Capacity to Contract: A Comprehensive Guide for Law Students

Question 1

In England and Wales, at what age do individuals attain full legal capacity to enter into contracts?

Accepted Answer

18 years old

Answer

16 years old

Answer

21 years old

Question 2

When can an intoxicated individual be legally bound to a contract?

Accepted Answer

If the intoxicated person fully understood and agreed to the contract's terms

Answer

If the other party was unaware of the intoxicated person's condition

Answer

If the intoxicated person was forced to sign the contract

Answer

If the contract was for essential goods or services

Question 3

How does the doctrine of estoppel affect the enforceability of contracts made by individuals with limited contractual capacity?

Accepted Answer

Estoppel can prevent a party from using an individual's limited capacity as a defense to avoid their contractual obligations.

Answer

Estoppel only applies to contracts entered into by minors.

Answer

Estoppel cannot be used to enforce contracts made by individuals with mental incapacity.

Question 4

Which of the following factors is NOT relevant in determining a minor's contractual capacity?

Accepted Answer

Parental consent

Answer

Age

Answer

Maturity and understanding

Answer

Nature of the contract

Question 5

Generally, a person with a mental illness is considered to have full contractual capacity unless:

Accepted Answer

The illness renders them incapable of understanding the contract

Answer

The illness is a permanent condition

Answer

The illness is caused by substance abuse

Answer

The illness is diagnosed by a psychiatrist

Question 6

Intoxication can impair contractual capacity if it:

Accepted Answer

Renders the person incapable of understanding the contract

Answer

Causes the person to enter into the contract under duress

Answer

Leads to financial loss for the intoxicated party

Answer

Is caused by prescription drugs

Question 7

Corporations generally enjoy:

Accepted Answer

Full contractual capacity

Answer

Limited contractual capacity

Answer

No contractual capacity

Answer

Capacity only in certain specific areas

Question 8

Which of the following statements about minors' contracts is accurate?

Accepted Answer

They are always voidable by the minor

Answer

They are always void

Answer

They are only voidable if the minor is under a certain age

Answer

They are only void if the minor lacks understanding of the contract

Question 9

In general, the burden of proof to establish a lack of contractual capacity lies on:

Accepted Answer

The party asserting the lack of capacity

Answer

The party seeking to enforce the contract

Answer

The court

Answer

The party with the greater financial interest in the contract

Question 10

In which of the following scenarios is it most likely that a court would find a minor to possess the necessary contractual capacity?

Accepted Answer

A 16-year-old purchasing a bicycle with their own earnings

Answer

A 12-year-old signing up for a mobile phone contract

Answer

An 18-year-old entering into a mortgage agreement

Answer

A 20-year-old with an intellectual disability signing a contract for a gym membership

Question 11

Which of the following best describes the key difference in the treatment of minors' contracts between common law and civil law jurisdictions?

Accepted Answer

Both common law and civil law jurisdictions typically allow minors to enter into certain types of contracts, with some exceptions.

Answer

Common law systems void minors' contracts, while civil law systems uphold their validity.

Answer

Only common law systems permit minors to ratify their contracts.

Answer

The age of majority is generally lower in civil law jurisdictions than in common law jurisdictions.

Question 12

Which of the following factors does NOT affect an individual's capacity to contract?

Accepted Answer

Financial status

Answer

Minority

Answer

Mental incapacity

Answer

Intoxication

Question 13

At what age does a person attain full contractual capacity in England and Wales?

Accepted Answer

18

Answer

16

Answer

21

Answer

25

Question 14

Which of the following is a potential defense to a contract entered into by a person with mental incapacity?

Accepted Answer

Non est factum

Answer

Undue influence

Answer

Estoppel

Answer

Statute of Frauds

Question 15

Corporations have:

Accepted Answer

Full contractual capacity.

Answer

Limited contractual capacity.

Answer

No contractual capacity.

Answer

Capacity to contract only with other corporations.

Question 16

Which of the following is NOT a ground for setting aside a contract on the basis of undue influence?

Accepted Answer

Adequate consideration

Answer

Special relationship of trust and confidence

Answer

Actual pressure or coercion

Answer

Vulnerability of the victim

Question 17

Which of the following is a characteristic of a contract made under duress?

Accepted Answer

It is voidable at the option of the victim.

Answer

It is enforceable even if the threat is not serious.

Answer

It is void from the outset.

Answer

It is valid if the victim fails to take reasonable steps to avoid the threat.

Question 18

Which of the following best describes the general rule regarding minors' contractual capacity?

Accepted Answer

Minors generally lack capacity to enter into legally binding agreements unless they have obtained parental consent or are emancipated.

Answer

Minors have limited contractual capacity and can only enter into certain types of agreements, such as those for necessities.

Answer

Minors have full contractual capacity and can enter into any type of agreement.

Question 19

What is the primary legal effect of intoxication on contractual capacity?

Accepted Answer

Intoxication can render a person incapable of understanding the nature and consequences of a contract, potentially voiding the agreement.

Answer

Intoxication only affects a person's ability to enter into contracts involving real property.

