Chapter 14: Capacity and Legality Flashcards
the legal ability to enter into contracts; the mental capacity required by law for a party who enters into a contract to be bound by that contract
contractual capacity
Contractual capacity is either:
not present or subject to special rules
today, the age of majority for contractual purposes in 48 states is:
18 years
the legal avoidance, or setting aside, of a contractual obligation
disaffirmance
To disaffirm, a minor must express his or her _______, through words or conduct, not to be bound to the contract.
intent
T or F: A minor can disaffirm a portion of a contract.
False; has to be all of it
Typically, courts presume that in the case of minors, executed contracts (fully performed contracts) are _________ and that executory contracts (contracts not yet fully performed by both parties) are __________.
ratified; disaffirmed
Contracts made by mentally incompetent people can be ______, ______, or ________.
void; voidable; valid
When will a contract be void for mentally incompetent people?
If a court has previously determined that a person is mentally incompetent.
If a court has not previously judged a person to be mentally incompetent but the person was incompetent at the time the contract was formed, the contract may be _______.
voidable
lucid intervals
valid
What is the age of majority in Alabama and Nebraska?
19
T or F: If you don’t have contractual capacity you may not enter into a contract
False
Sometimes, the object or performance of a contract is rendered illegal by a statute after the parties entered into the contract. In that situation, the contract is considered to be _________ (terminated) by law.
discharged
charging an illegal rate of interest
usury
Although contracts involve private parties, some are not enforceable because of the negative impact they would have on society. These contracts are said to be
contrary to public policy
involves inconspicuous print, unintelligible language (“legalese”), or one party’s lack of an opportunity to read the contract or ask questions about its meaning.
procedural unconscionability
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.
exculpatory clauses
both parties intended and mutually agreed to give or give up consideration
bargained for exchange
contracts in restraint of trade (anticompetitive agreements) generally are:
void (unenforceable)
T/F: you can’t have discriminatory contracts
true
If their is an illegal contract courts just:
leave the parties where they find them
T or F: A party may have the capacity to enter into a valid contract and the right to avoid liability under it.
True
T or F: A minor can enter into any contract an adult can, without exception.
False
T or F: Contracts in restraint of trade always violate one or more federal or state statutes.
False
T or F: A court usually will enforce a covenant not to compete provided its restrictions are reasonable.
True
T or F: A contract clause that releases an employer from liability for any injury to an employee, no matter who is at fault, is generally enforceable.
False
T or F: A landlord can avoid liability for injuries that occur on rental property by including an exculpatory clause in the lease.
False