BLTE-10E PRACTICE QUIZ
CHAPTER 8:
CAPACITY, LEGALITY, AND ENFORCEABILITY
1. A definition of the term contractual capacity would be:
a.
b.
c.
d.
The ability to enter into a void contract.
The ability to enter into a contractual relationship.
The ability to mitigate contractual damages.
The ability to physically write a contract.
ANS:
a. Incorrect. If you enter into a void contract, you may lack contractual
capacity.
b. Correct. You have contractual capacity if you are legally able to enter into
a contractual relationship.
c. Incorrect. A child or someone adjudged insane might be able to mitigate
damages, but they would not have contractual capacity.
d. Incorrect. Again, someone who lacks contractual capacity might be able to
physically write a contract.
2. The general rule with respect to minors who enter into contracts is:
a.
b.
c.
d.
All such contracts are void.
All such contracts are valid.
Some contracts may be avoided by the minor.
Such contracts may be avoided by the adult party to the contract.
ANS:
a. Incorrect. Minors may enter into valid contracts.
b. Incorrect. Minors may avoid contracts within a certain time period and
under certain circumstances.
c. Correct. If minors follow the rules of disaffirmance, they may avoid some
contracts.
d. Incorrect. Minors, not the adult parties to such contracts, may avoid
certain contracts.
3. A usurious contract is one that involves:
a.
b.
c.
d.
Hazardous chemical materials.
An illegally high rate of interest.
Prostitution.
Surrogate motherhood contracts.
ANS:
a.
b.
c.
d.
Incorrect. Usury does not involve dangerous chemicals.
Correct. Usury means charging an illegally high rate of interest.
Incorrect. Prostitutes may charge high rates, but this is not usury.
Incorrect. Usury involves illegal interest rates, not surrogate motherhood
contracts.
4. In an exculpatory clause:
a. One party agrees that the other party is not mentally incompetent.
b. One party releases the other party from liability in the event of monetary or
physical injury, no matter who is at fault.
c. One party is able to sue the other party based on the clear fault of the
other party.
d. Both parties agree to use arbitration, not adjudication, to settle any
disputes arising under the contract containing the clause.
ANS:
a. Incorrect. An exculpatory clause is not concerned with mental
incompetence.
b. Correct. An exculpatory clause involves one party releasing another party
from future liability.
c. Incorrect. In an exculpatory clause, fault is not an issue.
d. Incorrect. An exculpatory clause does not involve arbitration.
5. If you do not voluntarily consent to a contract, you may:
a.
b.
c.
d.
Legally assault the other party.
Rescind or cancel the contract.
Impose your own adhesion contract.
Avoid the contract based on the Statute of Frauds.
ANS:
a. Incorrect. A lack of consent does not give you the legal right to assault the
other party.
b. Correct. You may cancel a contract to which you have not voluntarily
consented.
c. Incorrect. You may not impose a contract that reflects unequal bargaining
power because you did not voluntarily consent to the present contract.
d. Incorrect. A lack of consent is not an issue covered by the Statute of
Frauds.
6. Mistakes of fact occur in two forms. What are they?
a. Associated and disassociated.
b. Linear and nonlinear.
c. Unilateral and bilateral (mutual).
d. Recessive and dominant.
ANS:
a. Incorrect. Mistakes may be associated with one another, but these are not
the terms for mistakes of fact.
b. Incorrect. Linear and nonlinear are not the terms for mistakes of fact.
c. Correct. Mistakes of fact may be unilateral (made by one party) and
bilateral, or mutual (made by both parties).
d. Incorrect. Genes are recessive and dominant, not mistakes of fact.
7. Which of the following is not an element of fraud?
a.
b.
c.
d.
There must be an intent to deceive.
The innocent party must have justifiably relied on the misrepresentation.
The misrepresentation must concern a material fact.
The innocent party must be under twenty-one years of age.
ANS:
a. Incorrect. An intent to deceive is a required element of fraud.
b. Incorrect. The innocent, or defrauded, party must have been justified in
relying on the misrepresentation.
c. Incorrect. The misrepresentation must concern an important, or material
fact, rather than some minor fact.
d. Correct. There is no requirement that the innocent party be under twentyone years of age.
8. If a party to a contract has an intent to deceive the other party, this is known
as:
a.
b.
c.
d.
Scienter.
Revision.
Rescission.
Optimization.
ANS:
a. Correct. Scienter is the Latin term for "guilty knowledge."
b. Incorrect. Revision is when something, such as a contract, is changed or
modified.
c. Incorrect. Rescission is when a contract is canceled.
d. Incorrect. Optimization is not a contract law term.
9. Which of the following is not covered by the Statute of Frauds?
a. A contract for the sale of a new college history textbook that costs $210.
b. A contract for the sale of land.
c. A contract for the sale of a new car.
d. A contract for the sale of the right to walk across your neighbor's yard in
order to get to the beach.
ANS:
a. Correct. Because the value of this book is less than $500, this contract
would not be covered by the Statute of Frauds.
b. Incorrect. Contracts involving legal interests in land must be in writing.
c. Incorrect. Because the value of a new car is more than $500, this contract
is covered by the Statute of Frauds.
d. Incorrect. Your right to cross over land is an interest in land and is thus
covered by the Statute of Frauds.
10. Under the common law, a written memorandum evidencing an oral contract
must include:
a.
b.
c.
d.
The quantity term only.
A signature only.
The delivery terms only.
The essential terms.
ANS:
a. Incorrect. This is not sufficient under the common law.
b. Incorrect. This is not sufficient either under the common law.
c. Incorrect. Just having the delivery terms will not be sufficient under the
common law.
d. Correct. Under the common law, a memorandum must include the
essential terms when it evidences an oral contract.