Final - Ch. 6 Capacity

Question 1

A minor has no power to (1) a contract; after majority, the person can give (2) or (3) ratification stating he will not disaffirm the contract.

Answer 1

1. ratify
2. express
3. implied

Question 2

Attorney-in-fact

Answer 2

Person appointed to act in place and stead of another through an instrument called a Power of Attorney.

Question 3

court has declared a person incompetent

Answer 3

adjudicated incompetent

Question 4

Unlike disaffirmation of a contract with a minor, which can only be done expressly, (1) of a contract after 18 can be done (2) or (3).

Answer 4

1. ratification
2. expressly (in words say you want the contract to continue)
3. impliedly (continue paying; do nothing to disaffirm)

Question 5

Guardian ad Litem

Answer 5

A court appointed person to serve as an advocate, usually for a child, and to act in the best interest of that child during a specific hearing or specific litigation.

Question 6

Two types of competency. The (1) looks for a total lack of understanding–the contract (2) even if it is fair. The (3) looks for a person who has some understanding of the transaction but is unable to act reasonably in relation to that understanding–usually someone is (4) in this situation.

Answer 6

1. cognitive test (person buys a Rolex)
2. voidable
3. volitional test (person knows he needs a watch but gets talked into a Rolex - Purchase isn’t one a reasonable person would make)
4. taking advantage

Question 7

Question

Answer 7

Answer

Question 8

3 people who are given special protection from contract mistakes in the form of a right to avoid the contract

Answer 8

1. minors2. mentally incompetent3. some people under influence of intoxicating substances

Question 9

(1) are viewed unsympathetically by courts in contract matters, the understanding is “your fault.” But courts are aware of (2). The contract may be voidable if (3) AND (4). In other words, the law does not protect (5), but does protect those who get (6).

Answer 9

1. Intoxicated individuals
2. alcohol/drug abuse
3. the person was too intoxicated to understand the nature of the transaction
4. the other party knows about the intoxication
5. drunks
6. taken advantage of

Question 10

Mental incompetence relates to (1)–for dimentia sufferers, competence can differ from day-to day.

Answer 10

1. when the contract is entered

Question 11

If a minor improperly avoids a contract, courts are forgiving with minors as (1) and harsh with them as (2). Many courtrs require return of (3) but do not require (4). A minor may also not avoid a contract to (5).

Answer 11

1. defendants
2. plaintiffs
3. consideration
4. restitution (e.g., if minor crashes a car, dealer is out of luck)
5. improve his position

Question 12

Can a minor act as an agent?

Answer 12

Yes. If a minor acts as an agent for the benefit of an adult, the agent is party to the contract.

Question 13

A cognitive test is easier when the person is (1) and has a (2) or (3).

Answer 13

1. adjudicated incompetent
2. guardian
3. power of attorney

Question 14

True or False:
The exception to contracting with minors, in which the person can legally get the value from the contract, is for necessities, which are food, clothing and shelter.

Answer 14

TRUE

Question 15

Two things that must be proven with regard to necessities in enforceability of contract

Answer 15

1. Was the item a necessity (determined by courts, matter of law)
2. Was the item a necessity to the person (matter of fact)(e.g., a minor renting an apartment when her parents provide a home she is welcome in = not a necessity)

Question 16

A person, the (1), who fears becoming incompetent will sometimes sign a (2) to appoint another to act as (3). A (4) remains valid despite principal’s loss of mental capacity.

Answer 16

1. principal
2. power of attorney
3. agent
4. durable power of attorney

Question 17

In some states, (1), (2) or (3) may either give a minor capacity or make the minor liable for more necessities.

Answer 17

1. marriage
2. enlistment
3. emancipation

Question 18

incompetence has not been determined by a court (courts look at necessity and state of mind)(may have to make restitution if other person didn’t know)

Answer 18

non-adjudicated incompetent

Question 19

If a contract is disaffirmed by the minor, the other party does not have to return (1). Likewise, if the minor (2) from the transaction, that must be paid to the other party. However, if the minor (3) the property, too bad. The general idea of courts about contracting with minors is (4).

Answer 19

1. their benefit (e.g., payments made toward owning car)
2. profits (sells the car for more)
3. damages
4. “do so at your own peril”

Question 20

Mental Incompetence

Answer 20

The inability to understand the nature and consequences of a transaction.

Question 21

Restitution

Answer 21

also known as indemnification, it is the act of making good or giving equivalent for any losses suffered.

