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Exam 12: Consideration, Capacity, and Legality

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Question 31

Multiple Choice

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Frisco offers to buy a Gibson guitar owned by Hayden for twice what Hayden paid for it. She accepts and hands the guitar to Frisco. Her delivery of the guitar is

A) not consideration because her voluntary consent may be lacking.
B) not consideration because the exchange is not a bargain.
C) consideration.
D) not consideration because the value is not legally sufficient.

E) B) and C)
F) B) and D)

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Question 32

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A contract that exculpates one party for negligence or other wrongdoing will often be viewed as unconscionable.

A) True
B) False

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Question 33

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Whether a contract with an unlicensed professional is legal and enforceable depends on the purpose of the licensing statute.

Intoxicated and not aware of the consequences, Umberto agrees to a two-year cell-phone service contract with Wander Talk, Inc., at more than the average market price. This contract is

A contract that is void from the outset can be enforced in some circumstances.

Rescission is the unmaking of a contract so as to return the parties to the positions they occupied before the contract was made.

All contracts between adults and minors are void.

Contracts entered into by mentally incompetent persons can be valid.

Essentially, adequacy of consideration concerns the fairness of the bargain.

Country Trucking Company contracts with Baldwin to transport crated goods to a certain destination for $5,000. \Country delivers the crates, but Baldwin does not pay. Country learns that the crates contained stolen goods. Country can

John obtains a loan from Liberty Credit Bank at an interest rate that exceeds the state's maximum. Liberty has

Contractual capacity includes the financial ability to pay for the benefits of a contract.

Digital Enterprise, Inc., promises to pay its employees a year-end bonus "if profits continue to be high and management agrees at the time." This is

Maya's motorcycle is damaged in an accident caused by Luc's negligence. Luc agrees to pay Maya $25,000 if she agrees to release him from further liability. Maya agrees. If her damages ultimately exceed $25,000, she can

While sailboarding, Jolene is injured when Kilroy carelessly crosses her path. Kilroy's insurance company offers Jolene $50,000 to release Kilroy from liability, and she accepts. Later, she learns that her injuries are more serious than she realized. The release is

Centre City Properties, Inc., owns and manages a warehouse. DIY Home Improvement Stores agrees to lease the warehouse for six years. Under the lease, DIY is obligated to pay all of the utility costs. Two years into the term, DIY asks Centre City to modify the lease to provide that the utility costs will be split equally between them. The landlord agrees, but later decides it does not want to share the costs and refuses to pay. Is Centre City bound to its agreement to share the utility costs? Why or why not?​

In certain circumstances, bargains are so oppressive that the courts relieve innocent parties of part or all of their duties.

Fay is mentally incompetent but has not been so adjudged by a court. Any contract Fay enters into is

Alexis, a minor acting on her own, signs a contract to buy a motorcycle and accessories from Bad Bikes dealership. Later, after taking possession, Alexis disaffirms the deal. She

To avoid liability for negligence, Mall Mart Discount Stores can normally obtain a court order to enforce