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Chapter 9

Chapter 9. Capacity to Contract. For agreements to be valid contracts, enforceable in court, the person who makes them must have the capacity to contract. Adults are presumed legally competent. Those who lack capacity are: minors intoxicated persons mentally impaired persons.

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Chapter 9

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  1. Chapter 9 Capacity to Contract

  2. For agreements to be valid contracts, enforceable in court, the person who makes them must have the capacity to contract. • Adults are presumed legally competent. Those who lack capacity are: • minors • intoxicated persons • mentally impaired persons

  3. These people are restricted to contract for their own protection. • Minors are free to make contracts, but the law gives them the legal right to disaffirm, which means to set aside, void, or nullify. • If a contract is made between an adult and minor, only the minor can disaffirm the contract, the adult is bound.

  4. Businesses that make an important contract with a minor often require an adult to sign and be bound. • The adult would be held liable if the minor: • disaffirms • fails to pay

  5. Voidable Contracts • Returning the Merchandise • a minor can disaffirm a contract by returning the merchandise or offering to return the merchandise and get their money back

  6. Misrepresenting Age • This is fraud and can be held liable for committing fraud. • Would need to prove all 5 elements of fraud to win case.

  7. Disaffirming the Whole Contract • Must disaffirm all or none of the contract

  8. Disaffirming Contracts Made with other Minors • Both minors have the right to disaffirm

  9. Ratification of Minor’s Contracts • Upon majority a person approves a contract made as a minor

  10. Contracts for Necessaries • A minor is held responsible for the fair value of necessaries. • Necessaries are: • food • shelter • clothing • medical care

  11. Special Statutory Rules • Some states give minors the capacity to enter into contracts when: • Purchasing car insurance or life insurance • own a business in their own name • are married

  12. Mentally impaired & intoxicated • For the other two categories considered not to have the capacity to enter into a contract can be appointed a guardian or conservator. • Only contracts made by these guardian are binding. • If these persons do not have a guardian and enter a contract they can have it disaffirmed, if at the time of contracting, the incompetent could not understand the nature and the legal effect of the contract. • Anything received by either party would have to be returned.

  13. Other Capacity Limitations • Aliens

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