Capacity to Contract: A Guide to Legal Ability in Contract Formation

Question 1

In England and Wales, who among the following lacks the legal capacity to enter into a valid contract?

Accepted Answer

A 16-year-old who is not married

Answer

An adult diagnosed with schizophrenia but not declared legally incompetent

Answer

An intoxicated person who still partially understands the contract

Question 2

What is the definition of capacity to contract?

Accepted Answer

It is determined by a person's age, mental capacity, and level of intoxication.

Answer

It is the same as contractual capacity.

Answer

It is a permanent state that cannot change over time.

Answer

It prohibits individuals with diminished capacity from entering into any type of contract.

Question 3

Which of the following factors **does not** affect a person's capacity to enter into a contract?

Accepted Answer

Physical Disability

Answer

Age

Answer

Mental Capacity

Answer

Intoxication

Question 4

At what age does a person typically attain full capacity to contract in England and Wales?

Accepted Answer

18

Answer

16

Answer

19

Answer

21

Question 5

Which of the following mental conditions is likely to render a person incapable of contracting?

Accepted Answer

Severe dementia

Answer

Anxiety disorder

Answer

Obsessive-compulsive disorder

Answer

Depression

Question 6

What is the legal test for determining whether a person is intoxicated to the point of incapacity?

Accepted Answer

Whether they are so intoxicated as to not understand the nature and consequences of the contract.

Answer

Whether they are unable to speak clearly.

Answer

Whether their balance is impaired.

Question 7

Which of the following is a common exception to the general rule that minors lack capacity to contract?

Accepted Answer

Contracts for necessaries

Answer

Contracts for employment

Answer

Contracts for property

Answer

Contracts for luxury goods

Question 8

What is the legal consequence of entering into a contract with a person who lacks capacity to contract?

Accepted Answer

The contract is voidable at the option of the person who lacks capacity.

Answer

The contract is enforceable against the person with capacity

Answer

The contract is enforceable against the person without capacity

Answer

The contract is valid and binding on both parties

Question 9

Which of the following is a way to protect a person who lacks capacity to contract?

Accepted Answer

Appointing a guardian or conservator

Answer

Getting the person's consent in writing

Answer

Having the person undergo a medical examination

Answer

Having a witness present at the time of contracting

Question 10

What is the difference between void and voidable contracts?

Accepted Answer

Void contracts are invalid from the outset, while voidable contracts are valid until they are set aside by a court.

Answer

Void contracts are enforceable against both parties, while voidable contracts are not.

Question 11

Which of the following statements about the capacity of a bankrupt person to contract is true?

Accepted Answer

A bankrupt person can enter into contracts, but they cannot enforce them without the consent of the trustee in bankruptcy.

Answer

A bankrupt person cannot enter into any contracts whatsoever.

Question 12

What is the legal responsibility of a person who contracts with a person who they know lacks capacity?

Accepted Answer

They may be liable for any losses suffered by the person with capacity.

Answer

They are not liable for any losses suffered by the person with capacity.

Answer

They are only liable for losses suffered by the person with capacity if they were negligent.

Question 13

Which of the following is NOT a factor that typically affects a person's legal capacity to enter into a contract?

Accepted Answer

Credit score

Answer

Age

Answer

Mental capacity

Answer

Intoxication

Question 14

What is the age of legal majority in England and Wales, meaning someone can generally enter into contracts without needing a guardian's consent?

Accepted Answer

18

Answer

16

Answer

14

Answer

21

Question 15

Which of the following is a common legal defense used by someone arguing they lacked mental capacity when entering a contract?

Accepted Answer

Lack of mental capacity due to intoxication

Answer

Misrepresentation

Answer

Fraud

Answer

Undue influence

Question 16

Which of the following is NOT a factor that generally affects a party's ability to enter into a legally binding contract?

Accepted Answer

Height

Answer

Intoxication

Answer

Mental capacity

Answer

Age

Question 17

In the UK, at what age does a minor typically gain full legal capacity to enter into contracts?

Accepted Answer

18

Answer

21

Answer

25

Answer

16

Question 18

Which statement is TRUE about the impact of mental incapacity on a person's ability to make contracts?

Accepted Answer

A contract entered into by someone lacking mental capacity might be legally voidable.

Answer

A contract made by someone lacking mental capacity is always legally valid.

Answer

Someone lacking mental capacity can never enter into any contracts.

Question 19

In which scenario is intoxication LEAST likely to affect a person's ability to make a valid contract?

Accepted Answer

When the person is only slightly intoxicated.

Answer

When the person is intoxicated to the point of being unable to make a rational decision.

Answer

When the person is so intoxicated that they do not understand the nature of the contract.

Question 20

What are the possible legal consequences of a contract entered into by someone who lacked capacity?

Accepted Answer

The contract could be either void or voidable.

Answer

The contract is only valid if the other party knew of the person's lack of capacity.

Answer

The contract is always legally valid.

Answer

The contract is only voidable if the person lacking capacity can prove they were taken advantage of.

Question 21

Who is MOST likely to be held legally responsible if a contract is made with someone who lacks capacity?

Accepted Answer

The party who knew or should have known about the person's lack of capacity.

Answer

The person who lacks capacity.

Answer

The person's guardian.

Question 22

Which of the following is a good way to protect yourself from entering into a contract with someone who might lack legal capacity?

Accepted Answer

Requesting proof of capacity from the other party.

Answer

Assuming that all adults have legal capacity.

Answer

Only entering into contracts with people you know well.

Question 23

Which of the following is a situation where a person may have limited capacity to contract?

Accepted Answer

A person with a learning disability.

Answer

A person who is a foreign national.

Answer

A person who is unemployed.

Answer

A person who is homeless.