Business Law Chapter 13

capacity

the ability of a person to do a legally valid act

what are the three classes of people with limited capacity?

minors, people who are mentally impaired, and intoxicated persons

What is the contract considered if a person lacks capacity?

void or voidable

What does it mean that capacity is presumed?

a party must prove incapacity in order to avoid a contract

what does it mean to disaffirm a contract?

cancel

while minors can disaffirm most contracts a minors, which type of contract must they wait to?

title to real estate

a minor who does not disaffirm a contract within a reasonable time after reaching majority is said to have

ratified the contract

what are 3 ways courts deal with misrepresentation of age by minors?

minor is allowed to disaffirm but require minor to place adult in status quo; minor is estopped from disaffirming and bound by contract; minor is allowed to disaffirm but liable for tort of deceit

emancipation

termination of a parent’s right to generally control their minor children

Does emancipation give a minor the right to contract?

No

necessaries

defined as things that are essential to a minor’s existence and general welfare

what is the test incapacity?

whether a party, at the time of contract had sufficient mental capacity to understand the nature and effect of the contract

if a court finds that a person lacked mental capacity at the time they agreed to a contract, is it void or voidable?

voidable

if a person was adjudicated mentally incompetent before they entered a contract is it voidable or void?

void

for people who lacked mental capacity when entering a contract, are they still liable to pay for necessaries received?

they are still liable to pay the reasonable market value