Chapter 14. Contractual Capacity
1. Kris, age 17, who looks 18 or older, makes a contract to buy a car from Maisie, who is the age of majority. Maisie
finds out Kris’s age. Maisie may avoid the contract even if Kris did not misrepresent his age.
a. True
b. False
2. Sally goes away to college at 17, lives on her own, and pays her own rent and electric bills. If she makes a contract
to buy a television set, in most jurisdictions, she may assert her minority status and set aside the contract.
a. True
b. False
3. Beth, at age 17, sells an antique pin she inherited. Even if the buyer resells the pin to someone who did not know that
it was purchased from a minor, Beth can recover the pin from the third person if she changes her mind about
wanting to sell it.
a. True
b. False
4. Seventeen-year-old Teresa wants to disaffirm her student loan agreements. Most states will not allow her to avoid
such contracts.
a. True
b. False
5. In a contract to sell necessaries to a minor, these goods and services are limited to medical care, food, and shelter.
a. True
b. False
6. If Carrie, age 14, contracted to buy a fur coat by mail, the coat manufacturer would not have to send it since the
contract was void.
a. True
b. False
7. Jessica at the age of 15 entered into a contract to sell five acres of land to her uncle. She may disaffirm this contract
at any time before reaching her majority.
a. True
b. False
8. In general, if a minor lies about her age in order to induce the seller to contract with her, she cannot disaffirm that
contract.
a. True
b. False
9. A few states, either by statute or court ruling, recognize a duty on the part of a minor to make restitution to the seller
upon disaffirmance of a contract.
a. True
b. False
10. The doctrine of necessaries applies in the same way to minors and mental incompetents.
a. True
b. False
11. If a person is adjudicated insane and placed in care of a guardian, that person‘s contracts are void.
a. True
b. False
12. Sean had two beers and felt tipsy. He made a deal with Yoko to buy her stereo. He can avoid the contract because
of lack of capacity.
a. True
b. False
13. By the majority view, a minor need only return any property he has received from the other party if the minor wishes
to disaffirm the contract. He has no duty to return the property in the same condition in which he received it.
a. True
b. False
14. In general, a minor may only disaffirm a contract after he has reached the age of majority.
a. True
b. False
15. All states agree that a minor who has fraudulently misrepresented her age when entering into a contract has no
power to disaffirm the contract.
a. True
b. False
16. In general, minors have liability for their torts.
a. True
b. False
17. A person under guardianship by court order has no contractual capacity.
a. True
b. False
18. At common law, a minor was a person who was under twenty-one years of age.
a. True
b. False
19. An intoxicated person must have been so intoxicated as to have been unable to understand the consequences of his
actions or have been unable to act in a reasonable manner in order to avoid a contract.
a. True
b. False
20. Ratification makes a contract void from the beginning.
a. True
b. False
21. Disaffirmance may be express, but it may not be implied.
a. True
b. False
22. An automobile may be considered a necessary item for a minor.
a. True
b. False
23. Ratification need not be express; it may be implied from the minor‘s conduct.
a. True
b. False
24. In some states, minors are liable for contracts involving bank accounts and student loans and cannot avoid these
contracts even though they can avoid other types of contracts.
a. True
b. False
25. Emancipated minors have no ability to avoid contracts based upon their minority.
a. True
b. False
26. Michael, a minor, rents a car to attend the senior prom at his high school. He signs an agreement stating that he will
not take the car more than 100 miles from the rental agency. At 2:00 a.m., after he has had a few beers, his friends
talk him into driving 200 miles to Chicago for the weekend. On the way, the car is involved in a minor traffic
accident that damages the vehicle. In most courts, because the tort of negligence is related to the rental contract for
the vehicle, Michael has no liability to the rental agency.
a. True
b. False
27. Darrell goes to lunch with an office equipment salesman. After drinking two beers and eating a Reuben sandwich,
Darrell signs a contract to purchase a $1200 machine for the office. Two hours later, he has second thoughts and
decides a different machine might be a better buy, so he calls the salesman and wants to disaffirm the contract
based upon intoxication. Darrell can avoid the contract on this basis.
a. True
b. False
28. Intoxicated persons are liable in quasi contract for necessaries purchased during their incapacity.
a. True
b. False
29. All furniture, television sets, and appliances purchased by a minor for her apartment would be considered
necessaries.
a. True
b. False
30. John is 17 years old and earns extra money by repairing cars. Nathan, who is 21, brings his car to John for repairs,
and John ruins the brake system of the car, because of his inexperience. If Nathan sues John for negligence in
performing the auto repair contract, in most states John will have no liability, because the tort of negligence and the
auto repair contract are connected.
a. True
b. False
31. If a person is unable to understand the nature and effect of entering into a contract, he or she can avoid it.
a. True
b. False
32. An incompetent person who lacks understanding of a contract and its consequences can avoid it even if the other
party had no reason to know of the incompetent‘s mental condition.
a. True
b. False
33. A mental condition that impairs a person’s ability to act in a reasonable manner is one type of mental incompetence.
a. True
b. False
34. Courts treat contracts of incompetents and intoxicated persons essentially the same, except they are stricter with
intoxicated persons because of intoxication’s voluntary nature.
a. True
b. False
35. A person taking a prescription medication will be treated the same as an incompetent under the cognitive ability test.
a. True
b. False
36. A minor can ratify part of a contract and disaffirm another part of it.
a. True
b. False
37. Ratification of a contract, once effected, is final and cannot be withdrawn.
a. True
b. False
38. Persons who lack mental capacity at the time they enter into a contract may avoid liability under the agreement.
a. True
b. False
39. Lydia makes a contract to purchase a used car on her seventeenth birthday. Six months later, her ratification of the
contract can be effectively implied by her continuing payments.
a. True
b. False
40. A mental illness or defect of one of the parties to a contract automatically makes a contract void.
a. True
b. False
41. Anna is 88 years old and under the legal guardianship of her daughter. One day Anna receives a telephone call from
a health insurance salesman and purchases a $400–a-month Medigap insurance policy. This contract is:
a. valid.
b. voidable.
c. void.
d. voidable only at the option of Anna.
42. Fay, age 17, ordered a pair of skis on the installment plan. She paid $20 every month until she turned 18, the age of
majority. The next day, she sold them to Sharon and disaffirmed the contract. Fay is:
a. still liable since she had to disaffirm before her 18th birthday.
b. still liable because selling the skis amounts to a ratification.
c. not liable because she disaffirmed the contract.
d. not liable because skis are not necessaries.
43. Ann, a minor, disaffirmed her agreement to buy $127 worth of cosmetics from Facial Glo Company. She had used
up all the eye shadows, lipsticks, and powders. The general rule is that she may:
a. disaffirm, but she must pay the asking price of the cosmetics used.
b. disaffirm, but she has to return the makeup that is not used up.
c. not disaffirm without paying the value of used makeup.
d. not disaffirm because she has used the goods.
44. Mary, age 17, sold Mark, age 22, the briefcase she got for graduation. Mark’s father liked it and bought it from him.
If Mary decides to disaffirm the contract, will Mark’s father have to return the briefcase to her?
a. Yes, the briefcase is not a necessary.
b. Yes, if Mark’s father still has it.
c. No, her contract was with Mark and he cannot return goods he does not have.
d. No, if Mark’s father bought it without knowing that Mary was a minor.
45. Ratification can occur in which of the following ways?
a. Through express language
b. As implied from conduct
c. Through failure to make a timely disaffirmance
d. All of these.