Chapter 15 Flashcards
What is mental capacity?
The mental ability to enter into a contract
What is a valid contract?
A contract with all five elements: offer, acceptance, consideration, capacity, and legality
What is a voidable contract?
A contract entered into by either a minor or a person with limited mental capacity
What is a void contract?
A contract missing one or more elements required of a k
Who are the parties to a lack of capacity defense?
Plaintiff and State
What must the plaintiff prove in a lack of capacity defense case?
That the defendant is insane by a preponderance of evidence
How is lack of mental capacity proven?
Non Compos Mentis and Effect of a void K
What does a declaration of non compose mentis mean?
It means that you are adjudicated insane
What is the effect on k if one of the parties is non compose mentis?
The court will appoint a guardian for you that will enter into k’s for you since you lack capacity.
Important Concept 1
If you are adjudicated insane when you entered into the k then your k is voidable. You can get out of the K but you have to pay for damages to the goods.
What is disaffirmance?
The minor can choose to get out of the k
What is ratification?
If the minor does not disaffirm the k after reaching their 18th birthday then the K is valid. We say that the minor ratified the k.
When can a minor disaffirm?
Upon reaching the age 18, and for a short time afterwards they can still disaffirm to get out of the k
How does a minor disaffirm?
The minor gets out of the K and gets all of their money back
Is a minor liable for anything?
A minor is not liable for paying any goods except necessaries.
What are necessaries?
Food, clothing and shelter
Why are minors liable for necessaries?
Merchants wouldn’t want to enter into K’s with minors and then they couldn’t buy food, clothing or shelter
What happens if a minor lies about his/her age?
Then the minor has committed a tort and committed fraud. The court will hold them liable for their contracts.
What is a usurious k?
A k that charges an illegal rate of interest.
What is a gambling k?
Wagers, lotteries, games of chance based on skill is illegal except in the states that have legalized gambling on games of chance.
What are Sunday K’s?
Some states have statutes that make entering into a K on a Sunday illegal.
What are licensing k’s?
A license to represent competency or to generate revenue (alcohol for bartending/medical/law license)
What is a k to commit a crime?
If you hire someone to commit a crime, it is not enforceable.
What is a k in restraint of trade?
“Convenants not to Compete”
You agree that if you leave your job, you will not get a job at a similar business as a part of competition
The exception to the rule is if the time is too long, area too big, and its not very necessary to prevent you from competing (doctors are plentiful, etc) then the courts will deem it unenforceable.
What is an Exculpatory Clause?
These agreements say that even if the other party was negligent, nevertheless, you agree not to sue.
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