Question 1

A person who is mentally impaired generally can create only __________ contracts.
A)fraudulent
B)void
C)unconscionable
D)voidable

Accepted Answer

A mentally impaired person can create voidable contracts, which means the contract can be either affirmed or voided by the impaired person. However, if the impairment is severe enough to render the person completely incapable of understanding the nature and consequences of the contract, then the contract may be considered void. It is important to note that a mentally impaired person may still be able to create valid contracts if they have a legal guardian or representative who can act on their behalf.

Question 2

Which of the following is the MOST accurate statement regarding economic duress?
A)It is never grounds for rescission.
B)It is always grounds for rescission.
C)It is a UCC concept only.
D)It may be grounds for rescission.

Accepted Answer

Economic duress is a situation where a party is forced into a contract due to financial pressure or threats of economic harm. It may be grounds for rescission, but this depends on the specific circumstances of the situation. It is not a UCC concept only, and therefore, options A and C are incorrect. Option B is too broad and does not accurately reflect the legal application of economic duress in contract law.

Question 3

If Jane persuades Linda to buy her horse by telling Linda that the horse runs "like the wind," then Jane's statement is
A)fraud.
B)reckless misrepresentation.
C)a unilateral mistake.
D)puffery.

Accepted Answer

Jane's statement can be considered as puffery, which is an exaggeration or subjective statement that cannot be objectively proven false. It is a common advertising technique that does not qualify as a legally binding statement or promise.

Question 4

Deborah purchased a boat from Sun 'N Surf Marine.She later learned that the salesman had made misrepresentations to induce her to make the purchase.Under UCC Section 2-721,Deborah can rescind the contract
A)only if the misrepresentation was fraudulent.
B)and sue for damages if the misrepresentation was fraudulent.
C)but cannot sue for damages even if the misrepresentation was fraudulent.
D)but must forego all other remedies.

Accepted Answer

Under UCC Section 2-721, a buyer can rescind the contract and sue for damages if the seller made misrepresentations that induced the buyer to purchase the goods, regardless of whether the misrepresentation was fraudulent or innocent. Therefore, option B is the best choice. Option A is incorrect because fraudulent misrepresentation is not the only factor that would allow a buyer to rescind the contract. Option C is incorrect because the buyer can sue for damages if the misrepresentation was fraudulent. Option D is incorrect because the buyer would still have other remedies available, such as rescission and damages.

Question 5

Peter,a minor,purchased a car from ACME Motors.Using a fake ID,he misrepresented his age to be 18.The contract is fully executed.Which of the following is correct?
A)Peter cannot disaffirm the contract because a car is a necessary.
B)Peter cannot disaffirm the contract because of his misrepresentation.
C)Peter can disaffirm the contract,because a minor must be saved from his own poor judgment,including his lie.
D)Either b or c may be applicable depending on the law of the jurisdiction in which the contract was formed.

Accepted Answer

The answer could potentially be either B or C, depending on the jurisdiction in which the contract was formed. Some states may allow a minor to disaffirm a contract based on misrepresentation, while others may require the misrepresentation to be material or fraudulent in order for the contract to be voidable. Similarly, some states may require a minor to be able to disaffirm any contract, regardless of whether it involves a necessary or a non-necessary item, while others may only allow disaffirmance of contracts for non-necessary items. Therefore, the best answer would be D, as it acknowledges the potential variability in the law depending on the jurisdiction.

Question 6

An example of the type of relationship required to find undue influence would be
A)a salesperson-purchaser relationship.
B)a bartender-customer relationship.
C)a doctor-patient relationship.
D)a neighbor-neighbor relationship.

Accepted Answer

The doctor-patient relationship involves a power imbalance, with the doctor possessing specialized knowledge and expertise that the patient relies on. This power imbalance can create a situation where the doctor could potentially exert undue influence over the patient's decisions. Therefore, this type of relationship is most closely associated with determining the presence of undue influence.

Question 7

Sasha,who is mentally infirmed,contracts to purchase a piano for $2,500 in 60 monthly installment payments.Six months later she tries to void the contract on grounds of mental impairment.A court will
A)normally void the contract without requiring anything further on Sasha's part.
B)normally void the contract but will require Sasha to return the piano.
C)ordinarily not void the contract unless Sasha had a court-appointed guardian at the time she entered into the contract.
D)not void the contract unless Sasha agrees to have the court appoint a guardian for her.

Accepted Answer

A court will typically allow Sasha to void the contract due to her mental impairment, but it will require her to return the piano to avoid unjust enrichment. This ensures fairness to the seller by returning them to their original position before the contract was made.

Question 8

A(n)_______ contract is illegal from the beginning and may not be enforced by either party;a(n)_______ contract is legal but permits one party to escape,if he or she so wishes.
A)disaffirmed;affirmed
B)void;voidable
C)affirmed;disaffirmed
D)voidable;void

Accepted Answer

A void contract is illegal from the beginning and is not enforceable by law, while a voidable contract is legal but allows one party to escape if they choose to do so. Therefore, option B is the correct choice.

