Contractual Capacity

Categories of Capacity

• Categories: Two main categories exist based on age: infant (minor) and adult.

• Types of Capacity:

  • Low Capacity: Limited ability to enter contracts without permission from parents.

  • Limited Capacity: Minors have some rights but no obligations without parental consent.

  • Full Capacity: Adults have full rights and obligations in contracts.

Minors and Contracts

• Rights and Obligations: When minors enter a contract, they receive rights but not obligations unless parental consent is provided.

• Consequences of Limited Capacity: If a minor enters a contract without permission, complications arise for the other party involved.

• Key Focus: Understanding remedies available when a minor breaches a contract.

Remedies for Minors in Contracts

Exceptio Non Adempicci Contractus

• Definition: A Latin term meaning the minor cannot enforce the benefits of the contract unless they fulfill payment obligations.

• Reciprocal vs. Non-reciprocal Contracts:

  • Unilateral: One party has rights; no obligations.

  • Bilateral: More than one obligation, e.g., sum of repayments in a loan agreement.

  • Reciprocal: Both parties exchange; e.g., money for goods (like a PS5).

• Performance Requirement: Minors cannot claim performance unless they fulfill their side of the contract.

Unjustified Enrichment

• Concept: Occurs when one party benefits at another's expense without it arising from a contractual agreement.

• Liability of Minors: Minors may be held liable for unjust enrichment if they possess the goods (e.g., PS5) without payment.

• Remedy Calculation: The impoverished party may recover the lesser of the value they lost or the value that the minor gained.

Exceptions to Minors’ Contractual Capacity

Fraudulent Misrepresentation

• Definition: When a minor falsely claims to be of age (18+) and appears older.

• Good Faith: If the other party acted in good faith without knowing the deceit, they can hold the minor liable.

Ratification

• Definition: A minor can validate a contract after reaching full age (18), effective retroactively to when the contract was signed.

• Parental Ratification: Parents can ratify contracts on behalf of minors either explicitly or implicitly.

Instances of Limited Capacity

1. Age of Consent: Minors over 16 can open a savings account and make a will without parental permission.

2. Emancipation: Minors can become independent and enter contracts without parental consent, often due to marriage or court declaration.

Mental Capacity and Contracts

Definition and Implications

• Legal Standing: If declared mentally ill, a person needs a curator for contract execution.

• Contract Nullity: Contracts made without a curator's consent become void, with the other party only able to claim unjustified enrichment.

Mental Illness and Contractual Capacity

• Definition: Mental illness is assessed on situational facts; understanding may vary.

• Peak Understanding: Individuals with conditions like Alzheimer's may fluctuate between clarity and confusion, impacting their contractual capacity.

Status Implications in Contracts

Married Individuals

• Community of Property: All assets and liabilities are shared unless an antenuptial contract is stipulated.

• Permission Requirements: Spouses need permission to enter contracts regarding:

  • Alienation of immovable property

  • Securing surety

  • Entering credit agreements

Practical Considerations

• Complexity of Property Division: Disputes can arise in property splits during divorce, especially regarding intangible assets such as loyalty points or frequent flyer miles.