CH. 13 Capactiy to Contract

Contract

A legally enforceable set of promises.

Contractual Capacity

The ability of a person to do a legally valid act, such as entering into a contract.

Minors' Contracts Status

Voidable at the option of the minor, giving them the right to disaffirm (cancel).

Public Policy for Minors' Capacity

Protecting minors who may not be able to effectively bargain with more experienced adults.

minor contracts are void or voidable?

voidable

minors always have the right to disaffirm but the adult does or doesnt?

the adult does not disaffirm because the minor is protected

the general rule to disaffirm a K for a minor is:

minor may disaffirm entire K until age of majority (18) and for a reasonable time after

minors can disaffirm any K except…

real estate

only minor (or guardian/estate rep) may disaffirm, not who?

the adult counterparty who contracted

what does ratify K mean?

its when a minor doesnt disaffirm within a reasonable amount of time after 18, the minor does not have the right to disaffirm anymore

what actions by a minor is enough to signify intent to follow through with a K upon reaching 18+ and is enought to ratify?

words or actions like conduct; using the item or making payments

Traditional Common Law Disaffirmance Rule

Minors must return goods in possession, but do not have to return the adult to status quo ante.

Modern Exception to Status Quo Ante

If a contract is fair or the minor intentionally destroys property, the minor must return the adult to status quo ante.

Effect of Minor Misrepresenting Age

May require SQA restoration, bind the minor to the contract, or hold them liable for the tort of deceit.

Necessaries

Food, shelter, medical care, and education essential to a minor's continued existence and general welfare.

Liability for Necessaries

Minors can disaffirm, but are held liable on a quasi-contract basis for the reasonable market value of necessaries consumed.

Emancipation

The termination of parental rights, which usually does not give a minor the capacity to contract.

Test of Mental Capacity

Did the party have sufficient mental capacity to enter the contract when he or she entered into it?

Mental Incompetence and Contract Status

Voidable if the party lacked mental capacity at the time; void if declared insane by a court prior to contracting.

Mental Incapacity and Status Quo Ante

Required if the competent party was unaware of the impairment; not required if the competent party knew or should have known.

people lacking mental capicity __ ____ contracts when they regain their sanity (as may the personal representative of someone adjudicated insane)

may ratify the contract!

people lacking mental capacity are liable for what? (same as minors)

liable for reasonable value of necessaries

A minor buys food and necessary medical treatment. The minor later disaffirms the contracts. What may the minor still owe?

the reasonable market value of the necessaries recieved