Question 22

Is a minor liable for restitution? Is an adult liable for restitution?

Answer 22

No, a minor is not liable for the value of the benefit received from the contract.
Yes, An adult must return everything that the minor gave them, to full value.

Question 23

Incompetence, unlike age incapacity, is based on the parties’ (1) state of mind. The objective comes in with (2). Courts will try to protect the (3), whether the contract is (4) or not.

Answer 23

1. subjective
2. experts (psychiatrists, etc.)
3. incapacitated person
4. improper

Question 24

Emancipation

Answer 24

A declaration that a minor is no longer under the care of custody of parents or a guardian.

Question 25

Implied Ratification

Answer 25

Acknowledgement to honor a contract that is inferred from a party’s behavior, words and action.

Question 26

make a contract void

Answer 26

avoid (dissafirm)

Question 27

Can a married minor get out of a contract?

Answer 27

No. A minor married to an adult is not under a legal disability–in the eyes of the law, she becomes an adult.

Question 28

Necessities

Answer 28

Things that are considered indispensible to life, such as food clothing and shelter

Question 29

A minor can have liability under contracts for (1) under a theory similar to (2)

Answer 29

1. necessities
2. quasi-contract (quantum meruit)

Question 30

When looking at whether an intoxicated person entered into a contract, courts will look at the (1), the (2), and the other party’s (3) of the intoxication. They will also consider whether th intoxicated person ratified the contract by failing to (4) it when sober.

Answer 30

1. cause (bad reaction to rx)
2. degree
3. awareness
4. disaffirm

Question 31

Minors are always responsible for (1) and for (2).

Answer 31

1. student loans2. child support

Question 32

Saying someone under 18 has no legal capacity to enter a contract is an (1) standard based on one’s (2). It prevents (3) and protects minors from their own (4). For the sake of disaffirmation, whether the contract is (5) or not does not matter.

Answer 32

1. objective
2. birth certificate
3. exploitation
4. own decisions
5. predatory

Question 33

If a person contracts with someone under 18, that person has the ability to (1). This right extends for a (2) beyond 18. Disaffirmation can be done only (3).

Answer 33

1. disaffirm
2. reasonable time
3. expressly

Question 34

A parents’ waiver to his child’s injury is likely (1) as an (2)

Answer 34

1. unenforceable (ineffective)
2. exculpatory clause

Question 35

True or False: Like minors, incompetents are liable for reasonable value of necessities and are capable of ratifying contracts when competent.

Answer 35

TRUE

Question 36

Cognitive test for competence

Answer 36

Mental incompetence determined by one’s inability to understand the overall nature and consequences of a transaction. A total lack of understanding.

Question 37

A (1) is appointed to advocate for one particular case–usually this comes in where the actual guardian has a (2).

Answer 37

1. guardian ad litem2. conflict of interest

Question 38

Ward

Answer 38

Generic title given to minors and incompetents.

Question 39

mental incompetence shown by inability to act reasonable with respect to a transaction (courts generally consider whether other person was aware of the mental condition)

Answer 39

volitional test

Question 40

What does the AZ law require for emancipation?

Answer 40

In AZ it is very difficult to become emancipated
Must be at least 16 years old
Must show you have financial means to support yourself
Fully independednt from guardian
Maintain healthcare
Must show you are being educated

Question 41

If a minor lies, almost all jurisdictiosn allow the adult to (1) on the grounds of (2).

Answer 41

1. avoid
2. fraud

Question 42

In most states a minor can (1) despite misrepresentation but may have to pay (2), especially since minors are liable for (3).

Answer 42

1. disaffirm
2. restitution
3. torts

Question 43

A (1) or his/her (2) or (3) typically has the power to avoid a contract, while the adult does not have the same power.

Answer 43

1. minor2. guardian3. administrator

Question 44

Two types of guardianship are (1) and (2). A (3) “goes around” a guardianship, and causes appointment of an (4)–NOT the same thing as an actual attorney.

Answer 44

1. guardian (guards person)
2. conservatory (guards assets)
3. power of attorney
4. attorney in fact (stands in place of person)

Question 45

Guardian

Answer 45

A person or entity appointed to look after a person. A guardian of a person.

Question 46

mental incompetence determined by inability to understand the nature and consequences of a transaction

Answer 46

cognitive test

Question 47

Can a minor get out of a contract after they trun 18?

Answer 47

Yes. You can disaffirm a contract a “reasonable” amount of time after you turn 18, even if performance has been completed. A “reasonable” amount of time is usually 90 days.