Chapter 9: Legal Capacity to Contract
1. A person can have contractual capacity even if he or she cannot understand the wording of a contract.
2. Minority ends the day before the birthday of the age set as the age of majority.
3. As soon as a person reaches the age of majority the legal power to disaffirm a contract is immediately ended.
4. Ratification can never occur before the age of majority to contract.
5. For the voluntarily intoxicated, disaffirmance is only allowed if they did not even know they were making the
contract.
6. Emancipated minors may lose the power to disaffirm their contracts.
7. Employees acting outside the scope of their authority are generally personally liable whether their employer
is or not.
8. In most jurisdictions, even if a minor cannot return everything that was received under a contract, the minor
will receive back everything she or he put into the bargain.
9. The party lacking capacity can generally disaffirm contracts for non-necessaries or, as an alternative, can
enforce them against the party with capacity.
10. Minors are not usually liable for their torts.
11. Parties who may, because of their status, have the right to disaffirm a contract include
A. minors.
B. the intoxicated.
12. Acting toward a contract as though one intends to be bound by it is called
C. disaffirmance.
D. none of these.
13. When a court decrees a minor emancipated, it is referred to as
C. adult designatory.
D. all of these.
14. Which of the following would most likely not be classified as a necessary?
A. an apartment
B. clothes
15. In most states minors can get back everything they put into a contractual bargain even if
A. they are unable to return exactly what was received under the contract.
16. Contracts of a minor that cannot be disaffirmed include
A. court-approved contracts.
B. enlistment in the armed services.
17. In many states, a minor who lies about her or his age may be held liable for the tort of
C. improper identification.
D. maturity misrepresentation.
18. The severance of the child-parent relationship is referred to as
C. ratification.
D. none of these.
19. Employees acting outside of their ____________________ do not have the power to bind the employer.
C. both and b.
D. none of these.
20. Generally, a person lacking contractual capacity can disaffirm a contract for non-necessaries
A. any time while still under the incapacity.
21. Which of the following is not evidence of informal emancipation?
A. a minor marries
B. a minor gives birth
22. Which of the following are rights given to those who lack capacity?
A. right to disaffirm contracts for necessaries
B. right to pay the contract price for necessaries
23. Although Julie is a minor and generally lacks capacity, she cannot disaffirm some contracts for
non-necessaries. Which of the following cannot be disaffirmed?
A. court-approved contracts
B. certain life insurance contracts
24. The ability to understand the ____________________ of a contract is required for contractual capacity.
A. exact wording
B. laws controlling the making
25. When a person reaches the age of majority, which of the following does not occur?
A. the person’s parents’ duty to support him or her ends
B. he or she becomes formally emancipated
26. Acting toward a contract as though one intends to be bound by it is considered
A. scope of authority.
B. contractual capacity
27. All contracts by a party held to be permanently insane by a court are
A. valid but must be ratified by the party’s guardian.
B. voidable.
28. Contracts made by a party who was temporarily insane are
C. valid.
D. reviewed by a court for validity.
29. Which of the following is an act of ratification?
A. returning the merchandise
B. after entering majority giving a new promise to perform as agreed
30. Contracts made by a person that a court has ruled to be in a permanent state of alcoholism are
A. valid.
B. voidable.
31. Grant, a 16-year-old high school student, quit school and took a full-time job. His actions are evidence of
informal ____________________.
32. As the head of his academic department, Enrique has the capacity to contractually bind his school district to
pay for the supplies he orders. This capacity is known as Enrique’s _________________________.
33. Latrice is only 13 years old , but once she signs a court-approved contract she cannot
____________________ it.
34. Holly is 18 years old and has been treated for schizophrenia, a severe mental illnesses. After being
institutionalized repeatedly, she was been held to be permanently insane. Regardless, Holly has signed contracts
for two necessary items: an apartment lease agreement and rental agreement for furniture for this apartment.
Even though these contracts are for necessary items, these contracts will be held to be
35. Minors can disaffirm their contracts during their minority and for a reasonable period of time after attaining
their ____________________.
36. Food, clothing, and shelter are all classified as ____________________ for those who lack capacity.
37. If a judge rules that a person was temporarily insane when a contract was made, that contract is considered
to be ____________________ by the temporarily insane party.
38. In a majority of the states, minors cannot disaffirm a contract for ____________________ insurance.
39. For the first couple of months after he turned 18, Ben continued to make monthly payments on his car.
When the car was severely damaged in an accident, Ben tried to avoid the purchase contract and get his money
back. However, the court would not allow him to do so as it held that by making the payments Ben had
____________________ the contract.
40. When a contract for necessaries is disaffirmed by a party lacking capacity, they still must pay a
____________________ amount for those necessaries.
41. Ling’s mother sells jewelry. Ling took her mother’s sales catalog to high school, and her friend Randi
ordered $200 worth of merchandise out of it. When the merchandise was delivered, Randi didn’t have the
money to pay. Can she be forced to pay? Explain your answer.
42. Carl went to the local bar after work and spent the rest of the evening drinking. When he started to go home,
he discovered that his truck had a flat tire, and he began kicking the truck’s fenders. When Fred saw the problem
and heard Carl ranting in anger at his truck, he offered to give Carl a ten-dollar bill and a ride home for the
truck. Carl took the money and sat in the cab of the pickup until Fred could change the tire and drive him home.
When Carl couldn’t find his truck the next day, he reported his truck stolen. Who owns the truck and why?
43. Explain why merchants traditionally have been reluctant to sell to minors.
Minors lack capacity, and so are able to disaffirm the contracts they make and get back whatever they had given
44. Explain why a stricter standard of incapacity is applied to the intoxicated than to the mentally incapacitated.
Typically, intoxication, unlike insanity, involves a volitional act. Society, therefore, does not want to reward