Question 1

Cathy agrees to sell her Daily Donut shop to Ernie. In the agreement, there is a covenant not to compete that prohibits Cathy from operating a donut shop within a certain distance. If the restriction is unreasonable, a court will most likely

Accepted Answer

A)   award Cathy damages.
B)   order Ernie to stop doing business.
C)   reform the covenant.
D)   prohibit both parties from operating donut shops.E) None of the above
F) A) and B)

Question 2

The lack of a license in certain occupations bars the enforcement of work-related contracts.

Accepted Answer

A) True 
 B)False

Question 3

Restraint of trade involves interfering with free competition.

Accepted Answer

A) True 
 B)False

Question 4

All people can make legally binding contracts at all times.

Accepted Answer

A) True 
 B)False

Question 5

The purpose of the right to disaffirm a contract is to

Accepted Answer

A)   recognize the legitimate interests of those who contract with minors.
B)   protect minors.
C)   restore persons to positions they held before contracting.
D)   ratify a contract and make it enforceable.E) None of the above
F) B) and D)

Question 6

The general rule is that any party to an illegal contract can recover for performance rendered.

Accepted Answer

A) True 
 B)False

Question 7

A minor can ratify a contract and thus make it enforceable.

Accepted Answer

A) True 
 B)False

Question 8

Caitlyn is a minor. As a minor, Caitlyn

Accepted Answer

A)   is not usually legally bound by a contract.
B)   has the right to avoid liability under a valid contract.
C)   has the capacity to enter into a valid contract.
D)   all of the choices.E) A) and C)
F) A) and B)

Question 9

Intoxicated, Odell enters a contract for the sale of her business, Precision Machining, to Quentin for less than its market value. This contract is voidable if, at the time,

Accepted Answer

A)   Odell's intoxication was purely voluntary.
B)   Quentin fraudulently induced Odell to become intoxicated.
C)   Quentin was also intoxicated.
D)   Odell understood the legal consequences.E) B) and C)
F) C) and D)

Question 10

Tracy is fifteen. In most states, for contractual purposes, Tracy would be considered a minor until she is

Accepted Answer

A)   sixteen.
B)   seventeen.
C)   eighteen.
D)   twenty-one.E) A) and C)
F) A) and D)

Question 11

Donald is a minor. He can enter into any contract an adult can, provided

Accepted Answer

A)   the adult is willing to enter into contracts with minors.
B)   Donald is willing to disaffirm the contract.
C)   the contract is not one prohibited by law for minors.
D)   an adult is willing to ratify the contract.E) All of the above
F) C) and D)

Question 12

Accepting and giving legal force to an obligation that previously was not enforceable is

Accepted Answer

A)   disaffirmance.
B)   emancipation.
C)   ratification.
D)   illegal.E) None of the above
F) A) and D)

Question 13

In determining procedural unconscionability, a court is most likely to consider whether

Accepted Answer

A)   none of the choices.
B)   any provision left one party without a remedy for nonperformance.
C)   any provision deprived one party of the benefits of the agreement.
D)   the buyer had an opportunity to ask questions about the contract.E) B) and D)
F) C) and D)

Question 14

A contract to do something that is prohibited by statute is

Accepted Answer

A)   enforceable if the parties are aware of the prohibition.
B)   enforceable if the parties are ignorant of the prohibition.
C)   enforceable if the contract does not negatively affect society.
D)   unenforceable.E) B) and D)
F) A) and D)

Question 15

Horse racing, video poker games, and charity-sponsored bingo are

Accepted Answer

A)   forms of gambling not allowed or regulated by any state.
B)   forms of gambling allowed and regulated by many states.
C)   forms of gambling allowed and regulated by all states.
D)   not forms of gambling.E) A) and B)
F) None of the above

Question 16

Jack enters into a contract with Kris, an unlicensed contractor. This contract may be enforceable if

Accepted Answer

A)   the statute's purpose is to protect the public from unauthorized practitioners.
B)   the lack of a license in Kris's occupation bars the enforcement of work-related contracts.
C)   the statute expressly affirms the barring of a contract's enforceability.
D)   the statute does not expressly affirm the barring of a contract's enforceability.E) B) and D)
F) A) and D)

Question 17

Generally, neither party to an illegal contract can sue for breach.

