Question 1

[Poker dealer] Roland and Parna sign a contract for Parna to work as a poker dealer for a minimum of one year in Roland's casino. The contract includes a requirement for Roland to pay for a training program for Parna for the software system used throughout the casino. Parna completes the program and obtains a certificate. The week before Parna begins work at Roland's casino, their state passes a law that all poker dealers must be 21 years old. Parna, however, is only nineteen.
-Roland wants to avoid paying for the training program and claims the contract is indivisible and thus unenforceable. Is he correct?

Accepted Answer

A)   Yes, if Roland could show that the main purpose of the contract was for Parna to work as a poker dealer, then declaring parts of the contract as void would substantially alter the contract.
B)   No, because courts are likely to enforce a contract regardless of whether severing the contract would substantially alter it.
C)   No, because even if the legal parts were separated from the contract, the main purpose of the contract (employing Parna as a poker dealer)  can be met after she turns 21.
D)   Yes, because Parna would be unjustifiably enriched if Roland paid for the program.
E)   No, because almost every contract is divisible.F) A) and B)
G) C) and E)

Question 2

When a former minor does not specifically state that he affirms a contract entered into as a minor, but takes some action that is consistent with intent to ratify the contract, which of the following has occurred?

Accepted Answer

A)   Implied ratification
B)   Express ratification
C)   Express novation
D)   Implied novation
E)   Continued safetyF) A) and E)
G) A) and C)

Question 3

________ refers to when both parties are equally responsible for an illegal agreement.

Accepted Answer

A)   In pari delicto
B)   Procedurally unconscionable
C)   An adhesion contract
D)   A res ipsa contract
E)   A stare decisis contractF) B) and E)
G) B) and C)

Question 4

If a contract is disaffirmed due of intoxication, which of the following statements is true?

Accepted Answer

A)   Each party to the contract must return the other to the condition he or she was in at the time the contract was entered into.
B)   The intoxicated person must be returned to the condition he or she was in at the time the contract was entered into, but that is not true for any other party.
C)   Any party other than the intoxicated person must be returned to the condition he or she was in at the time the contract was entered into.
D)   So long as the contract was objectively fair, neither party must be returned to the condition he or she was in prior to the time the contract was entered into.
E)   So long as the contract was subjectively fair in the opinion of the intoxicated party, neither party must be returned to the condition he or she was in prior to the time the contract was entered into.F) A) and B)
G) All of the above

Question 5

In Buckeye Check Cashing, Inc. v. Cardegna et al., the case was heard in front of the U.S. Supreme Court to determine whether the court or the arbitrator should decide the issues of a case when illegality in relation to a contract is claimed. What was the ruling?

Accepted Answer

A)   An arbitrator should address charges of illegality involving either an arbitration provision or the contract as a whole.
B)   When an arbitration provision in a contract is not specifically challenged, an arbitrator should address a charge of illegality to the contract as a whole.
C)   When an arbitration provision in a contract is not specifically challenged, a court should address a charge of illegality to the contract as a whole.
D)   The court should address charges of illegality involving either an arbitration provision or the contract as a whole.
E)   Whether a court or an arbitrator should address charges of illegality involving either an arbitration provision or the contract as a whole depends upon the first to file rule.F) All of the above
G) D) and E)

Question 6

Which of the following is true once a guardian has been appointed for a person who has been adjudicated insane?

Accepted Answer

A)   If a person has been adjudicated insane and has a guardian appointed, that person has no capacity to enter into contracts and any contract he does attempt to enter into is void.
B)   If a person has been adjudicated insane and has a guardian appointed, that person has no capacity to enter into contracts and any contract he does attempt to enter into is voidable.
C)   If a person has been adjudicated insane and has a guardian appointed, that person retains capacity to enter into contracts so long as the other party to the contract is aware of the guardian's status.
D)   If a person has been adjudicated insane and has a guardian appointed, that person retains capacity to enter into contracts so long as the other party to the contract is aware of the insanity issue.
E)   If a person has been adjudicated insane and has a guardian appointed, that person retains capacity to enter into contracts so long as the other party to the contract is aware of the guardian's status and also the insanity issue.F) A) and E)
G) None of the above

Question 7

Food, clothing, shelter, and basic medical services are considered necessaries when discussing contracts with minors.

Accepted Answer

A) True 
 B)False

Question 8

[Poker dealer] Roland and Parna sign a contract for Parna to work as a poker dealer for a minimum of one year in Roland's casino. The contract includes a requirement for Roland to pay for a training program for Parna for the software system used throughout the casino. Parna completes the program and obtains a certificate. The week before Parna begins work at Roland's casino, their state passes a law that all poker dealers must be 21 years old. Parna, however, is only nineteen.
-Is Roland required to pay for the training program?

Accepted Answer

A)   Yes, the training program was legal and the legal part of the contract can be severed from the illegal part.
B)   No, although the training program was legal, the contract contains an illegal subject and is void.
C)   Yes, only Parna has the right to void the contract.
D)   Although the contract was legal when formed, its subject later became illegal under a new statute, thus both parties are discharged from their obligations under the contract.
E)   Although the contract was legal when formed, its subject later became illegal under a new statute, thus it is voidable by either party.F) A) and C)
G) D) and E)

Question 9

[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.
-If Briana subsequently obtains a valid license, would her agreement with Nedra be enforceable?