Question 9

Jeff was a subcontractor,bidding on a contract for ACE Corp. ,the general contractor.When adding up the total of materials and labor,Jeff's secretary mistakenly moved the decimal point one place,ending up with a bid of $3,500 rather than $35,000.ACE Corp.accepted Jeff's bid,mostly because all the other bids were over $30,000.When Jeff learns of the mistake,he tells ACE Corp.that he cannot do the job for $3,500.If ACE Corp.sues to enforce this contract,what is the most likely result?
A)The contract is enforceable,since there was an offer,acceptance,and consideration.
B)This is a bilateral mistake,so the contract can be rescinded by either party.
C)This is a unilateral mistake,so the contract cannot be rescinded by Jeff.
D)This is a unilateral mistake,but one where ACE Corp.knew that a mistake had been made.Jeff should be able to rescind the contract.

Accepted Answer

This is a unilateral mistake on Jeff's part, but ACE Corp. knew or should have known that a mistake had been made. In such cases, the mistaken party can rescind the contract. ACE Corp. will likely not be able to enforce the contract and would need to look for another contractor.

Question 10

As it applies to minors,which of the following is LEAST likely to be regarded as a necessary?
A)rent
B)food
C)medical expenses
D)educational expenses

Accepted Answer

Educational expenses are often not considered necessities for minors, as they can vary widely and are not always essential for immediate survival or well-being, unlike rent, food, and medical expenses.

Question 11

Ron,a minor,goes to the hospital for treatment of the flu.On the new-patient form Ron signs,he agrees to pay for any care or treatment he receives.When billed for the treatment,
A)Ron must pay for the value of the benefit he received,because medical care is a necessary.
B)Ron must pay for the benefit he received because the contract is fully executory.
C)Ron must pay for the benefit he received because he ratified the contract.
D)Ron does not have to pay for the benefit he received.

Accepted Answer

Ron signed a contract agreeing to pay for any care or treatment he receives. Medical care is considered a necessary expense, therefore Ron is obligated to pay for the benefit he received.

Question 12

Vince has begun forgetting things and is becoming very difficult to get along with.He is 85,has been ill,and is very fond of his housekeeper Annie.He gives a deed to Annie for all of his real property.At Vince's death,his children,who got only his photograph albums according to the will,ask that the deed be set aside and the land be put back in the estate for purposes of division among all the children.What will be the probable result in this case?
A)Since Vince was 85 he was probably incompetent and the court would rule for the children.
B)Clearly Annie used her position of dominance to persuade Vince to deed her the property,and it will be set aside.
C)Unless the children can prove that Vince was unable to understand what he was doing,or that Annie used her position to improperly influence Vince,Annie can keep the property.
D)Annie will not be able to keep the property since she is not a family member.

Accepted Answer

In order for the children to successfully challenge the deed, they would need to prove that Vince was not competent to understand what he was doing or that Annie used undue influence to persuade him to sign over the property. Age alone does not establish incompetence, and just because Vince was fond of Annie does not necessarily mean that she used undue influence. Therefore, unless the children can successfully prove one of these factors, the deed will likely stand and Annie will be able to keep the property.

Question 13

Which scenario is an example of puffery?
A)Martina purchases a ring from Alison.Both genuinely believe the stone in the ring is an emerald,but Martina later finds out the stone is just cut glass.
B)A salesperson tells Jinxing that the shiny,chrome-covered motorcycle he is looking at is "the hottest ride on the road."
C)Simon threatens to smash the windshield out of Clara's vintage Pontiac GTO unless she agrees to sell it to him.
D)The clerk at the candy store tells Billy the "Jug 'o Jellybeans" contains 1,000 jellybeans.When Billy takes the jug home and counts,he finds that the jug contains only 995 jellybeans.

Accepted Answer

Puffery is an exaggerated statement or claim that is not meant to be taken literally. In this scenario, the salesperson's statement that the motorcycle is "the hottest ride on the road" is an example of puffery. It is an opinion and cannot be proven or disproven.

Question 14

Pamela is planning to sell her home decorating store to her daughter.Pamela has
A)a greater duty to reveal problems in the business because her daughter assumes she will be honest.
B)no duty to disclose hidden defects in the business.
C)a lesser duty to reveal problems in the business because she has a relationship of trust with the buyer.
D)a duty to report only any latent defects she knows about that her daughter should not be expected to discover herself.

Accepted Answer

Pamela has a greater duty to reveal problems in the business to her daughter because there is an assumption of honesty in their relationship. As a parent, Pamela has a fiduciary duty to act in her daughter's best interest and provide her with all relevant information, including any problems or issues with the business. This duty includes disclosing any hidden defects or problems, as well as any other relevant information that could impact the decision to purchase the business.

