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Capacity to Contract

Capacity to Contract. 14. C. H. E. A. P. T. R. T. LEIGH ANENSON, J.D., LL.M. “No brilliance is need in the law. Nothing but common sense, and relatively clean fingernails.” John Mortimer. Introduction to Contracts The Agreement: Offer The Agreement: Acceptance Consideration

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Capacity to Contract

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  1. Capacity to Contract 14 C H E A P T R T. LEIGH ANENSON, J.D., LL.M. “No brilliance is need in the law. Nothing but common sense, and relatively clean fingernails.” John Mortimer

  2. Introduction to Contracts The Agreement: Offer The Agreement: Acceptance Consideration Reality of Consent Capacity to Contract Illegality Writing Rights of Third Parties Performance & Remedies CONTRACT LAW

  3. Learning Objectives • meaning of capacity • classes of persons without capacity • rights to disaffirm or ratify • duties of disaffirmance

  4. Definition of “Capacity” • A person must have the ability to give consent before he can be legally bound to an agreement, thus capacity is the ability to incur legal obligations and acquire legal rights

  5. LACK OF CAPACITY • Groups lacking capacity: • 1. minors • 2. mental disability • 3. intoxicated • Effect = avoid (disaffirm) contract

  6. MINOR’s RIGHT to DISAFFIRM • voidable by minor only • express or implied • exceptions by statute (i.e. marriage) • exculpatory clauses by parents not usually valid • reasonable period of time after age of majority

  7. RATIFICATION • a person who reaches majority indicates that he/she intends to be bound by a contract made while still a minor

  8. DUTIES upon DISAFFIRMANCE • return any consideration (money, goods) to each other • if the consideration given by the adult has been lost, damaged, destroyed, or depreciated in value, courts are split on whether the minor party must make restitution to the adult party • Dodson v. Shrader • misrepresentation of age? courts are split

  9. DUTIES upon DISAFFIRMANCE • minors pay reasonable value for necessities • 2 ELEMENTS: • 1. essential for existence • 2. parents will not provide • Young v. Weaver

  10. MENTAL IMPAIRMENT • Did the person have sufficient mental capacity to understand the nature and effect of the contract? OR • Was the person unable to act in a reasonable manner regarding the contract and the other party knew it?

  11. INTOXICATED PERSONS • person is unable to understand the nature of the bargaining process AND • other party had reason to know

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