Unit 4

Question 1

capacity

Answer 1

the ability to incur legal obligations and acquire legal rights 421

Question 2

Minors _____ capacity, and are often seen in legal terms as ____

Answer 2

lack, infants 421

Question 3

3 main classes of people who lack capacity to contract

Answer 3

• infancy (minors included)
• the intoxicated
• mentally impaired 421

Question 4

disaffirmance

Answer 4

minor or minor’s care giver’s right to cancel a contract 422

Question 5

the right to disaffirm has the the effect of _____ adults from dealing with ______.

Answer 5

discouraging, minors 422

Question 6

The age of majority in 49 states for contracting purposes is ____

Answer 6

18

Question 7

emancipation ____ give a child the right to contract…

Answer 7

does not 424

Question 8

what contracts, made during minority, can not be disaffirmed until the individual has reached majority?

Answer 8

real estate 424

Question 9

ratification

Answer 9

a former minor who elects to be bound by the contract previously made, cannot later disaffirm 424

Question 10

ratification can be expressed….(3 ways)

Answer 10

• orally
• written
• or implied by conduct 425

Question 11

duty to return consideration

Answer 11

-when a minor and a party have exchanged considerations and then the minor disaffirms the contract.
-Under this principle, the party must return to the minor and the minor must return any considerations they received.
425

Question 12

necessaries are…..

Answer 12

items classified as essential for the minors general welfare and continued existence 426

Question 13

disaffirming minors are _____ to pay for items classified as necessaries.

Answer 13

required 426

Question 14

Minors liability for necessary items furnished to them is _________ meaning …….

Answer 14

quasi-contractual, they are liable reasonable value, NOT the entire price listed. 426

Question 15

Are minors responsible for contracts when they lie about their age?

Answer 15

• generally, no, a minor does not attain the capacity to contract because they lied, however,
• states are equally divided on this matter 428

Question 16

the mentally incompetent have the right to _____ the contact, if the court determines them mentally incompetent 430

Answer 16

disaffirm

Question 17

if the party had reason to know of the mental incapacity prior to the contract, then it ____ be disaffirmed, however if the party acted in good faith, then it _____ be disaffirmed except when the party is placed in status quo (position before the contract was instated).

Answer 17

CAN, cannot 430

Question 18

can intoxicated persons disaffirm a contract?

Answer 18

Only if their intoxication was so extreme that did not understand the nature of the contract. 430

Question 19

previously intoxicated persons are ______ allowed to ______ a contract

Answer 19

rarely, disaffirm

Question 20

Contracts are considered to be voidable under these 5 instances

Answer 20

• misrepresentation
• fraud
• mistake
• duress
• undue influence 402

Question 21

If a party wishes to rescind a contract due one of the voidable doctrines they must…..

Answer 21

PROMPTLY, upon learning of the voidability, unequivocally rescind the contract without DELAY 403

Question 22

Misrepresentations can be (2 things)

Answer 22

unintentional or fraudulent 403

Question 23

misrepresentation that is committed knowingly with intent to deceive is known legally as a ______

Answer 23

scienter 403

Question 24

the contract remedy for fraudulent misrepresentations is ______

Answer 24

rescission (restore of the parties to their pre-contractual positions) 403

Question 25

A person seeking to rescind a contract on grounds of misrepresentation must prove 4 elements

Answer 25

1. an untrue assertion of fact was made
2. the fact asserted was material or the assertion was fraudulent
3. the plaintiff entered the contract because of their reliance on the assertion
4. the reliance of the plaintiff was reasonable 404

Question 26

the _______ of the fact through some active conduct intended to prevent the other party from discovering the fact is considered the equivalent of an _______.

Answer 26

concealment, assertion 404

Question 27

nondisclosure can be the equivalent of an ____ ___ ___ ____

Answer 27

assertion of the fact 404

Question 28

nondisclosure differ from concealment how?

Answer 28

nondisclosures is merely the act of NOT volunteering information 404

Question 29

what is the primary example where duty to disclose arises?

