CHAPTER 14 Capacity to Contract Capacity to Contract If you don t have capacity to enter into a contract then you may not be bound to the contract Capacity the ability to incur legal obligations and acquire legal rights o Three primary groups of people who typically lack capacity Minors infants under 18 years of age Persons suffering from mental illness or defect Intoxicated persons drugs also o If one of the persons is lacking capacity the contract is voidable at the option of that person Example Bieber can get out of his contracts but the adults he got into them with cannot o In a few situations the contract is void rather than voidable Void if at the time the contract is entered there has already been a determination that they are lacking capacity Voidable if they are discovered to be incompetent after they have entered into a contract Mentally incompetent At the time the contract is entered into the person who has no capacity has already been determined to be mentally incompetent The impaired person is in a coma at the time the contract is entered into The impaired person is unconscious at the time the contract is entered into Minors Do not have capacity Disaffirmance The exercise of the right to void a contract o The right to disaffirm is personal to the minor only the minor or a legal representative could disaffirm Any words or acts that effectively communicate the minor s desire to cancel the contract can constitute disaffirmance o Exceptions Minor s do not have the right to Disaffirm Marriage An agreement to support kids Education loans Insurance contracts Who is a minor o Age of majority in every state 18 years o Emancipation termination of the parents right to control a child Occurs by parental consent or by marriage In most states the fact of emancipation does not give the minor capacity EXAM Time of Diaffirmance o When may a minor disaffirm The minor can choose to disaffirm in all cases except one the minute after he enters the contract Not allowed for title to real estate Title to real estate can only be disaffirmed when you turn 18 If you ratify a contract that prevents you from disaffirming How do you ratify a contract If you confirm expressly or impliedly that you intend to carry out the contract o There is no specific rule as to how long you have to disaffirm o Basic rule if the former minor when they turn 18 continues to retain the benefits of the contract for a certain period of time will be deemed ratification and they can no longer disaffirm Duties upon Disaffirmance o As a minor you enter into a contract and receive some benefits from it and decide you are going to disaffirm o Basic obligation to return the consideration Reasonable value of items that have been furnished to them as necessaries minor is required available items that has been furnished as necessaries o Necessaries food medical care education that has not been provided by the guardian o Young case The minor is not responsible for the remainder of the rent because the housing was not a necessary because the minor hadn t been kicked out of the parents home Mentally Impaired people dementia senility Mental incapacity mental illness brain damage mental retardation Can these people get out of their contracts o Can not necessarily get out o Test is whether the person has sufficient mental capacity to understand the nature and effect they have entered into If you do what is the effect Usually the contract is voidable if you are the incapacitated person you can get out of it if you want to BUT in three situations the contract is void 1 Already had been determined by the court as incapacitable and entered into contract 2 Comatose 3 Unconscious EX lose mental capacity and disaffirm contract and then if you later get capacity again recover and you don t disaffirm again then you could be deemed to have ratified the contract if you continue to accept the terms If mentally incapacitated and enter into contract in that state and later say you want out damage a car in that state do you have to reimburse the other side for Damage or Depreciation of Property o Basic Rule only if the other person had reason to know you were incapacitated No obligation if the other party does know you are Intoxicated and People under drugs incapacitated General Rule Intoxication from drugs or alcohol is regarded as lack of capacity only when it is so extreme that the incapacitated person is unable to understand the nature of the contract o Courts are extremely unsympathetic to people who try to get out of contracts that they made when they were drunk Obligations to get out of contract o Same as though for people who are mentally incapacitated Give back consideration No requirement to reimburse if the party knew you were In general you are responsible for damage intoxicated CHAPTER 15 Illegality 3 broad groups of illegal contracts POINT of chapter Certain contracts are unenforceable because they are illegal 1 Agreement that Violates a Public Policy o Public policy parents are supposed to support their children Main reason so everyone else tax payers doesn t have to support other people s kids o EX a woman wants a child but she doesn t want a man She talks to her male friends seeking a donor Her one friend agrees but he doesn t want to be financially responsible for the child Draw up a contract that he agrees to impregnate her and he will not be financially responsible She gets pregnant and has child and she then wants the father to financially support the child Lawsuit His defense if they signed a contract He losses because their contract is contrary to public policy She seeks an order for him to support the child 2 Agreement that violates a Statute o a An agreement declared illegal by the statute Ex a surrogacy agreement an agreement whereby an infertile couple hire a woman to carry their child for them and they would enter in a contract with the woman In certain states it is illegal which means it is unenforceable which means if the woman who carries the baby wants to keep it then the parents cant sue o b An agreement to violate public policy commit a crime EX commit a murder illegal under contract and criminal law o c agreements that promote the violation of the statute EX guy decided to kill his wife to be with his mistress Allegedly he gave his wife an overdose of insulin and lapsed into a coma and died he was acquitted Suppose the pharmacist who supplied the insulin to the guy knew he was going to use it to kill his wife
View Full Document
Unlocking...