Question 1

Alejandro was new in town and was considering buying Helen's house.Helen knew the basement flooded when it rained heavily,but she did not tell Alejandro this and he did not think to ask.Alejandro bought the house,but after the first heavy rainstorm he attempted to rescind the contract because Helen had not explicitly pointed out the problem with the basement.What will the likely outcome be?
A)Alejandro will definitely be successful because Helen had a duty to report this major defect about the house.
B)Alejandro will probably be successful because there was a relationship of trust between himself and Helen.
C)Alejandro will definitely succeed because he bought the house under duress.
D)Alejandro will probably not be successful;this is something he could have reasonably been expected to notice himself.

Accepted Answer

DAlejandro will likely be successful in rescinding the contract because Helen had a duty to disclose major defects about the house, such as the basement flooding. This is a material fact that could significantly affect the property's value or desirability. The principle of caveat emptor (let the buyer beware) does not apply in cases where the seller actively conceals known defects or fails to disclose them when they materially affect the property's value.

Question 2

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

Accepted Answer

According to the law, a person who is 18 or older and of sound mind has the legal capacity to enter into contracts.

Question 3

Fraudulent but innocent misrepresentation permits the injured party to rescind a contract.

Accepted Answer

In cases of fraudulent but innocent misrepresentation, the injured party can rescind the contract because the misrepresentation was made innocently, but still amounted to fraud.

Question 4

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 give his consent to the contract, so it would be considered voidable. When he becomes sober, he can choose to void the contract if he wishes to do so.

Question 5

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

A court will not rescind a contract entered into by a person with a mental impairment unless the other party acted in bad faith.

Question 6

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

Accepted Answer

In most states, once a person reaches the age of majority (18 in most states), they have the legal capacity to enter into contracts. However, if a person entered into a contract while they were a minor, they may have the option to ratify the contract after reaching the age of majority. This means that they can legally agree to be bound by the terms of the contract going forward.

Question 7

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

Accepted Answer

This is true. When one party commits fraud in a contract, the other party can either sue for damages or rescind (cancel) the contract. The injured party must choose one of these options and cannot do both.

Question 8

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?
A)The contract is void and Marty has no obligation.
B)The contract is now voidable by Cream-of-the-Crop Cycles.
C)Marty has ratified the contract and is now bound by its terms.
D)Marty has ratified the contract but can still get a return of the payments made while he was a minor.

Accepted Answer

Marty has ratified the contract by continuing to make regular payments on the motorcycle after reaching the age of majority. He is now bound by its terms. Option A is incorrect because a contract is not automatically void because one of the parties is a minor. Option B is incorrect because Cream-of-the-Crop Cycles would only be able to void the contract if Marty had not ratified it. Option D is incorrect because once Marty has ratified the contract, he cannot get a return of payments made while he was a minor.

Question 9

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 if certain conditions are met, such as the mistake being material, the other party not being prejudiced, and rescission being sought promptly.

Question 10

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 power or authority to take advantage of another party who is in a vulnerable or weaker position. In this case, Nancy convinced Mrs.Elsley to give her the house by taking advantage of the elderly woman's reliance on her for daily care. As a result, Mrs.Elsley may rescind the contract due to undue influence.

Question 11

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 is paid in full.Which of the following is correct?
A)The contract is voidable by Marty.
B)The contract is void as soon as it is made.
C)The contract is voidable by Cream-of-the-Crop Cycles.
D)The contract is voidable by either Marty or Cream-of-the-Crop Cycles.

Accepted Answer

Contracts entered into by minors are generally voidable at the option of the minor. This means Marty, being 16, can choose to void the contract. Cream-of-the-Crop Cycles, on the other hand, is bound by the contract unless Marty decides to void it.

Question 12

Alejandro was new in town and was considering buying Helen's house.The paint was peeling off the exterior and most of the windows were broken,but Helen did not make a point of mentioning these defects.Alejandro bought the house,but the following month he attempted to rescind the contract because Helen had not explicitly pointed out these cosmetic problems.What will the likely outcome be?
A)Alejandro will definitely be successful because Helen had a duty to report any defects about the house.
B)Alejandro will probably be successful because there was a relationship of trust between himself and Helen.
C)Alejandro will definitely succeed because he bought the house under duress.
D)Alejandro will probably not be successful;this is something he could have reasonably been expected to notice himself.

Accepted Answer

When buying a property, it is important for the buyer to conduct a thorough inspection of the house and note any defects or issues. In this case, Alejandro failed to notice the cosmetic problems before buying the house. It is not the duty of the seller to explicitly point out every minor defect, especially if it is something that could be reasonably expected to be noticed by the buyer. Therefore, it is unlikely that Alejandro will be successful in rescinding the contract.

Question 13

When courts consider economic duress,they consider all the following factors EXCEPT
A)relative bargaining power.
B)financial distress.
C)legitimate business purpose.
D)relative size of the contract.

Accepted Answer

Courts do not typically consider the relative size of the contract when evaluating economic duress. They focus on factors like bargaining power, financial distress, and whether there was a legitimate business purpose.

Question 14

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 salesperson's statement is an opinion, not a factual misrepresentation. Fraud involves intentionally deceiving someone by misrepresenting a material fact.

Question 15

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 stereo to get his money back. Minors have a privilege to disaffirm or void contracts they make with adults, subject to certain exceptions.

Question 16

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

Accepted Answer

A minor is actually someone under the age of 18 in most jurisdictions. Some states in the US have raised the age to 19 or 21, but it varies.

Question 17

When fraud is committed during the sale of goods,all states allow the remedy of rescinding a contract while still allowing the remedy of suing for damages.

Accepted Answer

All states provide for the remedy of rescission when fraud is committed during the sale of goods, and this does not preclude the ability to sue for damages as well.

Question 18

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 disclose all material facts related to the contract, they typically do not have a duty to investigate the truthfulness of the other party's factual statements. However, a party may choose to conduct additional research or ask questions to ensure they have a clear understanding of the facts presented.

Question 19

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

Minors have the right to cancel a contract before reaching the age of majority, or within a reasonable time after reaching the age of majority. This is because minors lack the legal capacity to enter into contracts, and as such, any contract they make is voidable.

Question 20

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 willingly entered into an agreement and there was no misrepresentation or fraud involved. The fact that Alice did not know the market value of her car does not invalidate the contract.

Quiz 15: Voidable Contracts: Capacity and Consent