Question 1

A party may have the capacity to enter into a valid contract and the right to avoid liability under it.

Accepted Answer

A) True 
 B)False

Question 2

A contract to do something that is prohibited by statutory law is illegal but not void from the outset.

Accepted Answer

A) True 
 B)False

Question 3

A party to a contract who has no reason to know that the contract is illegal can often obtain restitution on a partially executed contract.

Accepted Answer

A) True 
 B)False

Question 4

Dari, a minor, wants to disaffirm a contract that she entered into with Echo, a cell service company. The law in Dari's state, as in all states, permits minors to disaffirm

Accepted Answer

A)  fully executed contracts only.
B)  executory contracts only.
C)  executory and fully executed contracts.
D)  none of the choices.E) A) and D)
F) A) and C)

Question 5

Contracts entered into by mentally incompetent persons are not valid under any circumstances.

Accepted Answer

A) True 
 B)False

Question 6

Generally, any party to an illegal contract can recover for performance rendered.

Accepted Answer

A) True 
 B)False

Question 7

Goods and services that are reasonably needed to maintain a minor's standard of living, such as food, clothing, shelter, and medical services, are known as utilities .

Accepted Answer

A) True 
 B)False

Question 8

An unconscionable contract is one in which the terms of the agreement are oppressive, unscrupulous, or grossly unfair.

Accepted Answer

A) True 
 B)False

Question 9

Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar, competing store anywhere. This promise is most likely

Accepted Answer

A)  invalid because it is part of a sale of an ongoing business.
B)  invalid because of the unreasonable terms of area and time.
C)  valid because it is part of a sale of an ongoing business.
D)  valid if both parties are justifiably ignorant of the facts.E) A) and B)
F) B) and D)

Question 10

When a covenant not to compete is unreasonable in its essential terms, a court will refuse to reform the covenant.

Accepted Answer

A) True 
 B)False

Question 11

Ada agrees in writing to pay Bob to damage Ada's car, which is fully insured. Bob damages the car, but Ada's insurer refuses to pay for the damage. In Ada and Bob's suit against each other for breach of contract, the court is most likely to

Accepted Answer

A)  enforce the contract.
B)  allow Ada to recover.
C)  allow Bob to recover.
D)  none of the choices.E) A) and B)
F) B) and D)

Question 12

A contract provision that deprives one party of the benefits of the agreement may seem unfair but a court is not likely to consider it unconscionable.

Accepted Answer

A) True 
 B)False

Exam 14: Capacity and Legality

Contracts entered into by mentally incompetent persons are not valid under any circumstances.

Correct Answer
verified

Ada agrees in writing to pay Bob to damage Ada's car, which is fully insured. Bob damages the car, but Ada's insurer refuses to pay for the damage. In Ada and Bob's suit against each other for breach of contract, the court is most likely to

Correct Answer
verified

When a covenant not to compete is unreasonable in its essential terms, a court will refuse to reform the covenant.

Correct Answer
verified

Generally, any party to an illegal contract can recover for performance rendered.

Correct Answer
verified

An unconscionable contract is one in which the terms of the agreement are oppressive, unscrupulous, or grossly unfair.

Correct Answer
verified

Dari, a minor, wants to disaffirm a contract that she entered into with Echo, a cell service company. The law in Dari's state, as in all states, permits minors to disaffirm

Correct Answer
verified

Goods and services that are reasonably needed to maintain a minor's standard of living, such as food, clothing, shelter, and medical services, are known as utilities .

Correct Answer
verified

A contract to do something that is prohibited by statutory law is illegal but not void from the outset.

Correct Answer
verified

A party to a contract who has no reason to know that the contract is illegal can often obtain restitution on a partially executed contract.

Correct Answer
verified

Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar, competing store anywhere. This promise is most likely

Correct Answer
verified

A contract provision that deprives one party of the benefits of the agreement may seem unfair but a court is not likely to consider it unconscionable.

Correct Answer
verified

A party may have the capacity to enter into a valid contract and the right to avoid liability under it.

Correct Answer
verified

Exam 14: Capacity and Legality

Contracts entered into by mentally incompetent persons are not valid under any circumstances.

Correct AnswerverifiedShow Answer

Ada agrees in writing to pay Bob to damage Ada's car, which is fully insured. Bob damages the car, but Ada's insurer refuses to pay for the damage. In Ada and Bob's suit against each other for breach of contract, the court is most likely to

Correct AnswerverifiedShow Answer

When a covenant not to compete is unreasonable in its essential terms, a court will refuse to reform the covenant.

Correct AnswerverifiedShow Answer

Generally, any party to an illegal contract can recover for performance rendered.

Correct AnswerverifiedShow Answer

An unconscionable contract is one in which the terms of the agreement are oppressive, unscrupulous, or grossly unfair.

Correct AnswerverifiedShow Answer

Dari, a minor, wants to disaffirm a contract that she entered into with Echo, a cell service company. The law in Dari's state, as in all states, permits minors to disaffirm

Correct AnswerverifiedShow Answer

Goods and services that are reasonably needed to maintain a minor's standard of living, such as food, clothing, shelter, and medical services, are known as utilities .

Correct AnswerverifiedShow Answer

A contract to do something that is prohibited by statutory law is illegal but not void from the outset.

Correct AnswerverifiedShow Answer

A party to a contract who has no reason to know that the contract is illegal can often obtain restitution on a partially executed contract.

Correct AnswerverifiedShow Answer

Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar, competing store anywhere. This promise is most likely

Correct AnswerverifiedShow Answer

A contract provision that deprives one party of the benefits of the agreement may seem unfair but a court is not likely to consider it unconscionable.

Correct AnswerverifiedShow Answer

A party may have the capacity to enter into a valid contract and the right to avoid liability under it.

Correct AnswerverifiedShow Answer

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