Legal Capacity and Contract Rules for Minors, Mentally Incapacitated, and Intoxicated Persons

Minor

Under the age of capacity or under 18

Ratify

Words or actions that indicate the previous minor does want the contract and does not want to avoid it

Ratify Occurs when (Minor)

-Continuing to make payments

-Continueing to use the item/service

-Verbally or in writing saying they want to keep it

-Failling to disaffirm within a reasonable time after turning 18

Minors Necessities

food,clothing, shelther, sometimes medical care

Reasonable time (Minors)

If they wait too long, they lose the right to avoid

Reasonable time(Court Reasoning)

- Distance or logisitc

- How much time has passed since reaching 18

- The nature of the contract

Minor Contracts

Contracts signed by minors are voidable, not void

Rules for avoiding minor contracts

-A minor can avoid a contract while still a minor

-A minor can avoid it for a reasonable time after becoming an adult

-Unless,as an adult, the minor ratifies (accepts) the contract

To avoid a contract, a minor must

- Return what they still have

- Explain what happened to what they no longer have

- account for damage or depreciation (If they lied about age)

Minor Contract formed

-A minor must pay the reasonable value of any necessary conferred on them, even if they avoid the contract

- If overpayed, minor can avoid to receive back the money they paid

- If underpaing, a minor can avoid to not pay future payments but still have to pay the fair value of what was used

Minor contracts that can't be avoided

Business contracts, child support of minor's child, insurance, bail or student loans

Men incapacity

Where a person by reason of mental illness or defects in unable to udnerstand in reasonable manner the nature or consquences of tranasction in question or is unable to act in a reasonable manner with respect to the tranaction in question

adjudication

legally found mental incapacity

"knows or should know"

Reasonable person observing obivous signs should be recgonized that the individual cannot understand or act reasonably

status quo ante

Restoring things completely to the way things were bfore the contract (mental incapacity only)

Void

Has no regal effect from the beginning (as in adjudacted incompetence or when the other party knows of incompetence)

Voidable

Valid unless the incompetent party chooses to avoid it (applies when the competent party is unaware and the contract is unfaire)

Rules of Mental incapacity (Either two can be satisfied)

-The person is unable to understand in a reasonable manner the nature or consquences of the transaction in question

- The person is unable to act in a reasonable manner with resepct to the transaction

Categories for mental incapacity

-Congential defects in initelligence - Birth

-Accidental brain damage

-Organic Disease (physical diseases of the brain)

-Mental illness Psychiatric Disorders that impairs a person's ability to think or act rationally

Adjudication Process

A family member or other interested person files a motion in court requesting adjudication for mental incompetence

- The court holds a hearing and reviews testimony from witnesses

-The judge determines whether the person meet the legal definition of mental incompetence

Adjudication legal Consequences

- All Future contracts made after adjudication are void

- The individual permanently loses contractual capacity

- The guardian must provide public notice that the person has been adjucated incompetent

Type of public notices

-Actual Notice - A person is directly informed

-Constructive Notice - Notice is published publicly, the law presumes everyone is aware.

Opposing the adjudication

Family or other parties may oppose the petition

The proceeding becomes adversarial: evidence is presented, witnesses cross-examed, and the judge decides the outcome

If mental incompetence exists but has been adjudicated goes to 3 tiers

-If the person ajudicated then any subsequent contract is void

-No adjudication but the competent party knows or should know than the contract is void

-No adjudication, and competent party is unaware of incompetence then the contract evaulted for fairness to the incompetent party

Contract fairness

Contract unfair - inceompetence person can avoid the contract

contract fair - the contract is valid, unless the incompetent person can restore status quo ante.

Intoxiciation Law

To invalidate a contrat on the basis of intoxication, the person must be intoxicated to the level of mental incapacity

rules for Intoxication

If a intoxicated person makes contract with a sober party who is unware of the intoxication

- The contract is valid

- the intoxicated party cannot void the contract merely because they were intoxicated

Avoiding intoxicated contract (3 conditions)

-Regain Sobreity

-Learn about the contract

- act within a reasonable tim to disaffirm the contract

(If they do not act then the contract becomes binding