Exam 3 (Chapters 13,14,15,16)

Question 1

Capacity

Answer 1

The ability of a person to do a legal act (i.e., enter in a K)

Question 2

What can a minor do?

Answer 2

Disaffirm (cancel) or
Ratify (after 18) affect the benefits and make the contract legal

Question 3

What if a minor lies (fake id)
3 things happen

Answer 3

Allow to disaffirm but require minor to restore status quo
Prevent from raising minority defense and bound by contract
Allow minor to disaffirm but hold them liable for tort of deceit

Question 4

What are necessaries?

Answer 4

Anything essential to minor’s continued existence
Items are not necessaries if parents are willing to supply similar items

Question 5

Incapacity

Answer 5

People who are mentally impaired (insane, brain damage, development disability, drugs/alcohol) lack the capacity to contract

Question 6

Test of incapacity

Answer 6

Did the party have sufficient mental capacity to enter the contract when he/she entered into it. Can enter into a legal contract during a lucid moment.

Question 7

4 behaviors that prevent a party from freely entering into a contract

Answer 7

Misrepresentation
Fraud
Duress
Undue Influence

Question 8

What happens if there is not voluntary consent?

Answer 8

• Contract is voidable
• Inquired party may rescind (cancel) contract and return what they received
• Can be used as defense to breach of contract

Question 9

Mutual Mistake

Answer 9

When the parties to contract are both mistaken about the same material fact within the contract

Question 10

Unilateral Mistake

Answer 10

Only one party to the agreement is acting under a mistaken belief

Question 11

An agreement is illegal if

Answer 11

violates a statue, regulation or common law rule
committing a crime/ tort
affects general rule of public policy