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Exam 9: Capacity, Legality, and Enforceability

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Question 21

Multiple Choice

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Through fraudulent means, Finlay induces Ethel to sign a contract to invest with him the profits from her business. When Ethel learns the truth, she may​

A) only enforce the contract.
B) only recover what she invested with Finlay.
C) enforce the contract or recover what she invested with Finlay.
D) do nothing.

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Question 22

Multiple Choice

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Gene, an accountant, convinces his client Hazel to sign a contract to invest her savings in 2Gether, a nonexistent social-networking Web site. There is clear and convincing evidence that Hazel did not act out of her free will. This is​

A) duress.
B) fraud.
C) mistake.
D) undue influence.

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Question 23

Multiple Choice

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Dumont threatens physical harm to force Eddie to sell his business, Citywide Vending, Inc., to Dumont for a below-market price. This is​

The chief executive officers of Chemico, Inc., and Petro Products Corporation orally agree that Chemico will sell a refinery and the land on which it is situated to Petro. Under the Statute of Frauds, this deal is enforceable by​

To be enforceable, a memorandum evidencing an oral contract must include the essential terms.

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

Edward and First Star Company enter into an oral contract under which Edward agrees to provide delivery service for First Star for nine months. This contract is enforceable by​

A statement of opinion is generally subject to a claim of fraud.

Reliance on a misrepresentation is justified if the misrepresentation is an obviously extravagant statement.

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

Guardian Security, Inc., and Hedge Fund Corporation enter into an oral contract under which Guardian Security agrees to provide security services for Hedge Fund's offices for as long as Hedge Fund needs them. This contract may be enforceable by​

Phoebe enters into a contract with Everest for a guided tour of Whitewater Canyon. Everest represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Phoebe is most likely a victim of​

A minor who enters into a contract for necessaries may disaffirm the contract but remains liable for the reasonable value of the goods.

In Simone's selling a 300-acre farm to Rural Investments, Inc., she tells the buyer that the land "will be worth twice as much by next year." This is​

eBuy, Inc., hires Ferris to develop and implement a marketing strategy for eBuy's new online auction site. Ferris signs a contract that includes a clause prohibiting him from competing with eBuy during and after the employment. Before the strategy is implemented, Ferris resigns from eBuy's employ to market his own auction site to compete with eBuy. In eBuy's suit against Ferris, what is the most important factor the court should consider in determining whether Ferris should be allowed to compete with eBuy?​

An exculpatory clause in an employment contract is usually enforceable.

Metro City Mall requires its tenants to sign a lease that includes a clause releasing Metro from liability in the event of monetary or physical injury no matter who is at fault. Coco's Chocolate Creations signs a lease with the mall that contains the clause. This is​

Hal's True Hardware Stores and Ideal Tools, Inc., sign a written contract for a sale of goods. To be enforceable, this written contract must include​

A covenant not to compete included in the sale of an ongoing business is unenforceable.

Contracts entered into by mentally incompetent persons can be valid.