Define the incentive effects of enforcing such contracts

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Question: 1. A young girl found an attractive stone in the woods and sold it to a jeweler for $1. Later, her family discovered that the stone was a rough diamond worth $700. Her family asked the court to void the contract for incompetency. Who was situated to protect the young girl in this transaction at least cost?

2. Suppose that excessive drinking causes temporary incompetence, and suppose that someone who has drunk too much alcohol seeks to enter into a contract with someone who is sober. Contrast the incentive effects of enforcing and not enforcing such contracts.

Reference no: EM131908446

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