Capacity and Legality

Capacity is the ____________ element of a legally binding contact?

Third

Capacity

The legal ability to enter into a binding contract.

Incapacity

Some sort of mental or physical defect that prevents a natural person from being able to enter into a legally binding contract.

One of the oldest limitations on capacity is?

The ability of minors to enter into only voidable contracts.

What occurs when a minors parents or legal guardians give up their right to exercise legal control over the minor?

Emancipation

True or false: Because their contracts are voidable, minors have the right, until a reasonable time after reaching the age of majority, to disaffirm, or avoid, their contacts.

True

What contract supplies the minor with the basic necessities of life, generally thought of as food, clothing, shelter, and basic medical services?

contract for a necessary

An _________ _____________ occurs when, after reaching the age of majority, the person states, either orally or in writing, that he or she intends to be bound by the contact entered into as a minor?

Express ratification

To be enforceable, a contract must have what two things?

(1). Legal exchange as its subject, (2). and able to be preformed legally.

True or false: In the event of a contract with illegal subject, it is the agreement or the bargain that is legal, not the contract?

False.

(...it is the agreement or the bargain that is illegal, not the contract)

Unenforceable

A term applied to a contract that, because of a law, cannot be enforced by the courts.

When contracts are against generally accepted public policy, these agreements are determined to be __________________, and not void.

Unenforceable

True or False: No remedy is available for unenforceable agreements?

True

Contracts cannot be for an illegal subject or be carried out by illegal means. Therefore, any agreement to commit a crime or tort is __________ and _______________.

illegal, unenforceable

Licensing statutes have two main purposes. What are these two purposes?

The first is to give the government an avenue by which to regulate the specific industries. The second main purpose of licensing statutes is more closely related to the public interest, by protecting the publics health, safety and welfare.

Usury

The lending of money at an exorbitant or unlawful rate of interest.

Gambling

An agreement in which a party pays consideration (money placed during bets) for the chance, or opportunity, to obtain an amount of money or property.

Although gambling is still illegal in the vast majority of states, many states allow casino gambling. The states most notable for casino gambling are?

Nevada, New Jersey, and Louisiana

Sabbath laws

Laws prohibiting the performance of certain activities on Sundays.

The activities restricted today by Sabbath laws vary from state to state. Most Sabbath laws pertain to the sale of?

Alcoholic beverages

___________ ___________ involves both the government's concern for its citizens and the beliefs people hold regarding the proper subject of business transactions? (the focus is on what is in the society's best interest.

Public policy

Accordingly, agreements that restrain trade are viewed as being harmful to consumers and thus against public policy. These restraints on trade are also known as?

Anticompetitive agreements

When a restraint on trade is reasonable, as determined by the courts, and the restraint is part of a subordinate, or ancillary, clause, the restraint is typically allowed. Such restraints are known as?

Covenants not to compete, or restrictive covenants.

Covenant not to compete

An agreement not to compete against a party for a set period of time within a designated geographic area.

What two varieties do, covenants not to compete tend to involve?

(1). The first involves noncompetition in the sale of an ongoing business. (2). The second involves noncompetition in employment.

The public policy argument in favor of supporting restrictions with the sale of a business involves?

The fairness of the sale

To be enforceable, a covenant not to compare needs to be in a ________________ clause in the contract.

subordinate

The second category of permissible restraints on trade is covenants not to compete that involve ____________ contracts.

employment

True or False: The term unconscionable refers to the fact that the agreement in question is so unfair that it is void of conscience?

True

Unconscionable

A term applied to a contract in which one party has so much more bargaining power than the other party that the powerful parties dictates the terms of the agreement and eliminates the other party's free will.

What are the two main types of unconscionable agreements?

procedural and substantive

Procedural unconscionability

Unconscionability that derives from the process of making a contract .

Adhesion contract

A contract created by a party to an agreement that is presented to the other party on a take-it-or-leave-it basis. Such contracts are legal but are sometimes rescinded on the grounds of unconscionability and the absence of one party's free will to enter a contract.

Substantive unconscionability

Unconscionability that derives from one-sided, unjust, or overly harsh substance in a contract.

Exculpatory clause

A statement in a contract that frees one party (usually the drafter of the agreement) from all liability arising out of performance of the contract; generally based on factors such as consumer ignorance or a great deal of unexplained fine print that serve to deprive the less powerful party of a meaningful choice.

Because _________ law attempts to return the wronged party to the state he or she was in before the wrong occurred, anything preventing this corrective mechanism is against public policy.

tort

To be able to enforce an exculpatory clause, the party seeking enforcement must be a private ____________ or an individual and must not be imported to the ___________ interest.

business, public

In the law, when both parties are equally responsible for an illegal agreement, the parties are said to be ?

in pari delicto

in pari delicto

In equal fault.

Severable contract

A contract that contains multiple parts that can each be preformed separately.

Indivisible contract

A contract that requires complete performances by both parties.