Accepted Answer

A) True 
 B)False

Question 18

Insurance Company violates a state licensing statute when selling a policy to Jay, in whose state it is not licensed to sell insurance. As a member of the class of persons protected by the statute, Jay can

Accepted Answer

A)   none of the choices.
B)   enforce the policy and recover from the insurer.
C)   obtain a license to sell insurance and a list of the insurer's customers.
D)   collect benefits under the policy immediately.E) A) and D)
F) A) and C)

Question 19

Opal is a minor. In at least some states, Opal can enter into a legally binding contract when she

Accepted Answer

A)   reaches the age of majority.
B)   gets married.
C)   is emancipated from her parents.
D)   all of the choices.E) A) and D)
F) A) and B)

Question 20

Intoxicated, Efron enters a contract for the sale of his business, Freight Dispatch, to Gretel for less than its market value. This contract is enforceable if, at the time,

Accepted Answer

A)   Efron's intoxication was purely voluntary.
B)   Gretel fraudulently induced Efron to become intoxicated.
C)   Gretel was also intoxicated.
D)   Efron understood the legal consequences.E) A) and B)
F) None of the above

Exam 13: Capacity and Legality

Intoxicated, Efron enters a contract for the sale of his business, Freight Dispatch, to Gretel for less than its market value. This contract is enforceable if, at the time,

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Intoxicated, Odell enters a contract for the sale of her business, Precision Machining, to Quentin for less than its market value. This contract is voidable if, at the time,

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All people can make legally binding contracts at all times.

Correct AnswerverifiedShow Answer

A contract to do something that is prohibited by statute is

Correct AnswerverifiedShow Answer

Opal is a minor. In at least some states, Opal can enter into a legally binding contract when she

Correct AnswerverifiedShow Answer

The lack of a license in certain occupations bars the enforcement of work-related contracts.

Correct AnswerverifiedShow Answer

Cathy agrees to sell her Daily Donut shop to Ernie. In the agreement, there is a covenant not to compete that prohibits Cathy from operating a donut shop within a certain distance. If the restriction is unreasonable, a court will most likely

Correct AnswerverifiedShow Answer

Tracy is fifteen. In most states, for contractual purposes, Tracy would be considered a minor until she is

Correct AnswerverifiedShow Answer

The purpose of the right to disaffirm a contract is to

Correct AnswerverifiedShow Answer

Jack enters into a contract with Kris, an unlicensed contractor. This contract may be enforceable if

Correct AnswerverifiedShow Answer

Donald is a minor. He can enter into any contract an adult can, provided

Correct AnswerverifiedShow Answer

The general rule is that any party to an illegal contract can recover for performance rendered.

Correct AnswerverifiedShow Answer

Restraint of trade involves interfering with free competition.

Correct AnswerverifiedShow Answer

In determining procedural unconscionability, a court is most likely to consider whether

Correct AnswerverifiedShow Answer

Generally, neither party to an illegal contract can sue for breach.

Correct AnswerverifiedShow Answer

Horse racing, video poker games, and charity-sponsored bingo are

Correct AnswerverifiedShow Answer

A minor can ratify a contract and thus make it enforceable.

Correct AnswerverifiedShow Answer

Insurance Company violates a state licensing statute when selling a policy to Jay, in whose state it is not licensed to sell insurance. As a member of the class of persons protected by the statute, Jay can

Correct AnswerverifiedShow Answer

Caitlyn is a minor. As a minor, Caitlyn

Correct AnswerverifiedShow Answer

Accepting and giving legal force to an obligation that previously was not enforceable is

Correct AnswerverifiedShow Answer

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