Business Law Chapter 15 questions with complete solutions

Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. Marty agrees to make monthly payments until the purchase price plus interest are paid in full. Which of the following is correct? a. The contract is voidable by Marty. b. The contract is void as soon as it is made. c. The contract is voidable by Cream-of-the-Crop Cycles. d. The contract is voidable by either Marty or Cream-of-the-Crop Cycles. a. The contract is voidable by Marty. Marty, a 16-year-old, contracted with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. He agreed to make monthly payments until the purchase price plus interest were paid in full. It is three years later and Marty has not disaffirmed the contract and has made regular payments on the cycle since turning 18. Which of the following is correct? a. The contract is void and Marty has no obligation. b. The contract is now voidable by Cream-of-the-Crop Cycles. c. Marty has ratified the contract and is now bound by its terms. d. Marty has ratified the contract but can still get a return of the payments made while he was a minor. c. Marty has ratified the contract and is now bound by its terms. 00:20 01:26 When courts consider economic duress, they consider all the following factors EXCEPT a. relative bargaining power. b. financial distress. c. legitimate business purpose. d. relative size of the contract. d. relative size of the contract. Which of the following is most likely to constitute fraud? a. A false prediction that a painting's value will rise. b. A false statement that a used car is "the best deal in town." c. A false statement that a $30,000 car attracts members of the opposite sex. d. Silence as to a toxic waste problem on real property that the buyer would not reasonably find. d. Silence as to a toxic waste problem on real property that the buyer would not reasonably find. Angie, a minor, wants to avoid a contract she made with Cumberland Cycles. Which is a valid way for Angie to disaffirm the contract? a. by notifying Cumberland orally that she will not honor the agreement b. by filing a lawsuit to have a court formally cancel the contract c. by just refusing to perform her obligations under the contract d. All of the answers are correct. d. All of the answers are correct. Deborah purchased a boat from Sun 'N Surf Marine. She later learned that the salesman had made misrepresentations to induce her to make the purchase. Under UCC Section 2-721, Deborah can rescind the contract a. only if the misrepresentation was fraudulent. b. and sue for damages if the misrepresentation was fraudulent. c. but cannot sue for damages even if the misrepresentation was fradulent. d. but must forego all other remedies. b. and sue for damages if the misrepresentation was fraudulent. Mark's home had burned to the ground. When he met with his insurance adjuster, she accused him of burning down the house, and said she would have him criminally prosecuted if he didn't settle the claim for much less than the house was worth. Mark agreed to the settlement. If he changed his mind, he can probably rescind the settlement on the basis of a. fraud. b. duress. c. undue influence. d. mistake. b. duress. Larson entered Forrester's Auto Mart to purchase a used car. Larson found a vehicle with a sales price of $11,000. After Forrester answered all of Larson's questions, Forrester and Larson agreed to a sale. As Larson was leaving to get the money to pay for the car, Forrester told Larson that he thinks Robert Redford formerly owned the car. Larson later learned that Robert Redford had never owned the car. If Larson seeks to rescind the deal based on Forrester's statement, Larson will a. win because he relied on the misrepresentation. b. win because there was a misrepresentation of a material fact. c. lose because he will not be able to prove reliance on the misrepresentation. d. lose because Forrester made a unilateral mistake. c. lose because he will not be able to prove reliance on the misrepresentation. Which of the following terms designates the legal ability of a party to enter into a contract? a. Consent b. Affirmation c. Materiality d. Capacity d. Capacity Ryan, a minor, contracted to sell his auto to Ed, a 28-year-old. Ryan later refused to complete the sale. If Ed sues to enforce the contract, Ed will a. win because Ryan was the seller. b. win because minors can only avoid contracts for the sale of land. c. lose, as the contract is void. d. lose, because the contract is voidable by Ryan. d. lose, because the contract is voidable by Ryan. Ron, a minor, goes to the hospital for treatment of the flu. On the new-patient form Ron signs, he agrees to pay for any care or treatment he receives. When billed for the treatment a. Ron must pay for the value of the benefit he received, because medical care is a necessary. b. Ron must pay for the benefit he received because the contract is fully executory. c. Ron must pay for the benefit he received because he ratified the contract. d. Ron does not have to pay for the benefit he received. a. Ron must pay for the value of the benefit he received, because medical care is a necessary. Mentally infirmed Sasha contracts to purchase a piano for $2,500 in 60 monthly installment payments. Six months later she tries to void the contract on grounds of mental impairment. A court will a. normally void the contract without requiring anything further on Sasha's part. b. normally void the contract but will require Sasha to return the piano. c. ordinarily not void the contract unless Sasha had a court-appointed guardian at the time she entered into the contract. d. not void the contract unless Sasha agrees to have the court appoint a guardian for her. b. normally void the contract but will require Sasha to return the piano.