Module 9 - Contractual Capacity Flashcards
Contractual Capacity
The minimum mental capacity required by law for a party who enters into a contract to be bound to it
what is a minor
unmarried person under the age of 18
What are the three classes of person that the law assumes lacked contractual capacity when they entered into a contract
- Minors
- Intoxication
- Mental Incompentence
What is Dissafirmance
The right of a minor to rescind (undo) a contract that they have entered into
A contract is _______ at the option of the minor
voidable
How can a minor get out of a contract?
They can disaffirm it
How can a minor disaffirm
verbally or through actions (such as stopping payments)
what is the infancy doctrine?
a minor can enter any contract as an adult can but they can disaffirm it
Can a minor and an adult dissafirm
no only the minor, the adult party remains bound to the contract
When must a minor dissafirm by
anytime before they turn 18 or a reasonable time after
What is the difference between rejection and dissafirmance
timing issue rejection was about offer disaffirmance the offer was already made
What happens upon dissafirmance
Each party gives back to the other person whatever consideration they gave… the offeror gets the back thing in whatever form it is at that particular time
What is the exception to dissafirmance
Necessities
A minor who enters into a contract to purchase food, shelter, clothing, medical attention or other goods or services necessary to maintain his well-being will generally be liable for the reasonable value of those goods and services even if he disaffirms the contract
What contracts can not be dissafirmed by a minor
- Military
- Child Support
- Life Insurance
- Educational Loans
what is ratification?
accepting and giving legal force to an obligation that was previously (1) not enforceable or (2) voidable. Ratification may be either expressed or implied
continuing a contract even though there is no legal obligation to continue can be expressed or implied
Parent Liability to contracts kids make
generally are not liable for kids contracts
what are the three cases where parents become liable for their kids contracts?
- Co-Sign
- Wrongful Act (like coaching them)
What happens when someone enters into a contract intoxicated?
it can either be voidable or valid
If, despite intoxication, the person understood the legal consequences of the agreement what happens?
it will be enforceable/valid
What is intoxication
condition in which a person’s normal capacity to act or think is inhibited by alcohol or some drug – can disaffirm but you don’t get all money back
What can happen to the contract when a person is mentally incompetent
it can be void, voidable or valid
If a court has declared a person to be mentally incompetent and has appointed a legal guardian, any contract made by that person is…
void
who can enter into legally binding contracts for legally incompetent people?
guardians
If a court has not declared a person mentally incompetent, but that person lacked the capacity to comprehend the subject matter, nature, and consequences of the agreement, then the contract is
voidable
