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Case Analysis

Read the mini case and answer the questions that follow.

Matt

is a 17-year-old singer who makes money by performing at various clubs. On his seventeenth birthday, Matt entered into a contract with Bill, owner of Bill's Nightclub, to perform two shows at the club per month for two years. He also entered into a contract with Paul, owner of Paul's Electronics, to buy a microphone that Matt has used to perform.


1) When a person lacks capacity at the time he enters a contract, the person:

A) Must disaffirm the contract immediately.

B) Can only disaffirm the contract while the person still lacks capacity.

C) Can disaffirm the contract at any time, even long after the person gains capacity.

D) Can disaffirm the contract while the person still lacks capacity and for a reasonable period of time after the person gains capacity, as long as the person does not perform or accept the benefits of the contract after gaining capacity.

E) Must disaffirm the contract within a reasonable period of time, even if he still lacks capacity.


2) A minor who contracts for a necessary:

A) Cannot disaffirm the contract.

B) Must pay the contract price for any necessary that the minor has received.

C) Cannot enforce the contract against the other parties to the contract.

D) Must pay the reasonable value for any necessary that the minor has received.

E) Must pay the reasonable value for any necessary, even if the minor has not yet received it.


3) If Matt is still 17 and still lives at home with his parents, which of the following is true?

A) Matt can disaffirm the contracts with Bill and Paul, but he must pay for the reasonable value of his use of the microphone because it was a necessary.

B) Any of them—Matt, Bill, or Paul—can disaffirm the contract because Matt is a minor.

C) Matt cannot disaffirm the contracts with Bill and Paul because the job and microphone are necessary.

D) Bill and Paul can disaffirm the contracts because Matt is a minor.

E) Matt can disaffirm the contracts with Bill and Paul because he is a minor, but he must return the microphone.


4) If Matt falsely told Bill and Paul that he was 18, which of the following is true?

A) Depending on where he lives, Matt may be estopped from disaffirming the contracts, or he may be able to disaffirm the contracts but will be required to pay for any damages.

B) Bill and Paul will be allowed to disaffirm the contracts based on the fact that Matt is a minor.

C) Matt will be allowed to disaffirm the contracts and can keep the microphone.

D) No matter where he lives, Matt will be estopped from disaffirming the contracts.

E) No matter where he lives, Matt can disaffirm the contracts, but he will be required to pay for any damages.


5) Suppose Matt begins performing at Bill's club and continues performing and getting paid by Bill for eight months after his eighteenth birthday. At that point, which of the following is most likely?

A) Bill can disaffirm the contract because Matt is no longer a minor.

B) Matt cannot disaffirm the contract because he ratified it by beginning to perform when he was still 17.

C) Matt can disaffirm the contract, but he has to give back any money that he has received from Bill.

D) Matt can disaffirm the contract with Bill because he was a minor when he entered into it.

E) Matt cannot disaffirm the contract because he ratified it by continuing to perform after turning 18.


6) Which is true about an intoxicated person's capacity to contract?

A) A person can only avoid a contract if his intoxication is caused by alcohol (not other drugs).

B) A person's capacity to contract depends on his level of intoxication at the time he entered the contract (not before or after).

C) If one of the parties to a contract is intoxicated, none of the parties can enforce the contract.

D) A person can disaffirm a contract only if all of the parties to the contract were intoxicated at the time they enter into it.

E) Intoxicated people can disaffirm contracts, but must pay for the reasonable value of any necessary.


7) Which of the following is the most accurate statement about a mentally impaired person's capacity to contract?

A) None of the parties to a contract can enforce the contract if, before they entered the contract, one of the parties was judged by a court (i.e., adjudicated) to be mentally incompetent.

B) A person who suffers from a mental impairment can never have capacity to contract.

C) A person can disaffirm a contract if the other party to the contract suffers from a mental impairment.

D) A person with a mental impairment lacks the capacity to contract, even if the impairment does not affect their ability to understand and evaluate the contract.

E) If a person has a mental impairment that deprives him of capacity at the time he enters into a contract, the person can never have capacity to ratify the contract at a later time.


8) Which of the following is not an effective way to ratify a contract?

A) Performing a contract while still lacking capacity.

B) Continuing to accept the benefits of a contract after gaining capacity.

C) Continuing to perform a contract after gaining capacity.

D) Waiting an unreasonable period of time to disaffirm a contract after gaining capacity.

E) Expressly affirming one's intention to be bound by a contract after gaining capacity.


9) When can an intoxicated person ratify a contract?

A) As soon as they are able to understand the contract

B) Never, because contracts by intoxicated people are void, not voidable

C) Within a reasonable period of time after becoming intoxicated

D) Only after a reasonable period of time has passed

E) While they are still too intoxicated to understand the contract


10) In which of the following situations is an intoxicated person most likely to be able to disaffirm a contract due to lack of capacity?

A) Where a person enters into a contract while he is sober, but disaffirms the contract when he is extremely intoxicated.

B) Where a person understands that he is accepting an offer to sell his car, but he accepts less money than he would have demanded if he had not been drinking.

C) Where a website owner has no idea that a person was intoxicated when he clicked on a button to accept the website's privacy agreement.

D) Where a person is so drunk that he cannot remember that he had drafted and signed a contract earlier in the day.

E) Where a person is so intoxicated that he says "ok" without realizing that the bartender who has been serving him alcohol all night just offered to buy the person's car.

Top Answer

1) When a person lacks capacity at the time he enters a contract, the person: Best option; D) Can disaffirm the contract... View the full answer

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Other Answers

1) When a person lacks capacity at the time he enters a contract, the person: Answer: Option D) Can dis affirm the contract... View the full answer

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