Question 1

When courts consider economic duress,they consider all the following factors EXCEPT:

Accepted Answer

When courts consider economic duress, they consider factors such as relative bargaining power, financial distress, and legitimate business actions. The relative size of the contract is not typically considered as a factor in determining economic duress.

Question 2

If a minor can cancel a contract,it can be done at any time during minority or within a reasonable time after reaching majority.

Accepted Answer

This statement is true. Minors have the right to cancel a contract at any time during their minority or within a reasonable time after reaching majority. This is because minors are considered legally incompetent to enter into a binding contract, and so they have the ability to either void or affirm it when they are no longer a minor.

Question 3

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.In a majority of states,Roger may return the stereo and he does not have to pay for the use of the stereo or the damages.

Accepted Answer

This is because minors are generally considered to lack contractual capacity and therefore can disaffirm or cancel the contract, which includes returning the item and receiving a refund. However, the laws vary depending on the state and the circumstances of the case, so it's best to consult a local lawyer for advice.

Question 4

Marty,a 16-year-old,contracted with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle.He agreed to make monthly payments until the purchase price plus interest were paid in full.It is three years later and Marty has not disaffirmed the contract and has made regular payments on the cycle since turning 18.Which of the following is correct?

Accepted Answer

Marty has ratified the contract by continuing to make payments after turning 18 without disaffirming the contract. Therefore, he is now bound by its terms.

Question 5

After her 18th birthday Lora may,by words or action,ratify a contract she made during the previous year.

Accepted Answer

Under the doctrine of ratification, Lora may choose to ratify a contract she made prior to turning 18 after she reaches the age of majority. Ratification can occur either by words (express) or by actions (implied).

Question 6

The age of majority to contract in all states is 21.

Accepted Answer

The age of majority to contract varies by state, but generally it is 18 years old. Some states set the age at 19 or 20.

Question 7

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

Accepted Answer

When a party is injured by fraud, they have the option to either pursue damages for the harm they suffered or to rescind the contract and return to the status quo ante (meaning the parties are restored to their pre-contractual positions). The injured party must choose one option or the other and cannot do both.

Question 8

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

A salesperson expressing their personal opinion about a car does not necessarily constitute fraud, unless they make false statements about the car's condition or features. To be considered fraud, there must be an intent to deceive or manipulate the buyer into making a purchase based on false information. However, if the car turns out to be defective or not as advertised, the buyer may have legal recourse to return or exchange the vehicle.

Question 9

Which of the following is most likely to constitute fraud?

Accepted Answer

Silence as to a toxic waste problem on real property that the buyer would not reasonably find constitutes fraud because it is a deliberate concealment of material information that could affect the buyer's decision to purchase the property. The other choices may be considered deceptive or unethical, but they do not necessarily rise to the level of fraud.

Question 10

Frank suffers from a mental impairment due to a brain injury from a airplane accident.He contracts with Glena to purchase her dining room furniture.A month later,he tries to void the contract.If he is unable to return the furniture,a court will not rescind the agreement unless Frank can show that Glena acted in bad faith.

Accepted Answer

Frank's mental impairment may make the contract voidable, but if he cannot return the furniture, Glena has fulfilled her part of the agreement and a court will not rescind the contract unless Frank can prove that Glena acted in bad faith (such as taking advantage of his mental impairment).

Question 11

All states allow the remedy of rescinding a contract for the sale of goods while still allowing the remedy of suing for damages.

Accepted Answer

According to the Uniform Commercial Code (UCC), which has been adopted by all states, a buyer has the right to revoke or rescind acceptance of goods in certain situations. This means they can undo the contract and return the goods, and still have the option to sue for damages if they suffered any losses. Therefore, all states allow the remedy of rescinding a contract for the sale of goods while still allowing the remedy of suing for damages.

Question 12

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

Accepted Answer

While a party to a contract has a duty to be honest and not make misrepresentations, they do not have a duty to investigate the other party's factual statements. It is generally the responsibility of each party to do their own due diligence and verify the accuracy of any statements made during negotiations.

Question 13

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 may void the contract.

Accepted Answer

Travis was too intoxicated to understand and consent to the terms of the contract, which makes it voidable by him when he becomes sober.

Question 14

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 agreed to the terms and it is not necessary for Alice to know the true market value of her car. As long as there was no fraud or misrepresentation involved, the contract is legally binding.

Question 15

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

Accepted Answer

Spencer is 18 years old and presumed to have the legal capacity to contract. Each state has its own laws regarding the legal age of majority, but in general, anyone who is 18 years old or older is considered an adult and has the legal capacity to enter into contracts.

Question 16

Fraudulent,but not innocent,misrepresentation permits the injured party to rescind a contract.

Accepted Answer

The answer of Fraudulent,but not innocent,misrepresentation permits the injured party...

Question 17

Pushy Pat,a persuasive salesman,talked Nice Nancy into purchasing something she didn't really need or want.Nice Nancy may rescind the contract because of undue influence.

Accepted Answer

The answer of Pushy Pat,a persuasive salesman,talked Nice Nancy into...

Question 18

Angie,a minor,wants to avoid a contract she made with Cumberland Cycles.She may disaffirm the contract by:

Accepted Answer

A minor can disaffirm a contract by any clear indication of intent not to be bound, which can include oral notification, filing a lawsuit, or simply refusing to perform.

Question 19

Contract rescission can sometimes be based upon a unilateral mistake.

Accepted Answer

This means that if one party makes a mistake in the contract that the other party was unaware of, the injured party may be able to rescind or cancel the contract. However, this usually only applies in cases where the mistake is significant and not easily visible or known to the other party.

Question 20

Marty,a 16-year-old,contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle.Marty agrees to make monthly payments until the purchase price plus interest are paid in full.Which of the following is correct?

Accepted Answer

The answer of Marty,a 16-year-old,contracts with Cream-of-the-Crop Cycles to buy...

Quiz 14: Capacity And Consent