Contractual Capacity

Question 1

A contract is not formed unless:

Answer 1

Parties knowingly assent to its terms

Assent is lacking if a party is under a legal disability which the law presumes impairs such knowing assent

Question 2

Contractual Capacity Docrtine

Answer 2

A. Need to protect those who are under recognized legal disability

B. To assure the voluntariness of conduct

C. Typical situations involving no capacity - “contract” is void

• 1. A person adjudicated incompetent*
• 2. Children who have not reached the age of reason (7-10)*

D. Typical situations involving persons with revocable contractual capacity, contract is not void, but voidable at option of person uner the disability

• 1. minors*
• 2. incompentent persons in fact (but not under guardianship)*
• 3. extremely intoxicated persons*

Question 3

Minors

Answer 3

Right to disaffirm (avoid) contracts previously entered into

When - at any time during minority or within reasonable time after reaching the age of majority

2. how - express (words) or implied (actions)

Minor must:

• disaffirm in total
• return consideration received in whater condition it is in

Question 4

Extent of recovery for the minor

Answer 4

1. As to executory contracts - complete recovery for minor
2. as to executed contracts - split of opinion
   a. majority rule - complete recovery
   b. minority rule - “charge” the minor for any reduction in value or for the benefit of use (“rent”)

Question 5

Contracts for necessities

Answer 5

Minor liable for reasonable value on quasi contract theory

Question 6

Ratification of the contract by the minor

Answer 6

How it happens (can only occur after reaching age of majority)

Implied ratification (waiting too long after reaching the age of majority