Capacity and Legality in Contract Law: A Comprehensive Guide for Law Students

Question 1

What is the general nature of an illegal contract?

Accepted Answer

Void, meaning it is unenforceable from the beginning

Answer

Voidable, meaning it is valid until voided by a court

Answer

Unenforceable, meaning it is valid but cannot be enforced due to certain factors

Answer

Valid and enforceable, as long as both parties agree to its terms

Question 2

What is a key characteristic of a voidable contract?

Accepted Answer

It can be enforced by either party unless the party with the right to void chooses to do so.

Answer

It is legally binding on both parties from its inception.

Answer

It is automatically void from the outset, without any action required by the parties.

Answer

It cannot be ratified by the party with the right to void.

Question 3

Under which condition can an intoxicated person form a binding contract?

Accepted Answer

They are not influenced by the intoxication.

Answer

They are over the age of majority.

Answer

They have not consumed alcohol in excess.

Answer

They have a designated driver present.

Question 4

Which mental disorder typically does NOT affect a person's capacity to contract?

Accepted Answer

Generalized anxiety disorder

Answer

Schizophrenia

Answer

Depression

Answer

Mild cognitive impairment

Question 5

Which of the following is NOT a type of unenforceable contract?

Accepted Answer

Valid contract

Answer

Void contract

Answer

Voidable contract

Answer

Unconscionable contract

Question 6

Which type of contract is legally binding from its inception?

Accepted Answer

Valid contract

Answer

Void contract

Answer

Voidable contract

Answer

Unenforceable contract

Question 7

Which of the following is NOT a potential consequence of an illegal contract?

Accepted Answer

The contract is ratified by a court.

Answer

The contract is void.

Answer

The parties may face criminal prosecution.

Answer

The innocent party may recover damages.

Question 8

In the United States, which legal test do courts commonly use to assess the capacity of a mentally ill person to enter into a contract?

Accepted Answer

Totality of the circumstances test

Answer

Burden of proof test

Answer

Medical diagnosis test

Answer

Subjective intent test

Question 9

In contract law, what is the key difference between capacity and legality?

Accepted Answer

Capacity refers to an individual's ability to understand and enter into a contract, while legality pertains to the lawfulness of the contract's subject matter.

Answer

Capacity relates to a person's age, while legality encompasses the presence of fraud or coercion.

Answer

Capacity and legality are synonymous concepts in contract law.

Question 10

Which of the following is NOT a relevant factor in determining a minor's contractual capacity?

Accepted Answer

Financial status

Answer

Age

Answer

Mental capacity

Answer

Emancipation status

Question 11

Under which circumstance might an intoxicated person have the capacity to enter into a valid contract?

Accepted Answer

When they are not completely unconscious.

Answer

When they have a high tolerance for alcohol.

Answer

When they are under the influence of an illegal drug.

Answer

When they have a written agreement signed by a sober witness.

Question 12

Which of the following is a type of unenforceable contract due to its inherent unfairness?

Accepted Answer

Unconscionable contract

Answer

Void contract

Answer

Voidable contract

Answer

Executed contract

Question 13

A contract involving the sale of illegal drugs is considered:

Accepted Answer

Void

Answer

Voidable

Answer

Unenforceable

Answer

Legal

Question 14

Which of the following is NOT a requirement for a minor to disaffirm a contract?

Accepted Answer

The contract must have been for necessaries.

Answer

The minor must have disaffirmed the contract within a reasonable time.

Answer

The minor must return any consideration received.

Answer

The minor must have been under the age of majority at the time the contract was entered into.

Question 15

A contract that violates fundamental public policy principles is:

Accepted Answer

Void

Answer

Voidable

Answer

Unenforceable

Answer

Legal

Question 16

Which of the following is NOT a factor considered when evaluating the capacity of a mentally ill person to contract?

Accepted Answer

The recommendation of a medical expert.

Answer

The severity of the mental illness.

Answer

The individual's understanding of the contract.

Answer

The individual's ability to manage their affairs.

