Chapter 11: Capacity (unedited)

capacity

the legal ability to enter into a binding contract

emancipated

a minor is given the full legal capacity to enter contracts when he or she becomes ________ before reaching the age of majority

emancipation

occurs when a minor's parents or legal guardians give up their right to exercise legal control over the minor

voidable

minors can disaffirm a contract because the contract is

consideration

to disaffirm a contract a minor must return the

life insurance, health insurance, counseling, stock and bond transfers, education loans, child support contracts, marriage contracts, armed services contracts

exceptions to the minor's right to disaffirm the contract

the minor

the minors right to disaffirm the contract is designed to protect

necessaries

contracts for ________ are sometimes considered an exception to the rule that minors can disaffirm their contracts

contract for a necessary

a contract that supplies the minor with the basic necessities of life generally thought of as food, clothing, shelter, and basic medical services

ratify

once a person reaches the age of majority, they may _____ contracts made as a minor

expressed ratification

occurs when after reaching the age of majority, the person states that they intend to be bound by the contract entered into as a minor

implied ratification

occurs when the former minor takes some action after reaching the age of majority that is consistent with an intent to ratify the contract

are not

parents _____ liable for the contracts entered into by the minor children

full, limited, or no legal capacity to enter into a binding contract

persons suffering from mental illness or deficiency may have ____, _______, or _______.

the nature and extent of their mental deficiency

the level of legal capacity regarding mentally incapacitated is dependent on

___voidable

if the person suffering from mental deficiencies that prevent them from understanding his legal obligations under the contract he is entering the contract is ____

____valid

if the person's mental deficiency simply impairs their judgement about the desirability of the contract but does not prohibit them from understanding their obligations the contract is ____

____void if the person id adjudicatd insane the contract is ____

... voidable

if the sober party is aware that the intoxicated person is so impaired that they are unable to understand their legal obligations under the contract the contract is...

...valid

if the intoxication impairs only the intoxicated persons judgement but not theor understanding of their contract contractual obligations the contract is...

...void

if the intoxicated person has been adjudicated to be a hibitual drunkard the contract is...

unenforceable

a term applied to a contract that, becuse of law, cannot be enforced by the courts

illegal, illegal

contracts cannot be for an ____ subject or be carried out by ____ means

unenforceable

any agreement to commit a crime or tort is illegal and ____

give the government avenue to regulate industries and protect public interest and safety

licensing statutes have two main purposes:

enforceable

if the purpose of licensing is to provide government control, the contract is

illegal and unenforceable

if the licensing statue is to protect the public's health, the agreement is deemed

usury

the lending of money at an exorbitant or unlawful rate of interest

covenant not to compete

An agreement not to compete against a party for a set period of time within a designated geographic area

unconscionable

A term applied to a contract in which one party has so much more bargaining power than the other party that the powerful party dictates the terms of the agreement and eliminates the other party's free will

void of conscience

the term unconscionable refers to the fact that the agreement in question is so unfair that is

procedural and substantive

the two main types of unconscionable agreements

procedural unconscionability

unconscionability that derives from the process of making a contract

an adhesion contract

procedural unconscionability arises when one party presents the other with _________

adhesion contract

a contract created by a party to an agreement that is presented to the other party on a take-it-or-leave-it basis

substantive unconscionability

unconscionability that derives from one-sided, unjust, or overly harsh substance in a contract

exculpatory clause

a statement in a contract that frees one party from all liability arising out of performance of the contract, generally based on factors such as consumer ignorance or a great deal of unexplained fine print that serve to deprive the less powerful party of a meaningful choice

public policy

exculpatory clauses are often found to be against

are

business that _____ closely linked to the public interest cannot enforce exculpatory clauses

are not

business that _____ closely linked to the public interest can enforce exculpatory clauses

severable contracts

a contract that contains multiple parts that can each be performed separately

indivisible contract

a contract that requires complete performance by both parties