In His Last Year of High School, Larry, a Minor

question 48

Multiple Choice

In his last year of high school, Larry, a minor, saw a friend's computer and felt that the word-processing function would help him get through high school. He visited Computer Heaven Ltd. and contracted for an Apple Macintosh, printer, paper, and the program. The total cost was $4,000. He paid $1,800 down and promised to pay another $300 next July 3, his birthday, the remainder to be paid in monthly installments of $100. Larry made the July 3 payment and some of the monthly payments, but by then had graduated, thanks to his passing mark in English, and didn't have a use for the computer anymore. Furthermore, he wanted to save his money for a down payment on a compact disc player and speakers. When he quit making payments to Computer Heaven, the balance outstanding was $1,700. On these facts, which of the following is true?

• A) If the July 3 payment was made after he reached the age of majority, Computer Heaven Ltd. can successfully sue Larry for breach of contract.
• B) Computer Heaven Ltd. can sue Larry for breach of contract if it sues Larry after he reaches the age of majority.
• C) Computer Heaven Ltd. must suffer the loss because all contracts with minors are void.
• D) Computer Heaven Ltd. can enforce the contract even though he is a minor because Larry has paid over one half of the agreed-upon price.
• E) Computer Heaven Ltd.'s only chance for any money would be if Larry accidentally causes the computer to break down. In that instance, it could sue Larry for negligence to get around the difficulties in contract law.

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Definitions:

Total Assets

The sum of all resources owned by an entity, including both current and non-current assets, which can be used to generate value or meet obligations.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from total revenue.

Leverage

The use of borrowed capital (debt) or other financial instruments to increase the potential return of an investment.

Returns

Returns refer to the profit or loss generated on an investment over a specified period of time.