Accepted Answer

A)   Yes, but only if she pays the licensing fee.
B)   Yes, but only if Nedra did not deem the contract voidable.
C)   Yes, because the contract can be severed.
D)   No, because the agreement was illegal and is void.
E)   No, because employment contracts cannot be severed.F) A) and C)
G) A) and E)

Question 10

________ occurs when a minor's parents or legal guardians give up their right to exercise legal control over the minor.

Accepted Answer

A)   Legal consequence
B)   Affirmance
C)   Legal release
D)   Emancipation
E)   ReaffirmanceF) All of the above
G) C) and E)

Question 11

What is the maximum interest rate in the United States?

Accepted Answer

A)   20%
B)   15%
C)   12%
D)   10%
E)   It varies depending on the state involved.F) A) and B)
G) A) and C)

Question 12

Which of the following is true regarding the ability of persons suffering from a mental illness to enter into a binding contract?

Accepted Answer

A)   Persons suffering from a mental illness have no capacity to enter into a binding contract.
B)   Persons suffering from a mental illness have full capacity to enter into a binding contract so long as they do not present a danger to themselves or others.
C)   Persons suffering from a mental illness have full capacity to enter into a binding contract so long as they inform the other party that they are in treatment.
D)   Persons suffering from a mental illness may have full, limited, or no legal capacity to enter into a binding contract depending on the nature and extent of their mental deficiency.
E)   Persons who suffer from a mental illness always have full capacity to enter into a binding contract.F) A) and B)
G) A) and D)

Question 13

In the Case Opener, Apple customers tried to disaffirm purchases of game currency by their children. What was the result?

Accepted Answer

A)   The court dismissed the lawsuit on the basis that the parents were bound by the Terms of Service and notifications of their original contracts with Apple binding them to future purchases of game currency when their passwords were used.
B)   The court dismissed the lawsuit on the basis that the parents were bound by the Terms of Service and notifications of their original contracts with Apple binding them to future purchases of game currency regardless of whether passwords were used.
C)   The court dismissed the lawsuit on the basis that no contractual agreement was needed in order for the parents to be bound in regard to purchases of game currency so long as their passwords were used.
D)   The court refused to dismiss the lawsuit because no case law was provided to prove that Apple's Terms of Service served as a contract for all subsequent transactions.
E)   The court refused to dismiss the lawsuit because as a matter of law parents cannot be required to contractually agree to their children's future purchases that are unapproved by the parents.F) A) and B)
G) B) and D)

Question 14

[Beauty Shop Woes] When Giuseppe hired Ines to work in his beauty shop as a hair stylist, she entered into an agreement with Giuseppe whereby if she left his employment she would not work for another beauty shop within 50 miles for 2 years. Giuseppe trained Ines in a number of new techniques. After nine months, Ines was offered a great job down the street at a new beauty shop. She quit Giuseppe's shop and a number of customers followed her down the street to her new job. Giuseppe claimed that she had signed a contract and had no right to go to work at the new shop. Ines disagreed and told Giuseppe that no judge in the country would enforce such an agreement. Ines then told Giuseppe that she was more worried about a customer who was threatening to sue her because her hair turned green after Ines worked on it. Ines said that she knew that the customer's hair was damaged; but that she told the customer that odd results could result from a dye attempt and had the customer sign a contract that released Ines from all liability and that she would not sue. The customer, however, sued anyway.
-Is Ines correct in claiming that no judge in the country would enforce such an agreement?

Accepted Answer

A)   She is correct because such agreements are considered in restraint of trade in every state.
B)   She is incorrect because such agreements are criminally illegal in every state.
C)   She is incorrect because while no court would approve a geographical restriction, some courts recognize time restrictions as being valid.
D)   She is incorrect because all courts approve such agreements so long as it can be shown the employee gained a benefit other than pay from the employment.
E)   She is incorrect because courts across the country vary in regards to the enforceability of such agreements.F) D) and E)
G) C) and E)

Question 15

If a minor enters into a contract with an adult, both parties may disaffirm the contract based upon the minor's lack of majority.

Accepted Answer

A) True 
 B)False

Question 16

The age of majority regarding the right to contract in Great Britain is:

Accepted Answer

A)   16
B)   18
C)   21
D)   25
E)   There is not a set age of majorityF) A) and E)
G) B) and D)

Question 17

In Great Britain, a legally binding contract cannot be entered into by a young person until the age of 21.

Accepted Answer

A) True 
 B)False

Question 18

Gordon is 17 years old. He enters into a contract with Constance for a new stereo system. When Gordon turns 18, he moves away to college, taking the stereo system with him. This is a form of:

Accepted Answer

A)   express disaffirmance.
B)   implied disaffirmance.
C)   a contract for necessities.
D)   implied ratification.
E)   express ratification.F) All of the above
G) C) and D)

Question 19

Since public policy does not favor intoxication, the courts tend to be unsympathetic to intoxicated parties and will ________.