Answer

Intoxication always results in a contract being void, regardless of the person's level of impairment.

Question 20

What is the legal status of contracts entered into by persons with mental disabilities?

Accepted Answer

Such contracts may be voidable if the person lacked capacity to understand the nature and consequences of the agreement.

Answer

Such contracts are always void.

Answer

Such contracts are always enforceable.

Question 21

What is the primary requirement for a corporation to have legal capacity?

Accepted Answer

Proper incorporation and registration

Answer

Majority ownership by shareholders

Answer

Approval from government regulators

Question 22

What is the significance of the concept of 'ultra vires' in corporate law?

Accepted Answer

It refers to actions taken by a corporation that are beyond its authorized powers or purposes, and may be void.

Answer

It is a defense available to shareholders who disagree with corporate decisions.

Answer

It is a principle that prohibits corporations from entering into contracts with individuals.

Question 23

In which scenario is a contract most likely to be voidable due to lack of capacity?

Accepted Answer

A person with severe dementia signs a contract to sell their house.

Answer

A 17-year-old purchases a new car with their own money.

Answer

A person who is intoxicated enters into a contract for the purchase of a bottle of wine.

Question 24

What is the legal doctrine known as 'affirmation' in the context of contracts?

Accepted Answer

It refers to the act of a person who lacked capacity at the time of contracting but later, upon regaining capacity, confirms the agreement.

Answer

It is a principle that prohibits persons with mental illness from entering into contracts.

Answer

It is a principle that allows minors to ratify contracts entered into during their minority.

Question 25

Which of the following is NOT a potential consequence of entering into a contract with a person who lacks contractual capacity?

Accepted Answer

Enforceability of the contract

Answer

Rescission of the contract

Answer

Liability for damages

Answer

Criminal prosecution

Question 26

Which of the following individuals has full contractual capacity in the United Kingdom?

Accepted Answer

Adults of sound mind over the age of 18

Answer

Persons with mental impairments that affect their ability to understand the nature and consequences of their actions

Answer

Minors under the age of 16

Answer

Persons intoxicated by alcohol

Question 27

What is the legal status of a contract entered into by a minor under the age of 18 in the United Kingdom?

Accepted Answer

Voidable at the minor's option (subject to certain exceptions)

Answer

Valid and enforceable

Answer

Void from the outset

Question 28

What is the effect of intoxication on a person's contractual capacity in the United Kingdom?

Accepted Answer

Intoxication may render a contract voidable if it was so severe that the person could not understand the nature and consequences of the contract

Answer

Intoxication always renders a contract void

Question 29

Do corporations have full contractual capacity in the United Kingdom?

Accepted Answer

Yes, within the limits of their objects and powers as set out in their constitutional documents

Answer

No, but they can enter into contracts through their directors

Answer

Yes, but only if they are listed on a stock exchange

Answer

No, they cannot enter into contracts at all

Question 30

Which of the following is NOT a factor that can affect a person's contractual capacity in the United Kingdom?

Accepted Answer

Gender

Answer

Age

Answer

Mental health

Question 31

Can a person who is under the influence of drugs have contractual capacity in the United Kingdom?

Accepted Answer

Yes, unless the intoxication is so severe that it renders the person incapable of understanding the nature and consequences of the contract

Answer

Yes, as long as they are not unconscious

Answer

No, drug intoxication always renders a contract void

Question 32

Can a minor ratify a contract entered into during their minority after they reach the age of 18 in the United Kingdom?

Accepted Answer

Yes, provided they do so within a reasonable time after reaching adulthood and with full knowledge of the nature and consequences of their actions

Answer

No, minors cannot ratify contracts

Answer

Yes, but only if the contract is for their benefit

Question 33

What is the legal status of a contract entered into by a person with a learning disability in the United Kingdom?

Accepted Answer

It depends on the severity of the disability and whether the person has the capacity to understand the nature and consequences of the contract

Answer

Void

Answer

Voidable at the option of the person with the disability

Question 34

Which of the following is NOT a factor that can render an individual unable to enter into a legally binding contract?

Accepted Answer

Marital status

Answer

Age

Answer

Mental incapacity

Question 35

In England and Wales, at what age do individuals attain full legal capacity to enter into binding contracts?

Accepted Answer

18

Answer

16

Answer

21

Question 36

Which defense is frequently invoked by individuals with mental incapacity in contract disputes?

Accepted Answer

Lack of understanding

Answer

Estoppel

Answer

Illegality

Answer

Duress

Question 37

What is the legal criterion for determining intoxication that affects contractual capacity?

Accepted Answer

Inability to comprehend the nature and consequences of one's actions

Answer

Slurred speech or unsteady gait

Answer

Blood alcohol content exceeding a certain limit

Question 38

In which scenario would a contract entered into by a minor be deemed void?

Accepted Answer

Purchasing a vehicle

Answer

Buying a loaf of bread

Answer

Enrolling in university

Answer

Joining a fitness center

Question 39

Which legal remedy is available to a party who has entered into a contract with an individual lacking contractual capacity?

Accepted Answer

Rescission

Answer

Damages

Answer

Injunction

Answer

Specific performance