Contract Law: The Doctrine of Capacity

Vocabulary flashcards covering the doctrine of capacity, types of competency, minors' rights to disaffirm and ratify contracts, necessaries, and incapacity due to intoxication or mental health conditions.

Doctrine of capacity

An element of a contract concerning a party's legal ability to enter into a legally binding contract.

Limited competence

A condition wherein an individual has a defect, such as minority (being under the legal age to contract), giving them the right to avoid contractual liability.

Voidable contract

A contract that can be avoided or affirmed at the option of the person who lacks contractual capacity.

Entirely incompetent

The condition of lacking legal ability to enter into any contract, requiring an actual order, consideration, or judgment by a judge, which renders the contract void.

Void contract

A contract that has no legal effect and cannot be enforced, occurring when an individual is adjudicated entirely incompetent by a judge.

Disaffirm

To take back consent once given, signifying that a party lacking capacity is no longer desirous of obtaining the benefit of the bargain.

Necessaries

Items essential to the health and welfare of a human, such as food, shelter, and clothing, when a minor lacks an adult to provide them.

Reasonable value

The fair value of goods or shelter that a minor is legally obligated to pay if they disaffirm a contract for necessaries.

Ratification

The process through which a contract entered into by a minor becomes fully binding after the minor reaches the age of majority.

Express ratification

Orally or in writing stating the intent to be bound by a contract, carried out a reasonable period of time after reaching the age of majority.

Implied ratification

Actions taken by an individual after reaching the age of majority, such as operating a motor vehicle after turning $18$, indicating an intention to be bound by the contract.

Shield and the sword doctrine

A legal principle stating that incapacity may be used to protect a minor from an unscrupulous adult (shield), but cannot be used in an abusive fashion to exploit a contract or destroy property without consequence (sword).

Non-voidable contracts

Contracts that cannot be voided by minors due to public policy, including contracts for insurance, education, medical care, banking, checking, child support, enlistment in the armed services, and marriage.

Legal standard for intoxication

A standard based not on blood alcohol level, but on whether an individual is so intoxicated that they do not understand the legal consequences of their actions, requiring full restitution if disaffirmed.

Competency hearing

A legal proceeding where a judge determines whether an individual is mentally incompetent and takes away their ability to contract.

Guardian

An individual appointed by a judge at a competency hearing whose prime purpose is to enter into contracts on behalf of an adjudicated mentally incompetent person.