Capacity to contract Flashcards
As 1 of the major justifications for enforcing a contract is that parties voluntarily consented to be bound by it, a person must have the ability to give consent before she can be legally bound by contract, meaning…
Her maturity and mental ability must be such that it is fair to presume that she is capable of representing her own interests effectively
Meaning of capacity
Ability to incur legal obligations and acquire legal rights
Persons missing legal capacity to contract are…
Minors, persons suffering from mental illnesses, defects and intoxicated persons
Contract law gives persons who have lack of capacity the right to avoid contracts they enter during incapacity, meaning…
It protects people who bc of mental impairment, intoxication, youth, inexperience are disadvantaged in give and take of bargaining process
People whose capacity is impaired are able to…
Enter a contract and enforce it if they wish, but also can avoid the contract (contract is voidable)
People whose capacity is very impaired…
Cannot form a voidable contract
Meaning of disaffirmance
Minors have the right to avoid contracts in order to protect themselves against their own improvidence/overreaching by adults
Personal to minor: only minor/legal representative (guardian) may disaffirm contract
No formal act/written statement is required to make a valid disaffirmance
Disaffirmance can be any act/words by minor as communication to cancel the contract
If minor wishes to enforce contract…
Adult party must perform
The right to disaffirm discourages adults from dealing with minors bc…
It puts them in an undesirable position: adults are bound by contract unless it is to the minor’s advantage to disaffirm it
Expectation to the minor’s right to disaffirm
Not every contract involving a minor is voidable: some statutes prevent minors from disaffirming contracts such as marriage, agreements to support their children, educational loans, life/medical insurance contracts
Period of minority
At common law: 21, but the age of minority for contracting purposes has been lowered in 49 states to 18
Meaning of emancipation
Termination of a parent’s right to control a child and receive services and wages from her
No formal requirements involved
Can occur by implied consent, by parent’s express, by marriage of child
Doesn’t give minor the capacity to contract
All contracts entered during minority may be disaffirmed as soon as contract is formed, except for…
Contracts involving real estate in order to protect minor from imprudently disaffirming a transaction involving real estate
Minor’s right to avoid contract does not end when she reaches the age of majority, instead…
Continues for a time period after reaching majority (major factor courts consider in determining time of disaffirmance: whether adult relied on contract/given something of value to minor, if so, minor should disaffirm contract immediately, otherwise risks ratification, if not, former minor gets longer period of time to disaffirm, sometimes even years after reaching majority)
