defenses to enforcing a contract

Question 1

contractual capacity

Answer 1

legal ability to enter into contractual relationship

Question 2

no competence/ limited competence

Answer 2

no competence: judged mentally incompetent by court, contract is void
limited competence: minor/intoxicated/mentally disabled
contract is voidable by that party

Question 3

minors

Answer 3

children are minors/infants until they turn 18 years old, marry, or become emancipated

1. minors can enter into any contract as long as not prohibited by law (alcohol, cigs)
2. most contracts entered into by minors are voidable by the minor, so the minor can disaffirm the contract- this is so they don’t get taken advantage of
3. minor can disaffirm while a minor or during a short period after turns 18
   - must disaffirm entire contract- all or nothing
4. to disaffirm, minor must return goods or other consideration for full refund

Question 4

majority rule

Answer 4

in most states, minor can get full refund even if has damaged or lost the goods
-other states require restitution: restoring other party to position he was in before entered contract, damage bike, has to pay for damage, get back fmv

Question 5

exceptions to minor

Answer 5

minors can’t disaffirm:

• certain contracts because of public policy- contract to enlist in military, student loans, insurance
• some states prohibit minors from disaffirming contracts in which the minor has misrepresented her age
• minors can disaffirm contracts for necessaries (food shelter medical care) but are liable for reasonable value of goods received

Question 6

ratification for minors

Answer 6

express/implied:; can ratify a contract made as a minor upon reaching maturity or shortly thereafter

Question 7

intoxication

Answer 7

contracts entered into by intoxicated persons are either valid or voidable if the person’s judgement was so impaired that he couldn’t understand the legal consequences of his actions

• voidable contracts (including for necessaries) can be disaffirmed but after full restitution - not as generous of a rule
• intoxicated person may expressly or impliedly ratify voidable contracts within reasonable time after sobering

Question 8

mental incompetence

Answer 8

contracts entered into by the mentally disabled are:

• if the person has been legally declared incompetent, the contract is void, can’t enter into any contract
• even if not legally incompetent, if the person doesn’t have the mental capacity to understand that he is signing a contract or the consequences of doing so, the contract is voidable
• contract can be disaffirmed or ratified
• incompetent person is liable for reasonable value of necessaries
  3. if person is not legally incompetent and has either a lucid period or sufficient mental capacity to understand, the contract is valid