Business Law Chapter 14 Capacity and Legality Vocabulary

Age of majority

The age at which an individual is considered legally capable of conducting himself or herself responsibly and is entitled to vote. In contract law, the age at which one is no longer an infant and can no longer disaffirm a contract.

Contractual capacity

The legal ability to enter into contracts; the threshold mental capacity required by law for a party who enters into a contract to be bound by that contract

Covenant not to compete

A contractual promise to refrain from competing with another party for a certain period of time and within a certain geographic area. Although covenants not to compete restrain trade, they are commonly found in partnership agreements, business sale agreements, and employment contracts. If they are ancillary to such agreements, covenants not to compete will normally be enforced by the courts unless the time period or geographic area is deemed unreasonable.

Disaffirmance

The legal avoidance, or setting aside, of a contractual obligation.

Emancipation

In regard to minors, the act of being freed from parental control; occurs when a child’s parent or legal guardian relinquishes the legal right to exercise control over the child. Normally, a minor who leaves home to support himself or herself is considered emancipated.

Exculpatory clauses

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault

Necessaries

Necessities required for life, such as food, shelter, clothing, and medical attention; may include whatever is believed to be necessary to maintain a person’s standard of living or financial and social status.Ratification

Ratification

The act of accepting and giving legal force to an obligation that previously was not enforceable.

Reformation

A court-ordered correction of a written contract so that it reflects the true intentions of the parties

Unconscionable contract or clause

A contract or clause that is void on the basis of public policy because one party is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party.

Usury

Charging an illegal rate of interest.