Chapter 14 Capacity and Legality Flashcards
Age of majority
When a person is no longer a minor
Disaffirmance
Legal avoidance of a contractual obligation
- Need to disaffirm the entire contract, not just part of it
Duty of restitution
Requirement for the minor to restore the adult party to the position she or he held before the contract was made when disaffirming
- No full refund
Ratification
The act of accepting and giving legal force to an obligation that previously was not enforceable
Express ratification
When the individual, on reaching the age of majority, states orally or in writing that he or she intends to be bound by the contract
Implied ratification
When the minor, on reaching the age of majority, indicates an intent to abide by the contract
If not disaffirmed after reasonable time after age of majority…
Executed contracts -> ratified
Executory contracts -> disaffirmed
Contracts made under intoxication are voidable when…
Prove that a person’s judgment was so severely impaired that he or she could not comprehend the legal consequences of entering into a contract
When contract will be void for mentally incompetent persons
Court previously determined incompetence and only guardian can form contracts
When contract will be voidable for mentally incompetent persons
Not previously ruled as incompetent and was incompetent when the contract was formed
Usury
A lender who makes a loan at an interest rate above the lawful maximum
When contract will be enforceable for mentally incompetent persons
If the person had capacity at the time the contract was formed
- Such as lucid periods
Reform covenants
If a covenant is found to be unreasonable in time or geographic area, the court may convert the terms into reasonable ones and then enforce the reformed covenant.
Unconscionable contracts
Contracts that are so unscrupulous or grossly unfair as to be “void of conscience”
Adhesion contract
A contract written exclusively by one party and presented to the other on a take-it-or-leave-it basis
