Ch 14 Capacity And Legality

Question 1

Contractual capacity

Answer 1

Legal ability to enter into a contractual relationship

Question 2

Age of majority, exceptions?

Answer 2

When a person is no longer a minor, sometimes dep on marriage or emancipation

Question 3

contracts by minors

Answer 3

Voidable by option of minor, avoid by disaffirming

Question 4

Disaffirmance

Answer 4

Legal avoidance or setting aside of a entire contractual obligation, through words or action, can usually recover any consideration

Question 5

Disaffirmance limits

Answer 5

Within a reasonable time (any time during minority or reasonable time after minor reaches age of majority)
Majority: minor need only return the goods

Question 6

Exceptions to minors right to Disaffirmance (3)

Answer 6

Marriage
Misrepresented age
Necessaries

Question 7

Ratification

Answer 7

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

Question 8

(Age of maturity) Express v implied ratification

Answer 8

1. when indv, on reaching 18, states orally/in writing that they intend to be bound by contract
2. minor indicates intent to abide by contract

Question 9

Parent liability

Answer 9

not liable except contracts for necessaries

Question 10

Intoxication

Answer 10

condition in which a persons normal capacity to act or think is inhibited by alcohol, even if voluntary, valid or voidable

Question 11

How is intoxication determined?

Answer 11

objective indications of intoxicated persons condition to determine if they had required capacity, rarely -> void

Question 12

Intoxication disaffirmance

Answer 12

allowed while intoxicated and for a reasonable time after becoming sober
maj - return consideration recieved unless inv necessaries

Question 13

Mental incompetence - void, voidable, or valid

Answer 13

1. if court has previously determined * mentally incompetent (they need a court-appointed guardian)
2. have not been previously deemed mentally incompetent, didnt know they were entering contract, lacked mental capacity to comprehend nature, prupose, and consequences
3. person had capacity when contract was formed

Question 14

lucid intervals

Answer 14

periods during which intelligence, judgement, and will are temp restored

Question 15

Who does not have contractual capacity? (3)

Answer 15

minors, intoxication, mental incompetence

Question 16

Contracts lacking legality (3 types)

Answer 16

Contracts contrary to statute, contrary to public policy, discriminatory contracts

Question 17

Contracts contrary to statute (5 types)

Answer 17

Contract to commit a crime (if not crime at time entered -> terminated)
Ursury
Gambling
Blue laws
licensing statutes, dep on purpose of licensing statute

Question 18

Usury

Answer 18

lender makes loan at interest rate above lawful max

Question 19

gambling

Answer 19

creation of risk for the purpose of assuming it, only gambling contracts not allowed

Question 20

blue laws

Answer 20

sunday laws

Question 21

licensing statues

Answer 21

all states rq memebrs of certain professions to have licenses

Question 22

contracts contrary to public policy (3 types)

Answer 22

contracts in restraint of trade
unconscionable contracts
exculpatory clauses

Question 23

contracts in restraint of trade, exception + enforcement issues

Answer 23

anticompetitive agreements
- when reasonable and contain in ancillary clause in contract
covenant not to compete must be reasonable in duration and geographic restriction; contract reformation only when necessary to prevent undue burden/hardships

Question 24

Kennedy v. Shave Barber Co.

Answer 24

Kennedy worked at shave shop, employment contract had covenant not to compete, but she broke

Question 25

unconscionable contracts/clauses

Answer 25

bargains that are so oppresive that courts relieve innocent parties of part or all their duties; procedural/substantive grounds

Question 26

(contract) procedural unconscionability (4) v substantive

Answer 26

inconspicuous print, unintelligible language, one aprtys lack of op to read contract or ask Q about meaning; disparity in bargaining power between the 2 -> not voluntary (part of) contracts that - oppressive/overly harsh

Question 27

adhesion contract

Answer 27

written exclusively by 1 party and presented on take-it-or-leave-it basis, type of procedural unconscionability

Question 28

exculpatory clauses, when is it enforced (4 rq)?

Answer 28

(contract contrary to public policy) release party from liability in event of monetary or physical injury no matter who is at fault enforced when they X violate public policy, are reasonable, and do not protect parties from liability for intentional misconduct, relatively = bargaining positions

Question 29

discriminatory contracts

Answer 29

contracts in which a party promises to discriminate on basis of race, color, natl origin, religion, gender, age, disability

Question 30

Holmes v Multimedia KSDK, Inc UNFINISHED

Answer 30

Holmes signed entry form titled race waiver and release. She trips over an AV box and sustains injury.

Question 31

PAK Foods Houston, LLC v Garcia

Answer 31

minor worked at KFC operated by PAK food houston. Existence of arbitration clause. She is injured on job, left job, mother sues to recover medical expenses for injury. Filed motion to compel arbitration, minor elected to avoid any agreement to arbitrate by filing underlying suit. Suit alone does not disaffirm agreemnt to arbitrate, but response filed in opposition to motion to compel arbitration id definitive disaffirmance of any agreement to arbitrate. Decision affirmed

Question 32

Milicic v Basketball marketing, Inc UNFINISHED

Answer 32

BMC refuse to release, accuses Reebok and Adidas of contract

Question 33

in pari delicto

Answer 33

in most illegal contracts, both parties are considered to be equally at fault, and neither can enforce or recover damages

Question 34

(illegality) members of protected class

Answer 34

when statute is designed to protect a certain class of people, a member of that class can enforce a contract in violation of the statute even though the other party cannot

Question 35

withdrawal from an illegal agreement

Answer 35

if illegal part X performed, party rendering perf can withdraw and recover perf or its value

Question 36

severable or divisible contracts | + legality

Answer 36

has paarts that can be perf separately w sep consideration provided f e part courts may enforce legal portion