Capacity and Consent

Question 1

True/False: Spencer, an adult of sound mind, has the legal capacity to contract.

Answer 1

True

Question 2

True/False: Travis had too many beers at the baseball game. Ed realized Travis was so intoxicated he wouldn’t know what he was doing, so he got Travis to sign a promise to sell his motorcycle to Ed for $50. When Travis gets sober, he may void the contract.

Answer 2

True

Question 3

True/False: Vernon suffers from a mental impairment due to a brain injury from a motorcycle accident. He contracts with Glena to purchase her dining room furniture. A month later, he tries to void the contract. If he is unable to return the furniture, a court will not rescind the agreement unless Vernon can show that Glena acted in bad faith.

Answer 3

True

Question 4

True/False: A offers to sell her car to B for $500, and B accepts. A’s car has a market value of $1,000 but this fact is unknown to A. The contract is unenforceable.

Answer 4

False

Question 5

True/False: The age of majority to contract in all states is 21.

Answer 5

False

Question 6

True/False: If a minor can cancel a contract, it can be done at any time during minority or within a reasonable time after reaching majority.

Answer 6

True

Question 7

True/False: Roger, a minor, buys a stereo from Tuneland, Inc. Roger uses the stereo for a few months, returns it to Tuneland, and demands his money back. In a majority of states, Roger may return the stereo and he does not have to pay for the use of the stereo or the damages.

Answer 7

True

Question 8

True/False: If a salesperson says, “This is a great car,” but the car turns out to be a lemon, the salesperson has committed fraud.

Answer 8

False

Question 9

True/False: After her 18th birthday Lora may, by words or action, ratify a contract she made during the previous year.

Answer 9

True

Question 10

True/False: Pushy Pat, a persuasive salesman, talked Naive Nancy into purchasing something she didn’t really need or want. Naive Nancy may rescind the contract because of undue influence.

Answer 10

False

Question 11

True/False: A party injured by fraud generally has the choice of suing for damages or rescinding the contract.

Answer 11

True

Question 12

True/False: A party to a contract has a duty to investigate the other party’s factual statements.

Answer 12

False

Question 13

True/False: Fraudulent, but not innocent, misrepresentation permits the injured party to rescind a contract.

Answer 13

False

Question 14

True/False: All states allow the remedy of rescinding a contract for the sale of goods while still allowing the remedy of suing for damages.

Answer 14

True

Question 15

True/False: Contract rescission can sometimes be based upon a unilateral mistake.

Answer 15

True

Question 16

Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. Marty agrees to make monthly payments until the purchase price plus interest are paid in full. Which of the following is correct?

Answer 16

THE CONTRACT IS VOIDABLE BY MARTY

Question 17

Marty, a 16-year-old, contracted with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. He agreed to make monthly payments until the purchase price plus interest were paid in full. It is two years later and Marty has not disaffirmed the contract and has made payments on the cycle since turning 18. Which of the following is correct?

Answer 17

MARTY HAS RATIFIED THE CONTRACT AND IS NOW BOUND BY ITS TERMS

Question 18

When courts consider economic duress, they consider all the following factors EXCEPT:

Answer 18

RELATIVE SIZE OF THE CONTRACT

Question 19

Which of the following is most likely to constitute fraud?

Answer 19

SILENCE AS TO A TOXIC WASTE PROBLEM ON REAL PROPERTY THAT THE BUYER WOULD NOT REASONABLY FIND

Question 20

Angie, a minor, wants to avoid a contract she made with Cumberland Cycles. She may disaffirm the contract by:

Answer 20

ALL OF THE ANSWERS ARE CORRECT

Question 21

Deborah purchased a boat from Sun ‘N Surf Marine. She later learned that the salesman had made misrepresentations to induce her to make the purchase. Under UCC Section 2-721, Deborah can rescind the contract:

Answer 21

AND SUE FOR DAMAGES WHETHER THE MISREPRESENTATION WAS FRAUDULENT OR INNOCENT

Question 22

Marty’s home had burned to the ground. When he met with his insurance adjuster, she accused him of burning down the house, and said she would have him criminally prosecuted if he didn’t settle the claim for much less than the house was worth. Marty agreed to the settlement. If he changed his mind, he can probably rescind the settlement on the basis of:

Answer 22

DURESS

Question 23

Larson entered Forrester’s Auto Mart to purchase a used car. Larson found a vehicle with a sales price of $11,000. After Forrester answered all of Larson’s questions, Forrester and Larson agreed to a sale. As Larson was leaving to get the money to pay for the car, Forrester told Larson that Robert Redford formerly owned the car. Larson later learned that Robert Redford had never owned the car. If Larson seeks to rescind the deal based on Forrester’s statement, Larson will:

Answer 23

LOSE B/C HE WILL NOT BE ABLE TO PROVE RELIANCE ON THE MISREPRESENTATION

Question 24

When a party to a contract makes a unilateral mistake, the contract:

