Chapter 15

Question 1

What is mental capacity?

Answer 1

The mental ability to enter into a contract

Question 2

What is a valid contract?

Answer 2

A contract with all five elements: offer, acceptance, consideration, capacity, and legality

Question 3

What is a voidable contract?

Answer 3

A contract entered into by either a minor or a person with limited mental capacity

Question 4

What is a void contract?

Answer 4

A contract missing one or more elements required of a k

Question 5

Who are the parties to a lack of capacity defense?

Answer 5

Plaintiff and State

Question 6

What must the plaintiff prove in a lack of capacity defense case?

Answer 6

That the defendant is insane by a preponderance of evidence

Question 7

How is lack of mental capacity proven?

Answer 7

Non Compos Mentis and Effect of a void K

Question 8

What does a declaration of non compose mentis mean?

Answer 8

It means that you are adjudicated insane

Question 9

What is the effect on k if one of the parties is non compose mentis?

Answer 9

The court will appoint a guardian for you that will enter into k’s for you since you lack capacity.

Question 10

Important Concept 1

Answer 10

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.

Question 11

What is disaffirmance?

Answer 11

The minor can choose to get out of the k

Question 12

What is ratification?

Answer 12

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.

Question 13

When can a minor disaffirm?

Answer 13

Upon reaching the age 18, and for a short time afterwards they can still disaffirm to get out of the k

Question 14

How does a minor disaffirm?

Answer 14

The minor gets out of the K and gets all of their money back

Question 15

Is a minor liable for anything?

Answer 15

A minor is not liable for paying any goods except necessaries.

Question 16

What are necessaries?

Answer 16

Food, clothing and shelter

Question 17

Why are minors liable for necessaries?

Answer 17

Merchants wouldn’t want to enter into K’s with minors and then they couldn’t buy food, clothing or shelter

Question 18

What happens if a minor lies about his/her age?

Answer 18

Then the minor has committed a tort and committed fraud. The court will hold them liable for their contracts.

Question 19

What is a usurious k?

Answer 19

A k that charges an illegal rate of interest.

Question 20

What is a gambling k?

Answer 20

Wagers, lotteries, games of chance based on skill is illegal except in the states that have legalized gambling on games of chance.

Question 21

What are Sunday K’s?

Answer 21

Some states have statutes that make entering into a K on a Sunday illegal.

Question 22

What are licensing k’s?

Answer 22

A license to represent competency or to generate revenue (alcohol for bartending/medical/law license)

Question 23

What is a k to commit a crime?

Answer 23

If you hire someone to commit a crime, it is not enforceable.

Question 24

What is a k in restraint of trade?

Answer 24

“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.

Question 25

What is an Exculpatory Clause?

Answer 25

These agreements say that even if the other party was negligent, nevertheless, you agree not to sue.

Question 26

Continue on 203

Answer 26

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