- Which of the following best describes the guardian's position?
Answer: The guardian may not set aside the sale because the contract was on fair terms, Alan had no knowledge of Helen's condition, and the sale was fully performed.
Under Restatement Second §15, a person lacking mental capacity incurs only voidable duties, but avoidance may be cut off where the contract was on fair terms, the other party had no reason to know of the incapacity, and the contract has been fully performed. The sale was at fair market value, Alan was innocent, and closing occurred. Thus the guardian cannot set it aside. (A) ignores the §15(2) limitation; (B) is not the correct basis; (D) is false because lack of adjudication does not itself bar a capacity defense.
- Which of the following is correct?
Answer: Darius can avoid the contract because Lena had reason to know of his incapacity; fairness is not a defense.
Under Restatement Second §16, a contract is voidable if the party was intoxicated and the other party had reason to know that the intoxication prevented understanding or reasonable action. Lena knew Darius could not understand, so the contract is voidable. Neither the fairness of the price nor the absence of overreaching is a defense. (A) and (B) are incorrect; (D) adds a causation requirement not in the rule.
- Which of the following best describes the dealer's rights under the contract?
Answer: The contract is void, so the guardian may set it aside without regard to the dealer's knowledge or the fairness of the price.
A person whose property is under guardianship because of an adjudication of incompetence has no capacity to contract; contracts made after the adjudication are void, not merely voidable. The dealer's good faith and fair price are irrelevant. (A) incorrectly treats the contract as enforceable; (B) incorrectly treats it as voidable and adds a proof requirement; (D) incorrectly recognizes a lucid interval capacity for an adjudicated incompetent.
- Which of the following best describes Jenna's rights?
Answer: Jenna may recover the full $1,200 because the contract was voidable and she was not required to return consideration that she no longer possessed.
A minor may disaffirm a non-necessity contract before or within a reasonable time after reaching majority. Upon disaffirmance, the minor must return any consideration still in her possession, but if the consideration has been lost or stolen, the minor is not liable for its value and may recover the payments she made. Because Jenna no longer had the laptop, her inability to return it did not defeat avoidance. The dealer is not entitled to offset use or lost value. (B) and (C) wrongly impose restitution; (D) misstates the return requirement.
- What is the dentist's best recovery?
Answer: $3,200, because Mateo's disaffirmance relieves him of the contract price, but he remains liable for the reasonable value of necessaries.
A minor's contract for necessaries is not enforceable at the contract price, but the minor is liable in quasi-contract for the reasonable value of necessaries furnished. Dental surgery for a minor without parental support was a necessary. Mateo's disaffirmance discharged the contract price but left a duty to pay $3,200, the reasonable value. (A) overstates by enforcing the contract price; (C) ignores the necessaries exception; (D) incorrectly adds a capacity requirement.
