.

Correct AnswerverifiedShow Answer

Intoxicated but fully aware of the consequences,Uri agrees to a two-year cell-phone service contract with Wander Talk,Inc. ,at more than the average market price.This contract is

Correct AnswerverifiedShow Answer

A promise to do something that one has a prior legal duty to do is not consideration.

Correct AnswerverifiedShow Answer

Boyd is a minor.As a minor,Boyd has the capacity to enter into

Correct AnswerverifiedShow Answer

Through fraudulent means,Fred induces Gail to sign a contract to build resort cabins on land that Fred does not own.Gail performs,but Fred does not pay.When Gail learns the truth,she may

Correct AnswerverifiedShow Answer

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