Question

1. If a legally enforceable contract includes a binding arbitration clause, the parties to the contract under which the dispute arose can go through litigation if one of parties decides to take the dispute to court.

True

False

2. Veruca Salt, a Michigan resident, buys a used car from Rick's Used Cars, a Michigan business. Two weeks later, the car breaks down, and Veruca learns that it needs a new engine even though she was told the car was in perfect working condition. Veruca sues Rick's Used Cars for fraud (for selling a bad car) and breach of contract. Veruca can sue:

C. In federal court only

D. Veruca cannot sue because she already bought the car.

B. In state court only

A. In either federal or state court

3. A salesman convinced Kayla, who is age 16, to agree to buy a home exercise machine. Kayla can argue that the contract is not enforceable under what defense?

a. Impossibility

c. Lack of capacity

e. Misrepresentation

b. Duress

d. Unconscionability

Answer 1

1. False, If there is a mandatory arbitration clause in a contract, the case must be resolved through arbitration and the case will not go to a court even if one party wants it.

2. Cases of fraudulant misrepresentation ( as in this case) can be heared in state court, and will be subject to state laws.

Option B is right

3. The cotract is not enforceable  because one of the parties lacks capacity to form a contract, being a minor. Option c is right.