Answer 29

sale of real estate 404

Question 30

material (in terms of contracts)

Answer 30

• when the fact is likely to play a significant role in inducing a reasonable person to enter the contract OR
• if the person asserting the fact know the other person is likely to rely on the fact. 407

Question 31

nature of mistake doctrine

Answer 31

if parties enter into a contract under material facts which are incorrect by mistake, the person adversely affected can avoid the contract 409

Question 32

define mistake

Answer 32

a belief about a current fact at the time the contract was created, that is not in accord with the truth 409

Question 33

mutual mistake

Answer 33

when both parties to the contract have erroneous assumptions about the same fact 410

Question 34

requirements for mutual mistake (3 elements)

Answer 34

1. the mistake relates to a basic assumption on which the contract was made
2. the mistake has a material effect on the agreed-upon exchange
3. the party adversely affected by the mistake did not assume the risk of the mistake. 410

Question 35

the party adversely affected by the mistake does not bear the (did not assume) risk of the mistake…what does this 3rd elements of mutual mistakes mean? (2 things)

Answer 35

• party entered into the contract knowing they did not know the true state of affairs
• party expressly contracted to do so (example: contracts for things “as is”) 410

Question 36

Requirements for unilateral mistakes (in addition to elements of mistakes, 1 of 2 must also be proven)

Answer 36

1. the nonmistaken party caused or had reason to know of the mistake
2. it would be unconscionable to enforce the contract 413

Question 37

Contracts voidable when made under duress (2 elements)

Answer 37

1. The contract was induced by an improper threat

2. the victim had no reasonable alternative but to enter into the contract 415

Question 38

Economic to Duress or business composure

Answer 38

Situations in which one person induces the formation or modification of a contract by threatening another person’s economic interests 417

Question 39

Undue Influence Doctrine (contract law) -2 elements

Answer 39

1. the relationship between the parties is either one of trust and confidence or one in which the person exercising the persuasion dominates the person being persuaded
2. the persuasion is unfair 417

Question 40

Consideration

Answer 40

Legal value, bargained for and given in exchange for an act or promise. 382

Question 41

Consideration: If the promissor did not ask for anything of value in exchange, their is ____ enforceable contract.

Answer 41

NO 382

Question 42

Contracts that are not supported by _______ are _____ enforceable

Answer 42

consideration, NOT 382

Question 43

Illusory promises

Answer 43

promises that do not bind the promisee to do or refrain from doing anything and therefor lack consideration. (illusory means; not real) 385

Question 44

a contact clause stating “right to cancel or terminate at any time, for any reason, and without any notice” would be _____ and therefore _____

Answer 44

illusory, unenforceable 386

Question 45

performing or agreeing to perform a preexisting duty is _____ ______

Answer 45

NOT consideration 387

Question 46

Composition agreements

Answer 46

agreements between a debtor and 2 or more creditors who agree to accept as full payment a stated percentage of their liquidated claims against the debtor 392

Question 47

an agreement by a promisee to refrain or forbear, from pursuing a legal claim against a promisor can be a valid _____ to enforce a return ______ by a promisor. This is called _________

Answer 47

consideration, promise, forbearance to sue 392

Question 48

Past consideration is an act or other benefit given in the past that was _____ given in exchange for the promise in question. This therefore is NOT a

Answer 48

NOT, consideration 392

Question 49

promises to pay for past benefits = _____ and are generally NOT _______

Answer 49

past considerations, enforceable 392

Question 50

Promissory Estoppel

Answer 50

promisees significant reliance on a donative promise as a sufficient basis for enforcing the promise against the promissor 394

Question 51

promissory estoppel is not widely used as a _______ substitute.

Answer 51

consideration 394

Question 52

Promises to making gifts for charitable or education purposes are often ______ despite the absence of _______.

Answer 52

enforced, consideration. 398

Question 53

promises to pay charitable organizations are often enforced under ______

Answer 53

promissor estoppel 398

Question 54

one party agrees to supply as much of a good or service as is required by the other party, and in exchange the other party expressly or implicitly promises that it will obtain its goods or services exclusively from the first party:

Answer 54

requirements contract