Book Title
Business Law with UCC Applications 14th Edition

978-0077733735 Chapter 10 Solution Manual

April 10, 2019
Chapter 10 Capacity and Legality: The Final Elements
Opening Case Questions
2. A contract made by a minor is voidable by the minor. The law allows minors to disaffirm contacts
to protect them from unscrupulous adults who might take advantage of young people who might not
4. The law says that restrictive employment covenants must be reasonably necessary to protect the
5. The territory seems quite huge, covering as it does, much of Pennsylvania, Maryland, and
Virginia, as well as all of Washington D.C. However, Aaron was free to solicit business in New York,
New Jersey, Delaware, Massachusetts, Philadelphia, four additional counties in Pennsylvania, and the
Questions for Review and Discussion
1. Under common law the age of majority was established as 21 years of age. In 1971 when the
3. Ratification or affirmance occurs when a minor, after reaching his or her age of majority affirms
4. A contract made by a person who is mentally infirm or who suffers from mental illness may be
valid, if the person’s infirmity or illness is not severe enough to rob that person of the ability to
understand the nature, purpose, and effect of that contract. Thus mental impairment alone does not
necessarily reduce a person’s ability to enter into contracts. The question will always be whether the
mental problem was so serious that the person did not understand the nature of the contract. If that is
the case, the mentally infirm or mentally ill person may disaffirm any contract except one for
necessaries. The incompetent must return all consideration received, if he or she still has it. A second
rule is also recognized by the Restatement of Contracts and by some states. That rule says that a
person’s contractual obligations may be voidable if that person suffers from a mental impairment that
prevents him or her from acting in a reasonable manner. This rule goes beyond the orthodox rule which
5. Contracts agreed to by persons under the influence of alcohol or drugs may be voidable.
Incompetence related to either alcohol or drugs must be of such degree that a contracting party would
6. Parties cannot be allowed to enforce agreements that are contrary to the law. If the courts enforced
7. Statutory law outlaws the following agreements: usurious agreements, wagering
8. Agreements most commonly invalidated as contrary to public policy are agreements to
9. When both parties to an illegal agreement are equally wrong they are said to be in pari
10. In a divisible contract, a court may void that part of the contract that is illegal and enforce the
Cases for Analysis
1. This is an interesting case. In most states Mrs. Mitchell would not be correct and she would not
be able to void the release with State Farm, based on her minority. This is because in most states
married minors are seen as emancipated and, therefore, capable of making contracts on their own. They
3. No. Hays was a minor, and as a minor he could disaffirm the contract. The sale to the adult was
4. No. Voluntary enlistment in the armed forces is an exception to the rule that minors may void
their agreements. The court ruled that Lonchyna had continued to receive valuable benefits under his
5. No. The court ruled that dullness of intellect does not necessarily reduce one’s competence to
contract. The question before the court was whether Kruse had the ability to comprehend the nature of
the agreement. There is a presumption that one is capable when there is not sufficient evidence to prove
6. Yes. Courts can remove the illegal part of a contract and can enforce the legal part. The court
decided that it was permissible to remove the illegal clause from the contract without changing the
7. The appeals court overturned the trial court because the two parties were not of equal fault, as the
doctrine of in pari delicto requires. The court found that the active deception by Cyberian did not
8. No. The court held that the release was too general. It would insulate Melton from liability for