Question 1

The law has developed two (2)standards concerning contracts of mentally incompetent persons: 1)legal insanity; and 2)quasi-insanity.

Accepted Answer

A) True 
 B)False

Question 2

Insane persons are liable in quasi-contract to pay the reasonable value for the necessaries of life they receive.

Accepted Answer

A) True 
 B)False

Question 3

In order to be considered legally insane for the purposes of avoiding a contract,a person must:

Accepted Answer

A)   be significantly less intelligent than the other party to the contract.
B)   have been legally adjudicated to be insane.
C)   have been insane to the point that the insanity was obvious to the other contracting party.
D)   have been incapable of understanding or comprehending the nature of the transaction at the time it was entered into.
E)   be insane at the time avoidance of the contract is sought.

Question 4

Sid is a 15-year old sophomore at East High School.He purchases a computer at a local store for a computer class,but wants to return it after using it for a couple of weeks because his classmates have nicer computers than his and he wants to get one of the better models.He did not misrepresent his age.Which of the following statements is correct?

Accepted Answer

A)   Sid cannot return the computer because he ratified the contract by using the computer.
B)   Sid cannot return the computer but be liable for only its fair value if the computer is considered to be a necessary.
C)   Sid cannot return the computer because Sid should not have entered a contract as a minor, and because he did, he will be treated as an adult.
D)   Sid can be required to return the computer whether he wants to or not because minors cannot enter into contracts.
E)   Sid cannot return the computer because minors are always responsible for their purchase of computers and computer games.

Question 5

The Raging Waves Rafting Company takes tourists on half-day whitewater rafting trips in the Colorado mountains.All patrons sign an agreement that states in part that,"Raging Waves will not be liable for any injuries whatsoever cause by Raging Waves,whether caused intentionally,by negligence,or in any other manner." During the first hour,the guide negligently allowed the raft to hit a large rock,causing Heather to fall out of the raft and injure her arm when she crashed into this rock.Later on the trip,as Heather was criticizing the guide for the earlier incident,the guide got upset and hit her on the back with a paddle.This injured Heather's back.Assuming that the rafting company is responsible for the actions of its employees,can Heather recover for the injuries to her arm and back?

Accepted Answer

A)   She can recover for neither injury because of the exculpatory clause.
B)   She can recover for the back injury, but not for the injury to her arm.
C)   She can recover for the arm injury, but not for the injury to her back.
D)   She can recover for both injuries because the exculpatory clause is against public policy.
E)   She can recover only if she can show that there had been no prior accidents about which she should have been aware to put her on notice of danger.

Question 6

Kevin overhears his roommate Donovan tell someone that he is planning to go ski-diving next weekend.Despite not really knowing Donavan very well,Kevin purchases a $1M life insurance policy on Donovan's life.Donovan's chute fails to open and he meets his demise.Kevin can collect the $1M.

Accepted Answer

A) True 
 B)False

Question 7

If a court finds that the subject matter of a contract is not legal,the court will undo the contract and place the parties in the status quo.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is correct about contracts entered into by insane persons?

Accepted Answer

A)   Contracts entered into by all insane persons are void.
B)   Contracts entered into by all insane persons are voidable.
C)   Contracts entered into by persons adjudicated insane are void, and those entered into by nonadjudicated insane persons are voidable.
D)   Contracts entered into by persons adjudicated insane are voidable, and those entered into by nonadjudicated insane persons are void.
E)   Contracts entered into by insane persons are void, but only if there is no medication that they could have taken to make them competent.

Question 9

If a court finds that a contract or contract clause is unconscionable,it may refuse to enforce the entire contract.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following exculpatory clauses will most likely be enforceable?

Accepted Answer

A)   an exculpatory clause that relieves a riding stable of negligence
B)   an exculpatory clause that relieves a riding stable from intentional torts
C)   an exculpatory clause that relieves a riding stable from criminal acts
D)   an exculpatory clause that is hidden in an eight-page document that all riders are required to sign
E)   an exculpatory clause that the injured party signs after an accident involving the riding stable's gross negligence

Question 11

The two common situations where a covenant not to compete can be found valid are in connection with:

Accepted Answer

A)   the sale of a business and contracts involving risky activities.
B)   employment contracts and gambling contracts.
C)   contracts for the sale of goods and agreements between competitors in highly competitive industries.
D)   the sale of a business and employment contracts.
E)   employment contracts and contracts involving risky activities.

Question 12

Usury law limits vary from state to state.

Accepted Answer

A) True 
 B)False

Question 13

Courts have held contracts to be contrary to public policy if they have a negative impact on society or interfere with the public's safety and welfare.

Accepted Answer

A) True 
 B)False

Question 14

Most states provide that the minor must put the adult in status quo upon disaffirmance of the contract if the minor's intentional,reckless,or grossly negligent conduct caused the loss of value to the adult's property.This rule is called the minor's duty of ________.

Accepted Answer

A)   restitution
B)   revocation
C)   restoration
D)   reallocation
E)   retribution

Question 15

Most states use the ________ test to determine legal insanity.

Accepted Answer

A)   objective cognitive understanding
B)   subjective cognitive understanding
C)   objective cognitive reasoning
D)   subjective cognitive reasoning
E)   intelligence quotient

Question 16

In all states exculpatory contracts are void as to minors.

Accepted Answer

A) True 
 B)False

Question 17

What constitutes a necessary for a minor will depend on the particular minor's own individual circumstances.

Accepted Answer

A) True 
 B)False

Question 18

A contract of ________ is a preprinted form whose terms the consumer cannot negotiate and must sign in order to obtain a product or service.

Accepted Answer

A)   collusion
B)   dilution
C)   dissolution
D)   adhesion
E)   corroboration

Question 19

In most states,when can a party avoid a contract on the basis of intoxication?

