Question 1

Alice offers to sell her car to Barry for $500, and Barry accepts. Alice's car has a market value of $1,000 but this fact is unknown to Alice. The contract is enforceable.

Accepted Answer

The contract is enforceable because both parties have agreed on a price and there is no indication of fraud or deception. The fact that Alice did not know the true market value of her car does not make the contract unenforceable.

Question 2

A party injured by fraud generally has the choice of suing for damages or rescinding the contract.

Accepted Answer

This is true. A party who has been defrauded in a contract can sue for damages, which means compensation for the harm that has been done. Alternatively, they can rescind the contract, which means nullifying the agreement and returning each party to their pre-contractual status. This choice is available to the defrauded party as a way of seeking relief for the fraudulent behavior.

Question 3

If a salesperson says, "This is a great car and it's really fun to drive," but the car turns out to be a lemon, the salesperson has committed fraud.

Accepted Answer

The statement made by the salesperson is considered an opinion or puffery, not a factual claim, and therefore does not constitute fraud.

Question 4

A party to a contract has a duty to investigate the other party's factual statements.

Accepted Answer

While a party to a contract does have a duty to disclose certain information and not make false statements, they generally do not have a duty to investigate or verify the other party's statements. It is ultimately up to each party to do their own due diligence and assess the accuracy of the information provided by the other party.

Question 5

The original Statute of Frauds is the English law that began the practice of requiring written evidence of certain kinds of contracts, but now the British government has repealed the writing requirement for most contracts.

Accepted Answer

The statement accurately reflects the history of the Statute of Frauds and the current state of the law in Britain.

Question 6

When Randy, an electrician, accepted a job with Buren Construction, Randy signed the following agreement: "Upon termination of my employment with Buren Construction, I agree never to work for another employer as an electrician." If Randy resigns from Buren Construction, this agreement would be upheld under the theory of freedom of contract.

Accepted Answer

This agreement would likely be considered an unenforceable restraint on trade, and therefore not upheld under the theory of freedom of contract. Such agreements are generally considered against public policy and are not enforceable.

Question 7

Travis had too many beers at the baseball game. Ed realized Travis was so intoxicated he wouldn't know what he was doing, so he got Travis to sign a promise to sell his motorcycle to Ed for $50. When Travis gets sober, he can attempt to void the contract.

Accepted Answer

Travis was too intoxicated to understand the consequences of his actions, so the contract may be voidable.

Question 8

Bry, Inc. and Gangl Co. entered into an oral agreement for the sale of 3,000 sweaters. Both parties performed as required under the contract. Bry delivered the sweaters, and Gangl accepted and paid for them. Since the contract is fully executed, it makes no difference that it was an oral agreement.

Accepted Answer

Once both parties have fully performed under a contract, it is considered executed and it does not matter if it was an oral agreement. However, it is always recommended to have written contracts to avoid any misunderstandings or disputes in the future.

Question 9

Roger, a minor, buys a stereo from Tuneland, Inc. Roger uses the stereo for a few months, returns it to Tuneland, and demands his money back. Roger may rescind the contract, return the stereo and get his money back.

Accepted Answer

As a minor, Roger has the right to rescind the contract and return the item for a refund. This is because minors have the legal right to disaffirm contracts they enter into.

Question 10

In many states it is illegal to lend money to help someone gamble.

Accepted Answer

Many states have laws that prohibit lending money for gambling, as it can contribute to gambling addiction and financial problems for the borrower.

Question 11

In contract law, a minor is someone under the age of 21.

Accepted Answer

In most states, a minor is someone under the age of 18 in contract law. However, there are some states where the age is 19 or 21. It depends on the jurisdiction.

Question 12

If a minor can cancel a contract, it can be done at any time before the minor reaches the age of majority or within a reasonable time after reaching majority age.

Accepted Answer

According to the principle of minority, a minor has the right to cancel a contract at any time before they reach the age of majority or within a reasonable time afterward. This is because minors are considered to lack the legal capacity to enter into binding contracts.

Question 13

Courts will not allow the rescission of a contract due to a unilateral mistake.

Accepted Answer

Courts may allow rescission of a contract due to a unilateral mistake in certain circumstances, such as when the mistake is material, was made despite due care by the mistaken party, and the other party is not substantially prejudiced.

Question 14

Spencer, age 18 and of sound mind, has the legal capacity to contract.

Accepted Answer

In most jurisdictions, individuals who are 18 years of age or older and of sound mind have the legal capacity to enter into contracts.

Question 15

A contract may violate public policy even if the agreement does not violate a statute.

Accepted Answer

Contracts that are against public policy are unenforceable, regardless of whether or not they violate a statute. This is because public policy principles supersede private agreements. Examples of contracts against public policy include contracts to commit a crime, contracts to engage in fraudulent activities, and contracts that waive legal rights or protections.

Question 16

To be valid, an agreement not to compete must be ancillary to a legitimate bargain.

Accepted Answer

An agreement not to compete is only valid if it is connected to a valid and legitimate bargain. This means that the agreement must be a reasonable restriction that is necessary to protect the legitimate business interests of the party seeking the agreement. If the agreement goes beyond what is necessary to protect those interests, it may be deemed unenforceable.

Question 17

Mrs. Elsley was an elderly woman who relied on Nancy to visit her every day and prepare her meals. Nancy convinced Mrs. Elsley that she should give Nancy her house so they could live together and Nancy could better care for her, although Nancy really just wanted the house and had no intention of moving in to take care of Mrs. Elsley. Although Mrs. Elsley agreed, she may rescind the contract because of undue influence.

Accepted Answer

Undue influence occurs when one party uses their position of power or authority to unfairly persuade the other party into entering a contract. In this case, Nancy is using her position as Mrs. Elsley's caregiver to convince her to give her the house, which could be considered undue influence. As a result, Mrs. Elsley may have the legal right to rescind the contract.

Question 18

Barbara, a skilled welder, was hired at Mainco Enterprises for a welding position. She was asked to sign a non-compete clause limiting future employment if she left Mainco. A court would be very likely to enforce the non-compete clause unless the time or geographic restriction is unreasonable.

Accepted Answer

The answer of Barbara, a skilled welder, was hired at...

Question 19

Roger parked his car at a garage that has a large sign at the entrance saying, "This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.

Accepted Answer

An exculpatory clause is a provision in a contract that attempts to release one party from liability in the event of wrongdoing. In this case, the garage is attempting to release itself from liability for items stolen from a car by including the sign, making it an exculpatory clause.

Question 20

Any contract involving a sale of goods of $100 or more must be in writing.

Accepted Answer

The Uniform Commercial Code (UCC) requires a written contract for the sale of goods priced at $500 or more, not $100. This is known as the Statute of Frauds section of the UCC.

Quiz 11: Legality, Consent, and Writing