East Mississippi Community College ECON 2123 Chapter 14-CAPACITY AND GENUINE ASSENT TRUE/FALSE 1)Certain persons cannot make contracts that will bind them

East Mississippi Community College

ECON 2123

Chapter 14-CAPACITY AND GENUINE ASSENT

TRUE/FALSE

1)Certain persons cannot make contracts that will bind them.

2. Factual incapacity is imposed because of the class or group to which a person belongs.

3. Ordinarily, every party to a contract is presumed to have contractual capacity until the contrary is shown.

4. A factual incapacity may exist when, because of a mental condition caused by medication, drugs, alcohol, illness, or age, a person does not understand that a contract is being made or understand its general nature.

5. Discriminatory and punitive incapacities have largely disappeared.

6. Generally, when a person of legal age makes a contract with a minor, the contract is voidable by either party.

7. Contractual capacity can exist even though a party does not understand every provision of the contract.

8. Ratification consists of any words or conduct of a former minor manifesting an intent to be bound by the terms of a contract made while a minor.

9. When a minor avoids contracts, the minor always must return the other contracting parties to their original financial positions.

10. The "necessaries" of minors are precisely defined by law.

11. When necessary medical care is provided to a minor, a parent is liable at common law for the medical expenses provided the minor child.

12. At common law, a minor cannot be held contractually liable for his or her necessary medical expenses when the parent is unable or unwilling to pay.

13. A contract made by an incompetent person after a guardian has been appointed is voidable.

14. An incompetent person may ordinarily avoid a contract in the same manner as a minor.

15. A person who has drunk too much alcohol at a party and signs a contract may be able to rescind that contract.

16. A unilateral mistake as to a fact does not affect the contract when the mistake is unknown to the other contracting party.

17. The seller of a painting is not bound by the sales contract if the painting purchased was considered of little value and only later discovered to be valuable to the surprise of both buyer and seller.

18. A party who speaks with a reckless disregard for the truth not knowing of the falsity of his or her words cannot be liable for fraud.

19. Fraud requires a misstatement of either a fact or an opinion.

20. Fraud requires intent that the listener rely on the false statement of fact.

21. In order for fraud liability to arise, the listener must actually rely on the false statement of fact.

22. Ordinarily, a party to a contract has no duty to volunteer information to the other party.