Reference - Irresponsible Teen

question 62

Multiple Choice

Reference - Irresponsible Teen. At age 17, in a state in which the age of majority is 18, Sally purchased a prom dress from Formal Stuff. She wore it to the prom and then attempted to return it to the store claiming that she was a minor and that she was entitled to a refund. The dress had clearly been worn and had a purple stain which Sally claimed was from grape juice. Additionally, a few days before she turned 18, Sally purchased a used car from Dings and Dents used cars. She had a deal whereby she paid $100 per month on the car. She drove the car and made payments for fourteen months after she turned 18. Then, she returned the car to Dings and Dents and told them that she wanted all her money back. Dings and Dents claimed the car was a necessity. Sally and her parents claimed that the parents were ready and willing to provide a car to Sally and that she only purchased the car from Dings and Dents because she liked that particular style and color. When purchases of the dress and car were made, the sellers knew that Sally was under the age of 18. In the dispute between Sally and the owner of Dings and Dents, which of the following is true regarding the defense of Sally and her parents that the car was a necessary?

• A) The claim will have no effect because the law does not recognize the concept of necessaries when minors are involved.
• B) Social status is always irrelevant in addressing a claim that an item was a necessary.
• C) Whether or not parents would buy the item at issue is irrelevant in addressing a claim that an item was a necessary.
• D) A minor may not disaffirm a contract for a necessary.
• E) Even if a minor is allowed to disaffirm a contract for a necessary, the minor will still be held liable for the reasonable value of the necessary.

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Definitions:

Book Value

The value of an asset as it appears on a balance sheet, calculated by subtracting any depreciation or amortization from the asset's original cost.

Available-For-Sale

A classification used in accounting for financial assets, denoting securities that a company plans to sell but not immediately or in the near term.

Vertically Integrated

A strategy where a company expands its operations into different stages of production within the same industry, from raw materials to finished products.

Horizontally Growth

Expansion strategy whereby a company grows by acquiring or merging with firms in the same industry at the same level of the supply chain.