Minority & Incapacity

Question 1

When a contract is to a minor’s (infant’s) prejudice, it is ____.

Answer 1

void

Question 2

When a contract is to the minor’s ________ (as for necessities), it is good.

Answer 2

benefit

Question 3

When it is uncertain whether a contract is to the minor’s benefit or good, then it is __________ at the election of the minor.

Answer 3

voidable

Question 4

under the _____________ the contract is not void but voidable and subject to disaffirmance by the minor either before or after attaining majority.

Answer 4

“traditional rule”

Question 5

Upon rescission, recovery of the full purchase price is subject to a __________ for the minor’s use of the merchandise.

Answer 5

deduction

Question 6

The minor’s recovery for of the full purchase price is subject to a deduction for the minor’s ‘use’ of the ___________ he or she received under the contract, or for the ‘depreciation’ or ‘deterioration’ of the consideration in his or her possession.

Answer 6

consideration

Question 7

A contract entered into between an infant and an adult is voidable unless it is a contract for necessities (like food) for the infant.

Answer 7

The traditional (majority) rule

Question 8

If the infant voids the contract, then the infant receives all of the consideration the infant gave to the adult regardless of the condition of what was given to the infant.

Answer 8

The traditional (majority) rule

Question 9

A contract entered into between an infant and an adult is voidable by the infant.

Answer 9

The minority rule

Question 10

If the infant voids the contract, then the infant receives the current value of the consideration given to the infant.

Answer 10

The minority rule

Question 11

allows the party to avoid the contract if:
he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition

Answer 11

Incapacity

Restatement (Second) of Contracts § 15

Question 12

allows partial enforcement of the agreement even if the party seeking avoidance was incompetent if:
the contract is made on fair terms and the other party is without knowledge of the mental illness or defect,

Answer 12

Incapacity

Restatement (Second) of Contracts § 15(2)

Question 13

The law presumes that people are ___________ so this person enters the legal process presumed by the court to be competent.

Answer 13

competent

Question 14

Thus, if the party seeking to avoid the contract provides no evidence as to his/her competence, the court will conclude that they are _________.

Answer 14

competent

Question 15

the party seeking to avoid the contract must produce evidence that would overcome this ____________ __ _________

Answer 15

presumption of competence.

Question 16

A person lacks capacity to enter into a contract if the person is unable to understand the nature of the transaction or its consequences.

Answer 16

Cognitive Test

Question 17

A person lacks capacity to contract if the person is unable to act in a reasonable manner in the transaction and the other party has reason to know of the condition.

Answer 17

Volitional Test

Question 18

A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect
he is unable to understand in a reasonable manner the nature and consequences of the transaction, or
he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition.
Where the contract is made on fair terms and the other party is without knowledge of the mental illness or defect, the power of avoidance under Subsection (1) terminates to the extent that the contract has been so performed in whole or in part or the circumstances have so changed that avoidance would be unjust. In such a case a court may grant relief as justice requires.

Answer 18

Restatement (Second) of Contracts § 15. 
Mental Illness Or Defect

Question 19

A person incurs only voidable contractual duties by entering into a transaction if the other party has reason to know that by reason of intoxication
he is unable to understand in a reasonable manner the nature and consequences of the transaction, or
he is unable to act in a reasonable manner in relation to the transaction.

Answer 19

Restatement (Second) of Contracts § 16
Intoxicated Persons

Question 20

___________ ________ may be a form of mental illness; and when a guardian is appointed for the property of a habitual drunkard, his transactions are treated like those of a person under guardianship by reason of mental illness.

Answer 20

Compulsive alcoholism

Question 21

If drunkenness is so extreme as to prevent any ________ __ _________, there is no capacity to contract.

Answer 21

manifestation of assent

Question 22

Hence a contract made by an intoxicated person is enforceable by the other party even though entirely executory, unless the other person has reason to know that the intoxicated person _______________

Answer 22

lacks capacity