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Exam 10: Consideration

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Question 21

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Exculpatory clauses are illegal as a matter of law.

A) True
B) False

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Question 22

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Which of the following is true regarding the obligation of a minor on disaffirmance?

A) In all states, a minor must return any consideration in his control but is entitled to a full refund of any purchase price regardless of the condition of the consideration when returned.
B) In all states, a minor is entitled to a full refund without returning consideration.
C) In all states, a minor must return any consideration in his control, must make restitution, and must pay for any loss in value of the collateral.
D) In all states, a minor only receives a return of half the minor's investment.
E) The obligations of a minor on disaffirmance vary from state to state.

F) A) and D)
G) D) and E)

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Question 23

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Define the offense of usury. Identify two legal exceptions discussed in the text whereby usury statutes will not be applied.

For purposes of determining capacity, intoxicated persons include those under the influence of alcohol, but not drugs.

Reference - Beauty Shop Woes. When Janice went to work as a hair stylist in Rick's beauty shop, she entered into an agreement with Rick whereby if she left she would not work for another beauty shop within 50 miles for 2 years. Rick trained Janice in a number of new techniques. After nine months, Janice was offered a great job down the street at a new beauty shop, quit Rick, and had a number of customers follow her down the street to her new job. Rick claimed that she had signed a contract and had no right to go to work at the new shop. Janice disagreed and told Rick that no judge in the country would enforce such an agreement. Janice told Rick that she was more worried about a customer, Treena, who was threatening to sue her because her hair turned green after Janice worked on it. Janice agreed that Treena's hair was damaged. Janice pointed out, however, that she told Treena that odd results could result from a dye attempt, and she required that Treena sign a contract releasing Janice from all liabilities before she did anything with Treena's hair. Treena, however, sued anyway. Which of the following is true regarding Janice's claim that no judge in the country would enforce such an agreement?

Which of the following was the result in John Miller v. Jay Preefer, Richard Preefer, Compromised Management, Inc. and Palm Beach Ale House and Raw Bar, Inc., the case in the text involving Florida law in which the plaintiff claimed that a covenant not to compete in regard to the restaurant business entered into in conjunction with a settlement agreement was unenforceable as a violation of public policy?

Which of the following is false regarding contracts for necessaries entered into by minors?

If a legal contract is formed and the subject of the contract then becomes illegal under a new statute, the contract is _____________.

When a contract is overturned due to having illegal subject matter or being illegal to perform, the attempted contract is generally declared voidable.

Guardians may be appointed for which of the following?

Which of the following are contracts that contain multiple parts which can each be performed separately?

A[n] _____________ occurs when a former minor does not specifically state that he affirms a contract entered into as a minor but takes some action that is consistent with intent to ratify the contract.

Under federal law parents are responsible for the torts of their minor children without any showing of lack of supervision on the part of the parents.

A contract of an intoxicated person for necessaries will be enforced for the reasonable value of the necessaries.

Reference - Useless Friend. Charles, who is very gullible, is friends with Bobby. Bobby, who cannot be trusted, decides to try to bind Charles to a contract in Bobby's favor. Bobby has Charles sign a contract promising to wash Bobby's car once a week for a month for $80. The contract incorporated by reference terms on the back. The terms on the back were in very small print and required Charles for one year to cook dinner for Bobby, do his laundry, and clean his apartment. Bobby is also very angry with his former girlfriend, Tessa, and decides to start rumors, that would constitute the tort of defamation, such as that she has a vile disease, cheated on tests, and stole from friends. Bobby wants to enlist the help of Charles but knows that Charles would be hesitant to assist in his endeavors. One evening, however, Charles drank too much beer and was clearly intoxicated - a fact apparent to Bobby. Bobby had him sign a contract agreeing to defame Tessa for $50. When he sobers up, Charles tells Bobby that he was drunk and that he has no intention of defaming Tessa, who also happens to be Charles' new girlfriend. He also finally takes a look at the contract involving work for Bobby and tells Bobby that the contract is outrageous and that he has no intentions of going through with any of it. Which of the following would be a possible defense to Bobby's contract involving chores based upon the small print on the back of the contract?

Which of the following occurs when a person reaches the age of majority and states, either orally or in writing, that he or she intends to be bound by the contact entered into as a minor?

Which of the following occurs when a party gives a loan at an interest rate exceeding the legal maximum?

The term _____________ refers to the fact that an agreement is so unfair that it is void of conscience.

Polly decides to go snow skiing at a ski facility owned by Bill. Bill requires that all the skiers sign an agreement containing a release providing that even if the ski facility is guilty of negligence resulting in injury, the skier agrees not to hold the ski facility liable. While on one of the steepest slopes, Polly fell breaking her leg. She complains that she was not adequately warned of conditions on the slope and sues Bill. Polly's position is that the release is not enforceable. What is the release Polly signed called, and what is Bill's best argument?

If a licensing statute is intended to protect the public's health, safety, and welfare, an agreement with an unlicensed professional is typically deemed ___________.