Question 1

A legally binding contract that can be terminated at the option of one of the parties is called:
A) an executed contract
B) a formal contract with an escape clause
C) a void contract
D) a parol evidence contract
E) none of the other choices

Accepted Answer

The answer of A legally binding contract that can be...

Question 2

In Hinson v. N&W Construction, where Hinson submitted the low bid to N&W for plumbing work to be part of a larger construction project by N&W, but then refused to do the work when construction was started by N&W, the court held that:
A) Hinson was liable for the value of the contract because N&W relied on his verbal quote of $92,000
B) Hinson was not liable for the value of the contract because N&W should not have relied on his verbal quote
C) a verbal quote cannot be a promise
D) Hinson was not liable because there was not a contract due to lack of proper acceptance by N&W
E) none of the other choices

Accepted Answer

The court held that Hinson was liable because N&W relied on his verbal quote, which constituted a promise that induced reliance, leading to a binding obligation.

Question 3

The party claiming incapacity, or the lack of legal ability to create a contract:
A) does not have the burden of proving it
B) has the burden of proving it
C) must have at least 3 witnesses who can testify on his behalf
D) must claim incapacity before acceptance
E) must claim incapacity before the discovery stage of a trial

Accepted Answer

The party claiming incapacity has the burden of proving it. It is not automatically assumed by the court or other parties in the contract.

Question 4

The party claiming incapacity, or the lack of legal ability to create a contract:
A) does not have the burden of proving it
B) must claim incapacity before the discovery stage of a trial
C) must have at least 3 witnesses who can testify on his behalf
D) must claim incapacity before acceptance
E) none of the other choices are correct

Accepted Answer

The statement that the party claiming incapacity does not have the burden of proving it, must claim incapacity before the discovery stage of a trial, must have at least 3 witnesses who can testify on his behalf, or must claim incapacity before acceptance are all incorrect. In legal contexts, the party claiming incapacity typically has the burden of proving it, and there are no specific rules regarding the timing (before discovery or acceptance) or the number of witnesses required to establish incapacity.

Question 5

A(n) ____ is when one party to the contract has the right to avoid a legal obligation.
A) executed contract
B) formal contract with an escape clause
C) voidable contract
D) real contract
E) parol evidence contract

Accepted Answer

A voidable contract is a contract where one party has the right to avoid the legal obligation, typically due to some form of duress, undue influence, or misrepresentation. This means that the contract is initially valid but can be voided by one of the parties without incurring legal liability. Examples include contracts signed by minors, contracts signed under duress, or contracts based on false information.

Question 6

A contract made by a person with partial capacity is:
A) not enforceable
B) enforceable unless the person with partial capacity exercises the right to disaffirm the contract
C) enforceable in some states, but not others
D) enforceable only if the other party has complete capacity to contract
E) none of the other choices are correct

Accepted Answer

The answer of A contract made by a person with...

Question 7

In Hinson v. N&W Construction, where Hinson submitted the low bid to N&W for plumbing work to be part of a larger construction project by N&W, but then refused to do the work when construction was started by N&W, the court held that Hinson:
A) could not be relied upon by N&W because he was not licensed for such work
B) was not liable because there was no consideration paid by N&W to create a contract
C) was liable to N&W for the value of the contract based on a breach of contract
D) was not liable because there was not a contract due to lack of proper acceptance by N&W
E) none of the other choices

Accepted Answer

The answer of In Hinson v. N&W Construction, where Hinson...

Question 8

Tracy drinks beer at a bar, then goes to a car dealer and orders a new car. Tracy later claims he was drunk and should not have to buy the car. This:
A) is correct⎯people who have been drinking are not responsible for contracts they sign
B) is not correct⎯people who were drunk are responsible for their contracts, the law does not allow this excuse
C) is not correct⎯after drinking a few beers you are responsible for your contracts
D) depends if Tracy could show he was mentally incapacitated after a few beers, in which case he would not be held to the contract
E) none of the other choices

Accepted Answer

The correct answer is D because the enforceability of a contract signed under the influence of alcohol depends on whether the person was mentally incapacitated to the extent that they could not understand the nature and consequences of the transaction. If Tracy can prove he was mentally incapacitated due to alcohol consumption, he might not be held to the contract.

Question 9

____ is the legal ability to create a contract.
A) contractual capacity
B) understanding capacity
C) real capacity
D) final capacity
E) coherent capacity

Accepted Answer

Contractual capacity refers to the ability of a person to enter into a legally binding agreement, which involves being of legal age and possessing mental competence. This capacity is necessary for a contract to be valid and enforceable. The other options are not commonly used legal terms related to contract law.

Question 10

Contracts created by those with partial capacity are:
A) not voidable
B) voidable
C) executory
D) exemplary
E) illegal

Accepted Answer

Contracts created by those with partial capacity are considered voidable. This means that the person with partial capacity has the option to either affirm or void the contract.

