Business Law- Chapter 12

Question 1

Minor

Answer 1

A person who has not reached the age of majority.

Question 2

Infancy Doctrine

Answer 2

A doctrine that allows minors to disaffirm (cancel) most contracts they have entered into with adults.

Question 3

Disaffirmance

Answer 3

The act of a minor to rescind a contract under the infancy doctrine. Disaffirmance may be done orally, in writing, or by the minor’s conduct.

Question 4

Minor’s Duty of Restoration

Answer 4

A rule which states that a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmation.

Question 5

Competent Party’s Duty of Restitution

Answer 5

A rule which states that if a minor has transferred money, property, or other valuables to the competent party before disaffirming the contract, that party must place the minor in status quo.

Question 6

Rarification

Answer 6

The act of a minor after the minor has reached the age of majority by which he or she accepts a contract entered into when she was a minor.

Question 7

Emancipation

Answer 7

The act or process of a minorvoluntarily leaving home and living apart from his or her parents.

Question 8

Necessaries of Life

Answer 8

Food, clothing, shelter, medical care, and other items considered necessary to the maintenance of life. Minors must pay the resonable value of necessaries of life for which they contract.

Question 9

Legal Insanity

Answer 9

A state of contractual incapacity, as determined by law.

Question 10

Adjudged Insane

Answer 10

Declared legally insane by a proper court or administrative agency. A contract entered into by a person adjudged insane is void.

Question 11

Insane but not Adjudged Insane

Answer 11

Being insane but not having been adjudged insane by a court or an administrative agenct. A contract entered into by such person is generally voidable. Some states hold that such a contract is void.

Question 12

Intoxicated Person

Answer 12

A person who is under contractual incapacity becuase of ingestion of alcohol or drugs to the point of incompetence.

Question 13

Illegal contract

Answer 13

A contract that has an illegal object.

Question 14

Usury law

Answer 14

A law that sets an upper limit on the interest rate that can be charged on certain types of loans.

Question 15

Gambling Statutes

Answer 15

Statutes that make certain forms of gambling illegal.

Question 16

Effect of illegality

Answer 16

A doctrine which states that the courts will refuse to enforce or rescind an illegal contract and will leave the parties where it finds them.

Question 17

in pari delicito

Answer 17

A situation in which both parties are equally at fault in an illegal contract.

Question 18

Contract Contrary to Public Policy

Answer 18

A contract that has a negative impact on society or that interferes with the public’s safety and welfare.

Question 19

Immoral Contract

Answer 19

A contract whose objective is the commission of an act that society considers immoral.

Question 20

Contract in Restraint of Trade

Answer 20

A contract that unreasonably restrains trade.

Question 21

Licensing Statute

Answer 21

A statute that requires a person or business to obtain a license from the government prior to engaging in a specified occupation or activity.

Question 22

Regulatory Statute

Answer 22

A licensing statute enacted to protect the public.

Question 23

Revenue-raising Statute

Answer 23

A licensing statute with the primary purpose of raising revenue for the government.

Question 24

Exculpatory Clause

Answer 24

A contractual provision that relieves one (or both) of the parties to a contract from tort liability for ordinary negligence.

Question 25

Covenant not to Compete

Answer 25

A contract which provides that a seller of a business or an employee will not engage in a similar business or occupation within a specified time following the sale of the business or termination of employment.

Question 26

Unconscionable Contract

Answer 26

A contract that courts refuse to enforce in part or at all becuase it is so oppressive or manifestly unfair as to be unjust.