Accepted Answer

A)   when the intoxication was self-induced
B)   when the intoxication was forced by another
C)   when the intoxication occurred unknowingly
D)   when the intoxication was forced by another or occurred unknowingly
E)   when the intoxication was self-induced, forced by another, or occurred unknowingly

Question 20

Under current law a minor generally can disaffirm most contracts without a need to show that he or she was taken advantage of or that the particular contract was unfair.Should the law allow disaffirmance only if the minor can show that there was some kind of unfairness in the specific transaction?

Accepted Answer

By allowing disaffirmance in all situati...

Exam 11: Capacity and Legality

Correct Answer
verified

A contract of ________ is a preprinted form whose terms the consumer cannot negotiate and must sign in order to obtain a product or service.

Correct Answer
verified

Insane persons are liable in quasi-contract to pay the reasonable value for the necessaries of life they receive.

Correct Answer
verified

The two common situations where a covenant not to compete can be found valid are in connection with:

Correct Answer
verified

Usury law limits vary from state to state.

Correct Answer
verified

Correct Answer
verified

Under current law a minor generally can disaffirm most contracts without a need to show that he or she was taken advantage of or that the particular contract was unfair.Should the law allow disaffirmance only if the minor can show that there was some kind of unfairness in the specific transaction?

Correct Answer
verified
By allowing disaffirmance in all situati...
View Answer

If a court finds that the subject matter of a contract is not legal,the court will undo the contract and place the parties in the status quo.

Correct Answer
verified

What constitutes a necessary for a minor will depend on the particular minor's own individual circumstances.

Correct Answer
verified

In all states exculpatory contracts are void as to minors.

Correct Answer
verified

Which of the following exculpatory clauses will most likely be enforceable?

Correct Answer
verified

In most states,when can a party avoid a contract on the basis of intoxication?

Correct Answer
verified

Kevin overhears his roommate Donovan tell someone that he is planning to go ski-diving next weekend.Despite not really knowing Donavan very well,Kevin purchases a $1M life insurance policy on Donovan's life.Donovan's chute fails to open and he meets his demise.Kevin can collect the $1M.

Correct Answer
verified

If a court finds that a contract or contract clause is unconscionable,it may refuse to enforce the entire contract.

Correct Answer
verified

Courts have held contracts to be contrary to public policy if they have a negative impact on society or interfere with the public's safety and welfare.

Correct Answer
verified

Most states use the ________ test to determine legal insanity.

Correct Answer
verified

The law has developed two (2)standards concerning contracts of mentally incompetent persons: 1)legal insanity; and 2)quasi-insanity.

Correct Answer
verified

Which of the following is correct about contracts entered into by insane persons?

Correct Answer
verified

Most states provide that the minor must put the adult in status quo upon disaffirmance of the contract if the minor's intentional,reckless,or grossly negligent conduct caused the loss of value to the adult's property.This rule is called the minor's duty of ________.

Correct Answer
verified

In order to be considered legally insane for the purposes of avoiding a contract,a person must:

Correct Answer
verified

Exam 11: Capacity and Legality

Correct AnswerverifiedShow Answer

A contract of ________ is a preprinted form whose terms the consumer cannot negotiate and must sign in order to obtain a product or service.

Correct AnswerverifiedShow Answer

Insane persons are liable in quasi-contract to pay the reasonable value for the necessaries of life they receive.

Correct AnswerverifiedShow Answer

The two common situations where a covenant not to compete can be found valid are in connection with:

Correct AnswerverifiedShow Answer

Usury law limits vary from state to state.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under current law a minor generally can disaffirm most contracts without a need to show that he or she was taken advantage of or that the particular contract was unfair.Should the law allow disaffirmance only if the minor can show that there was some kind of unfairness in the specific transaction?

Correct AnswerverifiedBy allowing disaffirmance in all situati...View AnswerShow Answer

If a court finds that the subject matter of a contract is not legal,the court will undo the contract and place the parties in the status quo.

Correct AnswerverifiedShow Answer

What constitutes a necessary for a minor will depend on the particular minor's own individual circumstances.

Correct AnswerverifiedShow Answer

In all states exculpatory contracts are void as to minors.

Correct AnswerverifiedShow Answer

Which of the following exculpatory clauses will most likely be enforceable?

Correct AnswerverifiedShow Answer

In most states,when can a party avoid a contract on the basis of intoxication?

Correct AnswerverifiedShow Answer

Kevin overhears his roommate Donovan tell someone that he is planning to go ski-diving next weekend.Despite not really knowing Donavan very well,Kevin purchases a $1M life insurance policy on Donovan's life.Donovan's chute fails to open and he meets his demise.Kevin can collect the $1M.

Correct AnswerverifiedShow Answer

If a court finds that a contract or contract clause is unconscionable,it may refuse to enforce the entire contract.

Correct AnswerverifiedShow Answer

Courts have held contracts to be contrary to public policy if they have a negative impact on society or interfere with the public's safety and welfare.

Correct AnswerverifiedShow Answer

Most states use the ________ test to determine legal insanity.

Correct AnswerverifiedShow Answer

The law has developed two (2)standards concerning contracts of mentally incompetent persons: 1)legal insanity; and 2)quasi-insanity.

Correct AnswerverifiedShow Answer

Which of the following is correct about contracts entered into by insane persons?

Correct AnswerverifiedShow Answer

Most states provide that the minor must put the adult in status quo upon disaffirmance of the contract if the minor's intentional,reckless,or grossly negligent conduct caused the loss of value to the adult's property.This rule is called the minor's duty of ________.

Correct AnswerverifiedShow Answer

In order to be considered legally insane for the purposes of avoiding a contract,a person must:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
By allowing disaffirmance in all situati...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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