Question 17

A contract that is illegal due to its purpose being against public policy is:

Accepted Answer

Void.

Answer

Voidable.

Answer

Unenforceable.

Answer

Valid.

Question 18

Which of the following is NOT a type of unenforceable contract?

Accepted Answer

A contract that is in writing.

Answer

A contract lacking consideration.

Answer

A contract that violates the statute of frauds.

Answer

A contract that is entered into under duress.

Question 19

For a minor's ratification of a contract to be valid, which requirement must be met?

Accepted Answer

The minor must fully understand the contract's terms and implications.

Answer

The minor must be of legal age.

Answer

The minor must receive new consideration for the contract.

Answer

The minor must disaffirm the contract within a reasonable time after reaching majority.

Question 20

When is a contract considered unconscionable?

Accepted Answer

When all of the above conditions are met.

Answer

When one party has a significantly superior bargaining position.

Answer

When the contract's terms are inequitable.

Answer

When the contract is unduly oppressive.

Question 21

Which of the following is NOT a defense to the defense of incapacity?

Accepted Answer

Duress.

Answer

Estoppel.

Answer

Ratification.

Answer

Necessaries.

Question 22

Which of the following is **not** a factor that typically affects a person's legal capacity to enter into a contract?

Accepted Answer

Employment status

Answer

Age

Answer

Mental competence

Answer

Intoxication

Question 23

In the United States, at what age do individuals generally reach the age of majority and are considered legally competent to contract?

Accepted Answer

18

Answer

21

Answer

25

Answer

30

Question 24

Which of the following is a **direct** consequence of an illegal contract?

Accepted Answer

The contract is void and unenforceable.

Answer

The contract is partially enforceable.

Answer

The contract is valid and enforceable.

Answer

The parties are subject to criminal penalties only.

Question 25

Which of the following is **not** a type of unenforceable contract?

Accepted Answer

Contracts that are clearly and precisely written

Answer

Contracts made under duress or undue influence

Answer

Contracts made by minors

Answer

Contracts made for illegal purposes

Question 26

In determining whether an individual with mental illness has the capacity to enter into a contract, which of the following tests is commonly employed?

Accepted Answer

The objective test

Answer

The subjective test

Answer

The balancing test

Answer

The reasonable person test

Question 27

Which of the following is a defining characteristic of a voidable contract?

Accepted Answer

It is considered valid and enforceable until it is legally set aside.

Answer

It is binding on both parties and cannot be unilaterally terminated.

Answer

It is unenforceable against a minor, even if they have ratified it.

Answer

It is automatically terminated upon the occurrence of a specified event.

Question 28

A person with a mental illness who enters into a contract may use which of the following as a defense?

Accepted Answer

Insanity

Answer

Intoxication

Answer

Minority

Question 29

Which of the following is a legal consequence of a minor entering into a contract?

Accepted Answer

The contract may be voidable at the option of the minor

Answer

The minor is bound by the contract and can be held liable for its performance

Answer

The contract is always void

Answer

The minor can be held liable for fraud or misrepresentation

Question 30

An illegal contract is:

Accepted Answer

Void and unenforceable

Answer

Only void if it violates a statute

Answer

Enforceable if the parties agree to it

Answer

Voidable at the option of the parties

Question 31

A contract that is entered into under duress is:

Accepted Answer

Voidable at the option of the party under duress

Answer

Void and unenforceable

Answer

Enforceable if the party under duress knew about the duress

Answer

Only voidable if the duress was physical

Question 32

A contract that is entered into for an illegal purpose is:

Accepted Answer

Void and unenforceable

Answer

Voidable at the option of the parties

Answer

Only void if the illegal purpose was a felony

Answer

Enforceable if the parties did not know about the illegal purpose

Question 33

A contract that is entered into under undue influence is:

Accepted Answer

Voidable at the option of the party under undue influence

Answer

Enforceable if the party under undue influence knew about the influence

Answer

Void and unenforceable

Question 34

A contract entered into by a minor is generally considered:

Accepted Answer

Voidable by the minor until they reach the age of majority

Answer

Void from its inception

Answer

Unenforceable at the option of the adult party

Answer

Valid and binding on the minor

Question 35

In which of the following scenarios would a contract be considered void as a matter of public policy?

