Dennis has been adjudicated mentally incompetent by a court, and a guardian has been appointed...

The correct answer is A under the facts stated. Legal capacity is an essential element of contract formation. Where a court has already adjudicated a person legally incompetent and appointed a guardian with authority over the relevant affairs, the person generally cannot independently enter into a binding contract of the type covered by that guardianship authority.

This is distinguishable from a person who has never been adjudicated incompetent but whose mental capacity is questioned after entering an agreement. Such cases can involve more fact-specific analysis and may result in a contract being voidable rather than automatically void.

The decisive fact in this examination question is the prior judicial adjudication and guardian appointment.

A real estate salesperson has no authority to determine competency or override a guardianship order merely by witnessing a signature. Where capacity is uncertain, the parties should obtain legal advice rather than expect the licensee to resolve the legal issue.

Contract-law examinations regularly distinguish competent parties from minors and judicially incapacitated persons.

Study Guide Reference: Contracts — Competency of Parties, Incapacity, Guardianship and Validity of Contracts.