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  As the social force of protecting the person has gained recognition, many concepts of contractual incapacity have been abolished.   

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 part        

7  If any party to a contract does not have contractual capacity, the contract is either voidable or void     

8  Once a contract has been affirmed, it no longer can be avoided.         

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 concisely defined by law.   

11  Parents are liable for contracts signed by their minor children if the terms are reasonable.    

12  The parent of a minor is liable for payment of the purchase price of a contract that the minor has avoided.        

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

14  The appointment of a guardian for an insane person does not avoid a contract made by the person the day before the guardian was appointed.       

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 regarding expectations or the law does not have any effect on a contract

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 frau       

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

20  Fraud requires that the plaintiff intend to deceive.  

21  A fraudulent statement has no effect unless relied upon.

22  Increasingly, parties to a contract are being required to disclose defects or conditions that are unknown to and not obvious to the other party.    

23  There is a growing trend to treat fine print as not binding on the injured party without regard to whether fraud was involved. 

24  A claim of undue influence will be unsuccessful unless the contracting parties have a close relationship of trust

25  A contract obtained by physical duress is void.

MULTIPLE CHOICE

1. Contractual capacity is the ability to:

2. The key time for determining whether a party lacked contractual capacity is:

3. The maximum amount of time that a minor has to disaffirm a contract is:

4. A minor cannot avoid a contract to purchase a car if the:

5. A minor cannot avoid a contract that has been:

6. When a minor avoids a contract to purchase a car:

7. The obligation of a cosigner is discharged by:

8. A person lacks contractual capacity if:

9. In which of the following cases is a contract between A and B binding?

10. A person unable to read is bound by signing a paper without obtaining an explanation of it, unless:

11. An agreement is not binding when:

12. When a mutual or bilateral mistake is one of law, then:

12. All of the following statements refer to an element of fraud except:

13. Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles. Fraud has occurred if:

14. I believe that I own a very valuable vase. I tell this to you and state that I will sell it to you for $800. I sell the vase to you, and you later find out that the vase is worth only $200. A fraud:

15. An apparently voluntary agreement may in fact not be voluntary if:

CASE

1. John, a 17-year-old, purchased a Ping-Pong table and four new Ping-Pong paddles. A

week after he turned 18, John tried to return the Ping-Pong paddles. He told the seller that he had decided to keep the table. Can John avoid the contract in this way?

2. Roberta, an educated person, purchased real estate from Maurice. Roberta merely half- read the contract that she signed. As a result, she did not notice the provision in the contract about the interest on the unpaid portion of the purchase price. She refused to pay the interest specified in the contract. Maurice sued her. Could he recove
3. A young stockbroker was rather overwhelmed by a flood of new clients. Assunta, one of his clients, had purchased XYZ Corp. stock through the broker at a price of $35 per share. The price had gone down to $29, falling $3 on the morning Assunta telephoned the broker. Assunta told the broker that she wanted to sell the stock if it went below $30 and inquired as to the price. The broker did not check the price but, thinking it could not have fallen to that level, simply reassured Assunta that it was still "in the low 30s."

Marta, Aszsunta's cousin, also had purchased XYZ stock at $35 per share and made a similar call to the broker and received the same response. Marta, however, coincidentally saw the price on a stock ticker tape when she hung up and realized the broker had made an error. Both Assunta and Marta held the stock and did not sell.

Later that sam day, the stock price fell an additional $7 per share. Facing sizable losses, both Assunt