Business Law, 8e: Chapter 12

Chapter 12
Contractual Capacity: The Reality of Consent:

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1. A person who has drunk too much alcohol at a party and signs a contract may be able to rescind that contract.: a. True
b. False

2. A minor who becomes emancipated can affirm a contract and render it enforceable.: a. True
b. False

3. Incompetent persons cannot make contracts that will bind them.: a. True
b. False

4. Generally, when a person of legal age makes a contract with a minor, the contract is voidable by either party.: a. True
b. False

5. The parent of a minor is liable for payment of the purchase price of a contract that the minor has avoided.: a. True
b. False

6. Fraud requires the defendant intended to deceive the plaintiff.: a. True
b. False

7. A claim of undue influence will be successful if the contracting parties have an arm's length relationship.: a. True
b. False

9. A unilateral mistake regarding expectations or the law does not have any effect on a contract.: a. True
b. False

10. Contracts entered into by people who have been adjudged mentally incompetent are voidable.: a. True
b. False

11. Albert, age 18, agreed with this parents that if he got a 3.0 GPA they would buy him a car. In most states:: a. this agreement would be enforceable as there is consideration.
b. this agreement would be enforceable because of promissory estoppel.
c. this agreement would not be enforceable as it lacks consideration.
d. this agreement would not be enforceable as the promises are illusory.

12. Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles. Fraud has occurred if:: a. Jim bought the car solely because of its color.
b. Jim knew that the mileage was more than 12,000 miles.
c. Jim relied upon Jack's statement.
d. Jack's statement occurred after the sale.

13. On her 17th birthday, Patti makes a contract to purchase a computer. In a state in which the age of majority is 18, which of the following actions would be a ratification of the contract?: a. Two months before her 18th birthday, Patti telephones the seller and says, "I intend to keep my promise to you in our contract."
b. Two days after her 18th birthday, Patti telephones the seller and says, "I intend to keep my promise to you in our contract."
c. Before her birthday Patti behaves as though she intends to be bound by the contract, but two days after her 18th birthday, she calls the seller and says, "The deal's off."
d. None of the above are ratification.

14. Todd, a 16-year-old, negligently crashed into Cami's car and caused extensive damage. Which statement is correct?: a. Todd can disaffirm liability for the damage to Cami's car because he is a minor.
b. Todd can disaffirm liability for the damage to Cami's car unless he has car insurance.
c. Todd can disaffirm liability for the damage to Cami's car unless he was intoxicated.
d. Todd cannot disaffirm liability for his negligence.

15. I believe I own a very valuable painting. I tell this to you and state that I will sell it to you for $800. I sell the painting to you, but you later find out that the painting is worth only $200. A fraud:: a. generally has occurred based on mistake of law.
b. generally has occurred based on negligent mistake of value.
c. generally always occurs in this type of situation.
d. generally has not occurred.