Getting Out From An Agreement

Question 1

Incapacity due to Intoxication

Answer 1

A person incurs only voidable contractual duties if, due to intoxication, he is cognitively or volitionally impaired and the other party has reason to know that the person is impaired.

Question 2

Cognitive Test

Answer 2

Cognitive Test: if the party is unable to reasonably understand the nature and consequences of a transaction, the party incurs only voidable contractual duties
“Could the party reasonably understand the nature and consequences of the agreement?”

Question 3

Volitional Test

Answer 3

Volitional Test: if the party is unable to act reasonably in relation to the transaction and the other party has reason to know of his condition, the party incurs only voidable contractual duties
“Could the party act reasonably in relation to the agreement?”

Question 4

Rules regarding minors

Answer 4

• A contract involving a minor is voidable by the minor, not the other party

• The contract can only be disaffirmed within a reasonable time of the minor turning 18 - age of majority

• A minor who ratifies an agreement after turning 18 generally will not be able to subsequently disaffirm it
Ratification can include not disaffirming the contract within a reasonable time of turning 18

• Contracts for necessaries cannot be disaffirmed by a minor (food, clothing, shelter, medical services, etc.)

Question 5

Minor Majority Rule

Answer 5

Modern Rule: if a minor enters a fair contract, and the minor has paid for, taken, and used an article, the minor will not be awarded full recovery without giving the other party
reasonable compensation for the use and depreciation of the article while in the minor’s possession.

Question 6

Traditional Rule regarding minors

Answer 6

Traditional Rule: a minor may disaffirm or void a contract, even if there had been full performance and the minor can’t return what was received in exchange

Question 7

Statute of Frauds

Answer 7

The Statute of Frauds really just means that certain types of contracts are required to be IN WRITING.

Although many/most oral contracts are valid, statutes of frauds exist because the law insists that certain obligations be captured in writing.

Question 8

So, legal analysis of a Statute of Frauds issue asks:

Answer 8

(1) Is a writing required for this kind of agreement?
(2) If a writing is required, was that requirement satisfied?

Question 9

Under Statute of Frauds, a writing must have…

Answer 9

• The material, essential terms of the K described with reasonable certainty

• Identity of the parties
• Subject matter
• Terms of the deal
• Price/quantity

• The “signature” of the party against whom enforcement is sought