Business Law-Chapter 9

_________________ is the legal ability to enter into a contract, so minors and those with mental impairments lack it.

• Executory

• Consent

• Acceptance

• Capacity

This element refers to someones mental ability to enter into an contract.

• consideration
• legality
• capacity
• genuine agreement

What is emancipation? 

• A.  Termination of a case of fraud and misrepresentation.
• B.  Termination of a bargain that is considered void.
• C.  Termination of parental rights to control a child.
• D.  Termination of necessaries in a quasi-contractual case.

Who among the following have the capacity to enter into a contract? 

• A.  Persons suffering from mental illness
• B.  Adults that have divorced
• C.  Minor aged individuals
• D.  Individuals intoxicated at the time of entering into a contract

The law makes individuals suffering from mental illness lack capacity to enter into contracts because: 

• A.  The mental ill tend not to vote in large numbers
• B.  Those with mental illness would be at a disadvantage in their ability to protect their own interest in bargaining
• C.  An individual cannot be on public assistance and be legally competent to enter into a contract
• D.  There is fear that those with mental illness would manipulate and harm those that they would enter into contracts with

_____ makes any contract valid from its inception and can be done effectively only after a minor reaches majority. 

• A.  Disaffirmance
• B.  Emancipation
• C.  Ratification
• D.  Consideration

Which of the following is a criticism of the traditional rule of restitution in the case of minors? 

• A.  It allows adults to ratify a contract with a minor.
• B.  It allows a minor to be exploited in a contract.
• C.  It does not allow a minor to disaffirm a bargain.
• D.  It is harsh on innocent adults dealing with minors.

Sarah is 16 years old. She left home at age 15; her parents no longer support her. Sarah entered into a contract with Best Groceries for the purchase of $100 of groceries on credit. The groceries consisted of basic, necessary items. However, their reasonable value is only $80. If Sarah discovers that she has been overcharged and refuses to pay, Best is entitled to collect: 

• A.  nothing.
• B.  $80.
• C.  $100.
• D.  $90.

In general, contracts made by insane (mentally impaired) persons: 

• A.  can sometimes be ratified.
• B.  are unconditionally void.
• C.  are unconditionally voidable.
• D.  are voidable only if they involve necessaries.

Legal adulthood is also known as

• majority
• minor
• minority
• guardian