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Contract Law Essentials
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1
Question
What contracts can a minor enter into?
Page 1
Answer
Any contract that an adult can, except contracts prohibited by law for minors.
2
Question
Are contracts entered by minors voidable?
Page 1
Answer
Yes, at the option of the minor.
3
Question
What exception applies to necessities in minor contracts?
Page 1
Answer
The minor must pay reasonable value for necessities.
4
Question
What is the effect of a minor's disaffirmance on the other party?
Page 1
Answer
The adult party to the contract remains bound unless and until the minor's disaffirmance releases them.
5
Question
Are contracts with voluntary intoxication voidable?
Page 1
Answer
Yes, even with voluntary intoxication lacking mental capacity.
6
Question
When is an intoxicated person's contract enforceable?
Page 1
Answer
If the person understood the legal consequences of the agreement despite intoxication, using an objective standard.
7
Question
What options does an intoxicated person have regarding their contract?
Page 1
Answer
Disaffirm or ratify.
8
Question
When is a contract void due to mental incompetency?
Page 1
Answer
If the court previously determined the person mentally incompetent.
9
Question
When is a contract voidable due to mental incompetency at contracting?
Page 1
Answer
If the person did not know they were entering a contract or lacked mental capacity to understand its nature, purpose, and consequences.
10
Question
What is a lucid moment in mental competency contracts?
Page 1
Answer
A contract may be valid if the person understands the nature of the contract at the moment it was formed.
11
Question
What is usury in contracts?
Page 1
Answer
Maximum amount of interest allowed by statute.
12
Question
What is required for licensing statutes to enforce a contract?
Page 1
Answer
Competency based licensing is required to enforce the contract.
13
Question
Does a revenue license affect contract enforcement?
Page 1
Answer
No, revenue licenses are not required to enforce the contract.
14
Question
What are covenants not to compete?
Page 1
Answer
Agreements not to compete.
15
Question
For covenants not to compete, what must geographic restrictions be?
Page 2
Answer
Reasonable.
16
Question
What time requirement applies to covenants not to compete?
Page 2
Answer
Reasonable period of time.
17
Question
Are some states restricting covenants not to compete?
Page 2
Answer
Yes, some states are enacting statutes restricting their use.
18
Question
What are procedural unconscionable contracts?
Page 2
Answer
How formed - oppressive or overly harsh.
19
Question
What are substantive unconscionable contracts?
Page 2
Answer
Contract or portions are oppressive or overly harsh.
20
Question
What do exculpatory clauses release a party from?
Page 2
Answer
Liability in the event of monetary or physical injury—no matter who is at fault.
21
Question
When are exculpatory clauses enforceable?
Page 2
Answer
When they are not against public policy, not ambiguous, and do not shield parties from intentional conduct.
22
Question
What is a mistake of fact in contracts?
Page 2
Answer
Parties enter contract with different understandings of one or more material facts.
23
Question
Does a mistake of fact make a contract voidable?
Page 2
Answer
Yes.
24
Question
What is the general rule for unilateral mistakes of fact?
Page 2
Answer
Does not give mistaken party right to relief from the contract.
25
Question
When does unilateral mistake allow relief?
Page 2
Answer
If the other party to the contract knows or should have known that a mistake of fact was made.
26
Question
Another exception for unilateral mistake relief?
Page 2
Answer
The error was due to an inadvertent, substantial mathematical mistake and not gross (extreme) negligence.
27
Question
For bilateral (mutual) mistakes of fact, who can rescind?
Page 2
Answer
Either party can rescind when both parties are mistaken about the same material fact.
28
Question
When parties reasonably interpret a term differently, what may a court allow?
Page 2
Answer
The contract to be rescinded.
29
Question
Can contracts generally be rescinded due to mistakes of value?
Page 2
Answer
No.
30
Question
What must occur for fraudulent misrepresentation?
Page 3
Answer
A misrepresentation of a material fact must occur.