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Exam 9: Capacity, Legality, and Enforceability

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Question 1

True/False

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Because fraud actions necessarily involve wrongful conduct, courts may award punitive damages.

A) True
B) False

Correct Answer

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True

Question 2

Multiple Choice

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Sofia signs a covenant not to compete with her employer, Topmost Sales Corporation. A court decides that the covenant is overly restrictive. The court will likely​

A) enforce it as written so as not to undercut the freedom of contract.
B) enforce it but evaluate its effects over time.
C) reform its terms to prevent any undue burden.
D) refuse to enforce it unless Topmost pays additional consideration.

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

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Question 3

True/False

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A person who enters into a contract when he or she is intoxicated can void the contract under any circumstances.

Nyoko signs a covenant not to compete with her employer, Midstates Distribution, Inc. The covenant will be enforced if it​

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​

Sharon agrees to assume a debt owed by Tom's Guitars Inc. to United Funds Bank. The agreement is not in writing. To be enforceable under the "main purpose" rule, the promise must be for the benefit of​

To be enforceable, a contract for a sale of goods priced at $500 or more should be in writing.

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​

A contract entered into by an intoxicated person is never valid.

Any contract to commit a crime is unenforceable.

Creighton applies to BigData Corporation for a position as a software engineer. Creighton's resume lists training in computers or programming and background as an engineer when in fact he has neither. After Creighton is hired, BigData learns the truth. BigData can​

Ordinarily, a minor can disaffirm a contract even though she has misrepresented her age.

U-Can-Own-It Corporation sells appliances to less educated consumers, including Viv, on installment plans. U-Can-Own-It files a suit against Viv when she stops making payments. Viv claims that the deal is unconscionable. The court will most likely consider​

A contract in which a party assumes a primary obligation normally must be in writing to be enforceable.

On Victor's eighteenth birthday, he decides that he no longer wants to keep a fishing boat he bought from Water Craft, Inc., when he was seventeen. His right to disaffirm the deal will depend on​​

When both parties to a contract are mistaken about the same material fact, the contract cannot be rescinded.

Ranchland Properties and Prairie State Investments sign a written contract for a sale of land. In some states, to be enforceable, this contract must include​

In most illegal contracts, both parties are considered to be equally at fault, and neither party can enforce it.

Felicity, a minor, obtains fruits and other foodstuff on credit from Growers' Market. Later, Felicity disaffirms the purchase. Felicity owes Growers' Market​

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