Accepted Answer

A contract to restrain trade

Answer

A contract to provide services that are not essential

Answer

A contract to purchase a product that is not yet manufactured

Question 36

Which of the following is NOT a legal disability that can affect a person's capacity to contract?

Accepted Answer

Temporary intoxication

Answer

Permanent mental incapacity

Answer

Minority

Answer

Mental illness

Question 37

A minor's contract for the purchase of a luxury car is:

Accepted Answer

Voidable by the minor

Answer

Void ab initio

Answer

Enforceable against the adult seller

Answer

Enforceable against the minor if they misrepresent their age

Question 38

Which of the following contracts is illegal per se?

Accepted Answer

A contract to commit murder

Answer

A contract to sell a used car without a title

Answer

A contract to purchase alcohol by a minor in a state where the drinking age is 18

Answer

A contract to gamble on a sporting event in a state where gambling is legal

Question 39

A contract for the sale of land that does not meet the statute of frauds is considered:

Accepted Answer

Unenforceable

Answer

Voidable

Answer

Legal

Answer

Void

Question 40

Which of the following is an essential element of a valid contract?

Accepted Answer

Legality of purpose

Answer

Adequacy of consideration

Answer

Mistake of fact

Answer

Absence of bargaining power

Question 41

A contract to sell a controlled substance, such as marijuana, is:

Accepted Answer

Illegal per se

Answer

Voidable by the seller

Answer

Unenforceable

Answer

Legal if the parties are adults

Question 42

A contract that is entered into under the influence of extreme financial hardship may be:

Accepted Answer

Voidable by the disadvantaged party

Answer

Void ab initio

Answer

Unenforceable

Answer

Legal and binding

Question 43

What is the legal status of a contract entered into by an intoxicated person?

Accepted Answer

Voidable at the option of the intoxicated party

Answer

Unenforceable against both parties

Answer

Enforceable against the intoxicated party only

Question 44

Which of the following does NOT affect a person's mental capacity to contract?

Accepted Answer

Biological age

Answer

Severe mental illness

Answer

Coercion or undue influence

Answer

Impairment due to substance abuse

Question 45

What is the legal effect of an illegal contract?

Accepted Answer

Unenforceable by both parties

Answer

Voidable at the option of the party who is harmed

Answer

Enforceable against the party who benefits from the illegality

Answer

Void from the beginning

Question 46

Which type of contract is unenforceable because it lacks consideration?

Accepted Answer

Unilateral contract without a promise in exchange

Answer

Executed contract fully performed by one party

Answer

Voidable contract due to fraud or mistake

Answer

Bilateral contract with unequal consideration

Question 47

What is the primary purpose of the Statute of Frauds?

Accepted Answer

To prevent fraud by requiring certain contracts to be in writing

Answer

To provide a clear and complete record of contract terms

Answer

To protect minors from entering into binding contracts

Question 48

Under the Statute of Frauds, which of the following contracts is NOT required to be in writing?

Accepted Answer

Contracts for the sale of personal property valued under $500

Answer

Contracts for the sale of real estate

Answer

Contracts for the provision of services lasting longer than one year

Question 49

What is the legal effect of a contract that is void ab initio?

Accepted Answer

It is considered legally non-existent from the outset

Answer

It is unenforceable but may be revived under certain circumstances

Answer

It can be modified to become valid through ratification

Answer

It is enforceable against the party who breached the contract

Question 50

What is the difference between a liquidated damages clause and a penalty clause?

Accepted Answer

A liquidated damages clause is a pre-agreed estimate of damages, while a penalty clause is an excessive sum intended to deter breach of contract

Answer

A liquidated damages clause is enforceable only if the actual damages are uncertain, while a penalty clause is always enforceable