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Exam 16: Capacity and Legality

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Question 21

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Which of the following are contracts that contain multiple parts which can each be performed separately and for which separate consideration is offered?

A) Independent contracts
B) Substantive contracts
C) Adhesion contracts
D) Justifiable contracts
E) Severable contracts

F) B) and D)
G) D) and E)

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Question 22

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All exculpatory clauses are unlawful.

A) True
B) False

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Question 23

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When a contract is overturned because it is deemed to have illegal subject matter or is illegal to perform, it is generally considered voidable.

[Zaltar Zeb] Zeb suffers from delusions that he is from the planet Zaltar. Zeb's contract with DigiTV, his digital television service provider, has expired. After comparing his past payments to the potential savings from satellite television provider SatTV, Zeb decides to sign a two-year contract with SatTV. After six months with SatTV, Zeb realizes he paid less with DigiTV and he now wants to be released from his contract with SatTV. -Under which of the following scenarios might Zeb's contract with SatTV be voidable?

Joey's state has a licensing statute that specifically addresses the requirements for salons. Joey, however, decides not to get a license because it is too expensive. If Margaret enters into a contract with Joey for his salon services, this agreement is ________.

A person who has legal capacity to contract is one who has ________ and, therefore, will presumably be able to understand how to comply with the terms of the agreement.

[Amazing Fabrics] Amazing Fabrics, owned by Peri, has provided top-quality draperies, tablecloths and other linens to many of Chicago's high-end hotels for decades. Peri has an employment contract with his top designer, Calvin, which states that, if Calvin leaves Amazing Fabrics, he is prohibited from working for any competitor and that the clause remains effective even if the business is sold to new owners. Peri decides to sell his business to Lisette and retire. The contract for the sale of the business includes a clause that Peri shall not open a business that competes with Amazing Fabrics anywhere in the Chicago metropolitan area for two years. A year after signing the contract, Peri realizes he is bored in his retirement and opens Fine Fabrics, which provides tablecloths and other linens to Chicago area restaurants and hotels. Peri calls Calvin and persuades him to leave Amazing Fabrics and work for Peri. Many of Lisette's customers prefer to work with Calvin and move their business to Peri's new company. Lisette wants to sue both Peri and Calvin for breach of contract. -Assuming covenants not to compete in employment contracts are legal in their state, would Lisette likely be able to enforce the contract against Calvin?

Parents are always responsible for the torts committed by their minor children in all states except Hawaii and Alaska.

Minors can disaffirm contracts for necessaries, but they will still be held liable for the reasonable value of the necessary.

Dorian contracts with Julie to post on several social media accounts unflattering and false information about Julie's competitor to ruin the competitor's reputation which in theory would send all the customers towards Julie's business. This contract would be:

[Zaltar Zeb] Zeb suffers from delusions that he is from the planet Zaltar. Zeb's contract with DigiTV, his digital television service provider, has expired. After comparing his past payments to the potential savings from satellite television provider SatTV, Zeb decides to sign a two-year contract with SatTV. After six months with SatTV, Zeb realizes he paid less with DigiTV and he now wants to be released from his contract with SatTV. -According to Exhibit 16-4 regarding contracts that violate state or federal statutes, which of the following types of contracts would violate a statute in all states?

Because their contracts are ________, minors have the right, until a reasonable time after reaching the age of majority, to _______ or void their contracts.

A party who claims that he or she could not understand contractual terms because of tiny, hard-to-read print on the back of an agreement and the excessive use of legalese is referring to which of the following?

When a minor gets married, she or he is considered ________ in most cases.

[Motorcycle crash] Cassandra, who would be turning 18 in two weeks, wanted to purchase a motorcycle at Hal's Cycles. Hal explained she could pay monthly installments through a financing agreement, and that he needed an ID to verify she was at least 18 years old. Cassandra, who strongly resembled her older sister Alana, handed Alana's drivers' license to Hal, but Hal did not notice the license had the wrong name. The next day, when cruising in her new motorcycle, Cassandra crashed into Jonah, who was injured in the collision. The next month, Cassandra received a bill for the first installment of the motorcycle. Her parents also received a notice that they were being sued by Jonah because of Cassandra's collision. Realizing her parents would be upset that she purchased a motorcycle, Cassandra went to Hal to return the broken motorcycle and tell him she was a minor and she's not responsible for any payments under the financing agreement. -If, after her eighteenth birthday, Cassandra had paid the monthly payment on the financing agreement, would she still have the right to disaffirm the contract?

[Motorcycle crash] Cassandra, who would be turning 18 in two weeks, wanted to purchase a motorcycle at Hal's Cycles. Hal explained she could pay monthly installments through a financing agreement, and that he needed an ID to verify she was at least 18 years old. Cassandra, who strongly resembled her older sister Alana, handed Alana's drivers' license to Hal, but Hal did not notice the license had the wrong name. The next day, when cruising in her new motorcycle, Cassandra crashed into Jonah, who was injured in the collision. The next month, Cassandra received a bill for the first installment of the motorcycle. Her parents also received a notice that they were being sued by Jonah because of Cassandra's collision. Realizing her parents would be upset that she purchased a motorcycle, Cassandra went to Hal to return the broken motorcycle and tell him she was a minor and she's not responsible for any payments under the financing agreement. -Are Cassandra's parents liable for Jonah's injuries from the motorcycle crash?

[Zaltar Zeb] Zeb suffers from delusions that he is from the planet Zaltar. Zeb's contract with DigiTV, his digital television service provider, has expired. After comparing his past payments to the potential savings from satellite television provider SatTV, Zeb decides to sign a two-year contract with SatTV. After six months with SatTV, Zeb realizes he paid less with DigiTV and he now wants to be released from his contract with SatTV. -Is the SatTV contract legally binding on Zeb?

[Pedicurist license] Briana applied for a job at Nedra's salon as a pedicurist and signed an employment contract with Nedra. The contract contained a provision that stated, "Employee cannot be terminated for poor performance without prior notice and thirty days to improve performance." After Briana worked for Nedra for two months, Nedra noticed Briana did not follow standard public health procedures for pedicures. Nedra called the state licensing agency and found out that Briana's pedicurist license had expired ten years ago. Nedra's state requires that, in order to protect public health, all pedicurists must be licensed by the state in order to perform pedicures at salons within the state. Briana claimed that, according to the explicit terms of the contract, Nedra could not terminate her for poor performance without first giving her notice and thirty days to improve her performance. -Rabbi Dave, who strictly follows Sabbath law, purchased a golf club online on Friday morning. His account was set to the default status, under which payment is made at the time of shipping. Unbeknownst to Dave, shipment is made on Saturday, in violation of Sabbath law. On Monday morning, Dave notices an email that payment was made on Saturday. Dave calls the company, claiming that the agreement is illegal and should be rescinded. Is he correct?

________ is the third element of a legally binding contract.

All 50 states have statutes requiring that people working in certain professions obtain ________ before practicing their craft.