Page 27 Flashcards
What are the three ways that a ratification occurs?
- failure to make a timely disaffirmance
- express ratification
- conduct manifesting intent to ratify
How long does an infant have to disaffirm contract after reaching majority?
A reasonable time, and if he doesn’t do it within that time, the contract is ratified
What is the difference between executory and executive contracts when it comes to a minor making a disaffirmance after reaching maturity?
- executory: not binding unless ratified by words or conduct after majority
- executed: automatically ratified and binding if not disaffirmed within reasonable time after majority
If an infant hasn’t gotten any benefit under a contract, how does that affect disaffirmance?
There is no need to bar the infant from disaffirming before SOL runs out
What is required for an express ratification?
Nothing less than a promise will suffice, but it can be oral
What types of conduct can manifest an intent to ratify a contract?
- not making a timely disaffirmance after reaching majority
- retaining property for more than a reasonable time after reaching maturity
- receipt of performance by the other party after majority
If an infant is a defendant, what is his duty to make restitution on a contract?
Depends on the foreseeable risk to the parties, if infant bought something on credit, made some payments, and disaffirmed, that is fine, but he can’t keep the item and avoid payment. He must return any consideration he got and still possesses, but if he no longer has the item or services, there’s no obligation. Liable for the portion of the property that he still has
What is an infant’s duty to make restitution when he is the plaintiff?
If infant buys something for cash and destroys it, then returns it and disaffirms:
- traditional view: only liable to give back whatever consideration he still has, then he can get full recovery
- many courts: recovery based on depreciation in value of the item, so can only get what the destroyed item is worth
What is the rule about capacity to form a contract?
People must be:
- sane
- sober
- of age
- capable of understanding what is going on
What are examples of incapacitated parties?
Minors, mental infirmities
If the other party doesn’t know that the plaintiff is a minor, how does that affect the contract?
It doesn’t, the contract is voidable
If the other party doesn’t know the plaintiff has a mental infirmity, how does that affect the contract?
Other party had to have known or should have known in order for the contract to be voidable
If the incapacity of a party ever ceases, what does that do to the contract?
That party can affirm the contract and be fully obligated by it
If the contract is entered before incapacity affects a party, what does that do to the contract?
Makes it voidable by the incompetent or his guardian, but not the other party
If a party is insane when a contract is made, what does that do to the contract?
Makes it void from inception
What is a mentally incompetent person still liable for?
Reasonable value of necessities
What are the two different views on the definition of incompetence?
- traditional view: if a person’s mental processes are so deficient he doesn’t understand the nature, purpose, or effect of a transaction, he is incompetent
- restatement view: if person is unable to act in a reasonable manner and the other party has reason to know of the condition, he is incompetent
If after reaching majority, a minor shows intent to be bound, that is a ratification, but the contract is only enforceable as to what?
The specified price in the ratification
What effect does intoxication have on contract formation?
If the person voluntarily drank or took drugs to the point he was not in control of his cognitive abilities, he can avoid the contract only if the other person knew or had reason to know of the impairment or the other party created it to take advantage of him
People on medication, or drugs/intoxicated are treated the same as what when it comes to contract formation?
Those with mental disabilities
What is the effect of intervening illegality on a contract?
It terminates the offer, or discharges the contract
What are the two ways a contract can be a illegal?
- consideration is illegal
- the object of the contract is illegal
How are illegal contracts treated?
They are void, and the courts will not intercede to aid either party, even if partial performance has happened
What is the exception to courts being unwilling to intervene in illegal contracts?
If the contract is severable into legal and illegal parts, and the legal one goes to the essence of the bargain, then courts will enforce that part