Question 11

In Hinson v. N&W Construction, where Hinson submitted the low bid to N&W for plumbing work to be part of a larger construction project by N&W, but then refused to do the work when construction was started by N&W, the court held that Hinson:
A) could not be relied upon by N&W because he was not licensed for such work
B) was not liable because there was no consideration paid by N&W to create a contract
C) was liable for damages based on a theory of promissory estoppel, not breach of contract
D) was not liable because there was not a contract due to lack of proper acceptance by N&W
E) none of the other choices

Accepted Answer

The court held that Hinson was liable for damages based on a theory of promissory estoppel, not breach of contract. This means that even though there was no formal contract between Hinson and N&W, Hinson made a promise to perform the plumbing work and N&W relied on that promise to its detriment. As a result, the court found that Hinson was estopped from denying the existence of a contract and was liable for damages. The other options are incorrect because licensing and consideration are not necessary for a contract to exist, and there was a proper acceptance by N&W of Hinson's bid.

Question 12

A legally binding contract that can be terminated at the option of one of the parties is called:
A) an executed contract
B) a formal contract with an escape clause
C) a voidable contract
D) a void contract
E) a parol evidence contract

Accepted Answer

A voidable contract is one where one or more parties have the option to terminate the contract due to certain circumstances, such as misrepresentation, fraud, undue influence, or being a minor at the time of entering the contract.

Question 13

For Amy's sixteenth birthday her parents give her money so she can make a down payment on a car she wants. She enters into a contract with a car dealer to make payments. This is a:
A) valid contract
B) void contract
C) voidable contract
D) unenforceable contract
E) none of the other choices

Accepted Answer

Since Amy is a minor (under 18 years old), the contract she enters into is considered voidable at her discretion. This means she can choose to either honor the contract or void it due to her age.

Question 14

A(n) ____ is when one party to the contract has the right to avoid a legal obligation.
A) executed contract
B) formal contract with an escape clause
C) parol evidence contract
D) ephemeral contract
E) none of the other choices are correct

Accepted Answer

A situation where one party to the contract has the right to avoid a legal obligation is referred to as a voidable contract, which is not listed among the options provided. Therefore, none of the other choices are correct.

Question 15

Contracts created by those with partial capacity are:
A) not voidable
B) illegal
C) executory
D) exemplary
E) none of the other choices are correct

Accepted Answer

Contracts created by those with partial capacity (such as minors or those with mental impairments) are generally considered voidable, not illegal, executory, or exemplary. This means the contract can be affirmed or rejected by the party with partial capacity.

Question 16

A "contract" that does not exist at law, such as a contract to commit a crime, is what kind of contract?
A) executed
B) voidable
C) executory
D) void
E) unenforceable

Accepted Answer

A contract to commit a crime is void, meaning it has no legal effect, and cannot be enforced by either party.

Question 17

A "contract" that does not exist at law, such as a contract to commit a crime, is what kind of contract?
A) executed
B) voidable
C) executory
D) unenforceable
E) none of the other choices

Accepted Answer

A contract to commit a crime is considered void, not merely unenforceable, voidable, executed, or executory. This means it is treated as if it never existed because it involves illegal activities.

Question 18

____ is the legal ability to create a contract.
A) coherent capacity
B) understanding capacity
C) real capacity
D) final capacity
E) none of the other choices are correct

Accepted Answer

The term "legal ability to create a contract" is typically referred to as "contractual capacity" or "capacity to contract," which is not explicitly listed among the options provided. Therefore, none of the given choices accurately describe this legal concept.

Question 19

Which of the following categories of people have the right to walk away from a contract they made to buy a new house?
A) an insane person
B) a minor
C) a heavily intoxicated person
D) none of these conditions are relevant
E) all of those conditions can be relevant to contractual capacity

Accepted Answer

All of those conditions can be relevant to contractual capacity. Contractual capacity refers to the ability of a person to understand and enter into a contract. If a person is insane, a minor, or heavily intoxicated at the time of entering the contract, they may not have the mental capacity to comprehend the terms of the contract and the consequences of entering into it. Therefore, they may have the right to walk away from the contract.

Question 20

A contract made by a person with partial capacity is:
A) not enforceable
B) enforceable unless the person with partial capacity exercises the right to disaffirm the contract
C) enforceable in some states, but not others
D) enforceable only if the other party has complete capacity to contract with persons of partial capacity
E) not enforceable unless it deals with property worth less than $100 and there is a written agreement

Accepted Answer

A person with partial capacity has some ability to enter into contracts, but may lack capacity on certain aspects of the agreement. For example, a minor may have partial capacity to enter into contracts but lack capacity to enter into a contract that involves selling property. In general, contracts made by persons with partial capacity are enforceable unless the person exercises the right to disaffirm the contract. Disaffirmance must occur within a reasonable time after the person regains full capacity or learns of the contract (depending on the specific circumstances).

Quiz 10: Contracts

A legally binding contract that can be terminated at the option of one of the parties is called:

In Hinson v. N&W Construction, where Hinson submitted the low bid to N&W for plumbing work to be part of a larger construction project by N&W, but then refused to do the work when construction was started by N&W, the court held that:

The party claiming incapacity, or the lack of legal ability to create a contract:

The party claiming incapacity, or the lack of legal ability to create a contract:

A(n) ____ is when one party to the contract has the right to avoid a legal obligation.

A contract made by a person with partial capacity is:

In Hinson v. N&W Construction, where Hinson submitted the low bid to N&W for plumbing work to be part of a larger construction project by N&W, but then refused to do the work when construction was started by N&W, the court held that Hinson:

Tracy drinks beer at a bar, then goes to a car dealer and orders a new car. Tracy later claims he was drunk and should not have to buy the car. This:

____ is the legal ability to create a contract.

Contracts created by those with partial capacity are: