1) Which of the following is NOT true?
a. A minor can still disaffirm a contract for a reasonable time after reaching majority.
b. An adult cannot disaffirm a contract made with a minor.
c. A minor must pay the agreed price on a contract for necessaries.
d. What constitutes a necessary varies over time and can differ from state to state.
2) Usury laws are concerned with:
a. taxes paid
b. interest charged
c. uses of the labor force
d. contract purposes
3) Types of contracts that are commonly invalidated include the following EXCEPT:
a. immoral contracts
b. contracts in restraint of trade
c. contracts that impair family relations
d. contracts to commit a tort
e. contracts which result in competition with a valid preexisting business
4) Which of the following is generally true about exculpatory clauses?
a. They are not valid with respect to intentional acts.
b. The test is if they are reasonable in time, scope, and geographic area.
c. They are usually found to be invalid.
d. They are not valid for ordinary negligence.
5) Which of the following is NOT one of the needed elements of an unconscionable contract?
a. parties possessing severely unequal bargaining power
b. the dominant party's unreasonable use of that bargaining power to obtain oppressive or manifestly unfair terms
c. an unreasonably short period of time for the oppressed party to perform
d. no reasonable alternative for the oppressed party
6) Mike, who is 16 years old, buys a motorcycle from Cycle Sellers, Inc. Assume that Mike pays $5,000 and that the fair value of the motorcycle at the time of purchase is $4,500. Which of the following is true?
a. This is an illegal contract because Mike is a minor.
b. This contract is void because Mike is a minor.
c. Even if Mike signs a statement as part of the contract that states, "I agree not to disaf firm this contract," Mike may nonetheless disaffirm when he is 17 years old.
d. There was probably undue influence involved with this contract since Mike is a minor and the price charged was greater than the fair market value.
e. If a court decides that the motorcycle is a necessary, Mike will be obligated to pay the $5,000.
7) At age 16, Phil bought a car from Acme Auto Co. for $2,500. Phil drove the car for about six months, and then he had an accident. The damage to the auto was $1,500. In addition, the value of the auto before the accident was only $2,000. The accident was not Phil's fault. Phil wishes to disaffirm the contract. Which of the following best describes this situation?
a. Because the car was damaged, Phil cannot disaffirm the contract.
b. Phil can disaffirm the contract, but he can recover only $500 of his money.
c. Phil can disaffirm the contract, but he can recover only $2,000 of his money.
d. Phil can disaffirm the contract and recover the entire $2,500.
e. Phil can disaffirm the contract, but he must first have the car repaired.
8) The courts have very broad powers to enforce or not enforce certain types of contracts. Which of the following statements best describes this power?
a. Contracts that are contrary to public policy are well defined by statutes.
b. The determination of what is unconscionable is very well established and follows very clear standards.
c. Exculpatory clauses and noncompete agreements sometimes violate public policy and sometimes do not.
d. To be contrary to public policy, the contract must violate a statute.
9) On your first spring break, you go in a bar after reading a large sign outside saying, "Beers $1.00 each all night long. If you can drink 30, they're all free we'll pay for a taxi." You pay for your beers as you drink, and you manage to drink 30 beers. The bar agrees that you drank 30 beers, but refuses to refund your money. You sue the bar. Which is most likely true?
a. This contract is voidable by the bar if you get so intoxicated while drinking the 30 beers that you don't comprehend the nature of what you are doing.
b. The sign is an offer for a bilateral contract because both you and the bar must do something.
c. A court would ignore this contract on the basis of illegality even if it does not violate a specific statute.
d. There is no consideration on your part if you don't pay for the beer.
10) Gertrude wants to buy a new car, but is short of money. She promises the salesperson that she will grant him sexual favors for the next year if he will give her an automobile. He agrees. She later changes her mind, and he seeks to enforce the contract. How will a court most likely rule on the matter?
a. It is a valid contract.
b. It is an illegal contract in violation of public law.
c. It is a void contract in violation of public policy.
d. It is a contract that may be voidable by Gertrude.