Accepted Answer

A)   void all contracts due to incapacity.
B)   fairly liberally interpret behavior that seems like ratification.
C)   judge the contract on reasonable person standards in interpreting the contract.
D)   disaffirm the portions the court believes are one-sided.
E)   invalidate the entire contract.F) A) and E)
G) C) and E)

Question 20

The harsh and lopsided terms of Antoine's contract could be claimed as which of the following?

Accepted Answer

A)   Substantive unconscionability
B)   Unclear drafting
C)   Procedural unconscionability
D)   Outrageous wording
E)   Adhesion conscionabilityF) A) and C)
G) A) and D)

Exam 16: Capacity and Legality

Correct Answer
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Which of the following is true regarding the ability of persons suffering from a mental illness to enter into a binding contract?

Correct Answer
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Correct Answer
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If a contract is disaffirmed due of intoxication, which of the following statements is true?

Correct Answer
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________ refers to when both parties are equally responsible for an illegal agreement.

Correct Answer
verified

Which of the following is true once a guardian has been appointed for a person who has been adjudicated insane?

Correct Answer
verified

In the Case Opener, Apple customers tried to disaffirm purchases of game currency by their children. What was the result?

Correct Answer
verified

What is the maximum interest rate in the United States?

Correct Answer
verified

If a minor enters into a contract with an adult, both parties may disaffirm the contract based upon the minor's lack of majority.

Correct Answer
verified

The harsh and lopsided terms of Antoine's contract could be claimed as which of the following?

Correct Answer
verified

Food, clothing, shelter, and basic medical services are considered necessaries when discussing contracts with minors.

Correct Answer
verified

Since public policy does not favor intoxication, the courts tend to be unsympathetic to intoxicated parties and will ________.

Correct Answer
verified

When a former minor does not specifically state that he affirms a contract entered into as a minor, but takes some action that is consistent with intent to ratify the contract, which of the following has occurred?

Correct Answer
verified

The age of majority regarding the right to contract in Great Britain is:

Correct Answer
verified

In Great Britain, a legally binding contract cannot be entered into by a young person until the age of 21.

Correct Answer
verified

Gordon is 17 years old. He enters into a contract with Constance for a new stereo system. When Gordon turns 18, he moves away to college, taking the stereo system with him. This is a form of:

Correct Answer
verified

In Buckeye Check Cashing, Inc. v. Cardegna et al., the case was heard in front of the U.S. Supreme Court to determine whether the court or the arbitrator should decide the issues of a case when illegality in relation to a contract is claimed. What was the ruling?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

________ occurs when a minor's parents or legal guardians give up their right to exercise legal control over the minor.

Correct Answer
verified

Exam 16: Capacity and Legality

Correct AnswerverifiedShow Answer

Which of the following is true regarding the ability of persons suffering from a mental illness to enter into a binding contract?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a contract is disaffirmed due of intoxication, which of the following statements is true?

Correct AnswerverifiedShow Answer

________ refers to when both parties are equally responsible for an illegal agreement.

Correct AnswerverifiedShow Answer

Which of the following is true once a guardian has been appointed for a person who has been adjudicated insane?

Correct AnswerverifiedShow Answer

In the Case Opener, Apple customers tried to disaffirm purchases of game currency by their children. What was the result?

Correct AnswerverifiedShow Answer

What is the maximum interest rate in the United States?

Correct AnswerverifiedShow Answer

If a minor enters into a contract with an adult, both parties may disaffirm the contract based upon the minor's lack of majority.

Correct AnswerverifiedShow Answer

The harsh and lopsided terms of Antoine's contract could be claimed as which of the following?

Correct AnswerverifiedShow Answer

Food, clothing, shelter, and basic medical services are considered necessaries when discussing contracts with minors.

Correct AnswerverifiedShow Answer

Since public policy does not favor intoxication, the courts tend to be unsympathetic to intoxicated parties and will ________.

Correct AnswerverifiedShow Answer

When a former minor does not specifically state that he affirms a contract entered into as a minor, but takes some action that is consistent with intent to ratify the contract, which of the following has occurred?

Correct AnswerverifiedShow Answer

The age of majority regarding the right to contract in Great Britain is:

Correct AnswerverifiedShow Answer

In Great Britain, a legally binding contract cannot be entered into by a young person until the age of 21.

Correct AnswerverifiedShow Answer

Gordon is 17 years old. He enters into a contract with Constance for a new stereo system. When Gordon turns 18, he moves away to college, taking the stereo system with him. This is a form of:

Correct AnswerverifiedShow Answer

In Buckeye Check Cashing, Inc. v. Cardegna et al., the case was heard in front of the U.S. Supreme Court to determine whether the court or the arbitrator should decide the issues of a case when illegality in relation to a contract is claimed. What was the ruling?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

________ occurs when a minor's parents or legal guardians give up their right to exercise legal control over the minor.

Correct AnswerverifiedShow Answer

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