Question 15

Which of the following is NOT a true statement about fraud?
A)The plaintiff must prove that the defendant has knowledge of the falsity of his or her statement.
B)It is necessary for the plaintiff to show that he or she has suffered some type of detriment or injury because of his or her reasonable reliance on the defendant's false statement.
C)The defendant made the statement with the intent to induce the plaintiff to enter into the contract.
D)The plaintiff must show that although the defendant acted in good faith,the statement was material because the defendant expected the plaintiff to rely on it and enter into the contract.

Accepted Answer

This statement is not true because it contradicts the notion of fraud. Fraud requires that the defendant acted with the intent to deceive the plaintiff, not in good faith. The other options (A, B, and C) are true statements about fraud.

Question 16

Duress occurs when
A)the enforcement of a contract results in unconscionability.
B)an improper threat is made to force another party to enter into a contract.
C)both parties contract based on the same factual error.
D)a party gives notice of refusal to be bound by an agreement.

Accepted Answer

Duress occurs when one party is forced to enter into a contract due to an improper threat made by the other party. This threat may involve physical force, economic pressure, or coercion of some kind. If a contract is entered into under duress, it may be voidable at the option of the coerced party.

Question 17

Mark's home had burned to the ground.When he met with his insurance adjuster,she accused him of burning down the house and said she would have him criminally prosecuted if he didn't settle the claim for much less than the house was worth.Mark agreed to the settlement.If he changes his mind,he can probably rescind the settlement on the basis of
A)fraud.
B)duress.
C)undue influence.
D)mistake.

Accepted Answer

The insurance adjuster's threat of criminal prosecution to force Mark to settle for less constitutes duress, which is a valid ground for rescinding a contract or settlement.

Question 18

Which of the following statements,if made by a seller who knows the statement to be untruthful,would NOT be misrepresentation of material fact resulting in a cause of action for fraud?
A)"This horse is only six years old."
B)"There is no better car in the world."
C)"The tires have less than 5,000 miles on them."
D)"This car gets 28 miles per gallon."

Accepted Answer

This statement is an opinion and not a statement of fact, and therefore cannot be considered a misrepresentation of material fact.

Question 19

In contract law,capacity is best defined as
A)a benefit which must be bargained for between the parties.
B)one person's compliance with the offer made by another.
C)a promise in exchange for performance by another party.
D)the legal ability of a party to enter into a contract.

Accepted Answer

Capacity in contract law refers to the legal ability of a party to enter into a contract. This includes factors such as age, mental capacity, and legal status. For a contract to be legally binding, all parties involved must have the capacity to enter into the agreement.

Question 20

Larson entered Forrester's Auto Mart to purchase a used car.Larson found a vehicle with a sales price of $11,000.After Forrester answered all of Larson's questions,Forrester and Larson agreed to a sale.As Larson was leaving to get the money to pay for the car,Forrester told Larson that he thought Robert Redford formerly owned the car.Larson later learned that Robert Redford had never owned the car.If Larson seeks to rescind the deal based on Forrester's statement,Larson will
A)win because he relied on the misrepresentation.
B)win because there was a misrepresentation of a material fact.
C)lose because he will not be able to prove reliance on the misrepresentation.
D)lose because Forrester made a unilateral mistake.

Accepted Answer

Forrester's statement about the car's previous ownership by Robert Redford is not a material fact essential to the car's value or function, and Larson's decision to purchase likely wasn't based solely on this claim. Rescinding the deal would require proving that the misrepresentation was material and relied upon, which in this context, seems unlikely.

Quiz 15: Voidable Contracts: Capacity and Consent

A person who is mentally impaired generally can create only __________ contracts.

Which of the following is the MOST accurate statement regarding economic duress?

If Jane persuades Linda to buy her horse by telling Linda that the horse runs "like the wind," then Jane's statement is

Deborah purchased a boat from Sun 'N Surf Marine.She later learned that the salesman had made misrepresentations to induce her to make the purchase.Under UCC Section 2-721,Deborah can rescind the contract

Peter,a minor,purchased a car from ACME Motors.Using a fake ID,he misrepresented his age to be 18.The contract is fully executed.Which of the following is correct?

An example of the type of relationship required to find undue influence would be

Sasha,who is mentally infirmed,contracts to purchase a piano for $2,500 in 60 monthly installment payments.Six months later she tries to void the contract on grounds of mental impairment.A court will

A(n) _ contract is illegal from the beginning and may not be enforced by either party;a(n) _ contract is legal but permits one party to escape,if he or she so wishes.

As it applies to minors,which of the following is LEAST likely to be regarded as a necessary?

Ron,a minor,goes to the hospital for treatment of the flu.On the new-patient form Ron signs,he agrees to pay for any care or treatment he receives.When billed for the treatment,

Which scenario is an example of puffery?

Pamela is planning to sell her home decorating store to her daughter.Pamela has

Which of the following is NOT a true statement about fraud?

Duress occurs when

Which of the following statements,if made by a seller who knows the statement to be untruthful,would NOT be misrepresentation of material fact resulting in a cause of action for fraud?

In contract law,capacity is best defined as