Answer 24

GENERALLY CANNOT BE RESCINDED BY THE MISTAKEN PARTY UNLESS THE CONTRACT IS UNCONSCIONABLE

Question 25

Ryan, a minor, contracted to sell his auto to Ed, a 28-year-old. Ryan later refused to complete the sale. If Ed sues to enforce the contract, Ed will:

Answer 25

LOSE, B/C THE CONTRACT IS VOIDABLE BY RYAN

Question 26

Ron, a minor, goes to the hospital for treatment of the flu. On the new-patient form Ron signs, he agrees to pay for any care or treatment he receives. When billed for the treatment:

Answer 26

RON MUST PAY FOR THE VALUE OF THE BENEFIT HE RECEIVED, B/C MEDICAL CARE IS A NECESSARY

Question 27

Mentally infirm Sasha contracts to purchase a piano for $2,500 in 60 monthly installment payments. Six months later she tries to void the contract on grounds of mental impairment. A court will:

Answer 27

NORMALLY VOID THE CONTRACT BUT WILL REQUIRE SASHA TO RETURN THE PIANO

Question 28

Generally, a seller has no duty to disclose facts. However, there is a duty to disclose information or facts if the disclosure is necessary to:

Answer 28

ALL OF THE ABOVE ARE TRUE

Question 29

Pamela is planning to sell her home decorating store to her daughter. Pamela

Answer 29

A GREATER DUTY TO REVEAL PROBLEMS IN THE BUSINESS B/C HER DAUGHTER ASSUMES SHE WILL BE HONEST

Question 30

If Jane persuades Linda to buy her horse by telling Linda that the horse runs “like the wind,” then Jane’s statement is:

Answer 30

PUFFERY

Question 31

In the case of Sepulveda v. Aviles, the New York Supreme Court, Appellate Division, found evidence of undue influence in:

Answer 31

AVILES’S USE OF SEALS’ FUNDS AND CREDIT CARDS

Question 32

When a business is concerned about selling to minors because of their right to disaffirm contracts, the business might protect itself by:

Answer 32

REQUIRING AN ADULT CO-SIGNER

Question 33

Which of the following is least likely to be regarded as a necessary?

Answer 33

EDUCATIONAL EXPENSES

Question 34

The most accurate statement regarding economic duress is:

Answer 34

IT MAY BE GROUNDS FOR RESCISSION

Question 35

Which of the following statements, if made by a seller who knows the statement to be untruthful, would not be misrepresentation of material fact resulting in a cause of action for fraud?

Answer 35

‘THERE IS NO BETTER CAR IN THE WORLD’

Question 36

Vince has begun forgetting things and is becoming very difficult to get along with. He is 85, has been ill, and is very fond of his housekeeper Annie. He gives a deed to Annie for all of his real property. At Vince’s death, his children, who got only his photograph albums according to the will, ask that the deed be set aside and the land be put back in the estate for purposes of division among all the children. The probable result will be:

Answer 36

UNLESS THE CHILDREN CAN PROVE THAT VINCE WAS UNABLE TO UNDERSTAND WHAT HE WAS DOING, OR THAT ANNIE USED HER POSITION TO IMPROPERLY INFLUENCE VINCE, ANNIE CAN KEEP THE PROPERTY

Question 37

Jeff was a subcontractor, bidding on a contract for ACE Corp., the general contractor. When adding up the total of materials and labor, Jeff’s secretary mistakenly moved the decimal point one place, ending up with a bid of $3500 rather than $35,000. ACE Corp. accepted Jeff’s bid, mostly because all the other bids were over $30,000. When Jeff learned of the mistake, he tells ACE Corp. that he cannot do the job for $3500. If ACE Corp. sues to enforce this contract, what is the most likely result?

Answer 37

THIS IS A UNILATERAL MISTAKE, BUT ONE WHERE ACE CORP. KNEW THAT A MISTAKE HAD BEEN MADE. JEFF SHOULD BE ABLE TO RESCIND THE CONTRACT

Question 38

Peter, a minor, purchased a car from ACME Motors. Using a fake ID, he misrepresented his age to be 18. The contract is fully executed. Which of the following is correct?

Answer 38

EITHER B OR C MAY BE APPLICABLE DEPENDING ON THE LAW OF THE JURISDICTION IN WHICH THE CONTRACT WAS FORMED

Question 39

An example of the type of relationship required to find undue influence would be:

Answer 39

A DOCTOR-PATIENT RELATIONSHIP

Question 40

Which of the following is NOT a true statement about fraud?

Answer 40

THE PLAINTIFF MUST SHOW THAT ALTHOUGH THE DEFENDANT ACTED IN GOOD FAITH, THE STATEMENT WAS MATERIAL B/C THE DEFENDANT EXPECTED THE PLAINTIFF TO RELY ON IT AND ENTER INTO THE CONTRACT