Sally and Jeff Are Both Minors

question 3

Multiple Choice

Sally and Jeff are both minors.Sally buys Jeff's motorcycle for $1,000,its reasonable value.Jeff spends $700 of this money.Later,Sally wrecks the motorcycle and it is a total loss.Sally wants her money back.Which of the following best describes this situation?

• A)Because Sally and Jeff are both minors,the contract is valid and fully enforceable.
• B)If Sally voids the contract,she must give Jeff back the wrecked motorcycle and $1,000.
• C)If Sally voids the contract,she must give Jeff only the wrecked motorcycle.
• D)The court will determine the relative sophistication of Jeff and Sally,and the one with the lesser sophistication will be allowed to void the contract.
• E)If Sally voids the contract,Jeff must return to her the entire $1,000.

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Definitions:

Affirmative Covenants

Clauses in a loan agreement that require the borrower to perform certain actions to maintain the terms of the loan.

Borrower Must

Requirements or conditions that a borrower is obliged to meet in order to qualify for a loan or maintain its good standing.

Agency Cost

Agency cost refers to the expenses incurred due to the conflict of interest between shareholders and management within a company.

Principals

Fundamental truths or propositions that serve as the foundation for a system of belief or behavior or for a chain of reasoning.