Chapter 7: Capacity to Contract

how do you contract safely with minors

have an adult join in contract as cosigner with minor, gives right to party to the contract the right to sue adult who cosigned

ratification

indication by adult that a contract made while a minor is binding, minor indicating willingness to be bound by contact indicating one's willingness to be bound by promises made during minority, after majority is reached, silence ratifies an executed contract minor cannot ratify part of a contract to disaffirm another part; all or none of the contract must be ratified

other enforceable contracts

many of states prevent minor from avoiding certain specified contracts include educational loan agreements, contracts for medical care, contracts made with court approval

minor's business contracts

many states have made minor's business contract fully binding. if minor engages in business in same manner as capable person, contract cannot be set aside

contracts with minors

almost all minor's contracts are voidable at minor's option if minor wish to treat contract made with an adult as valid, the adult is bound by it 1. adult cannot avoid contract on the ground that the minor might avoid it 2. if contract is between two minors, each has the right to avoid it 3. should minor die, the personal representative of the minor's estate may avoid the contract that the minor could have avoided minor's liability is quasi-contractual in nature

contracts of minors for necessaries

if minor contracts for necessities, the contract is voidable, but minor liable for reasonable value of whatever has been received necessities include items required for minor to have reasonable standard of living (necessities) not provided by parents or guardian * include food, clothes and shelter, medical services, education

intoxicated people (alcohol and drugs)

Contracts made by people who have become so intoxicated that they cannot understand the meaning of their acts are voidable. On becoming sober, such persons may affirm or disaffirm contracts they made when drunk. If one delays unreasonably in disaffirming a contract made while intoxicated, however, the right to have the contract set aside may be lost.

What are some minor torts?

Generally, minor liable for torts as fully as adults are. If minor lied about age to adult and got into contract--minor committed to a tort if minors sue on the contracts to recover what they paid, they may be denied recovery if they misrepresented their age

Mentally Incompetent Persons

Insanity or incompetence as result of stroke, senile dementia, and other diminished mental capacities. most states, if a person has been formally adjudicated incompetent, contracts made by the person are void without regard to whether they are reasonable or for necessaries. if a person is incompetent but has not been so declared by the court, then the person's contracts are voidable, not void. Like a minor, the person must pay the reasonable value of necessaries that have been supplied. On disaffirmance, anything of value received under the contracts that the person still has must be returned. A person who has not been declared by a court to be insane and has only intervals of insanity or delusions can make a contract fully as binding as that of a normal person if it is made during a sane or lucid interval. The person must be capable of understanding that a contract is being made at the time the contract is entered into

what must all parties be in order for contract to be enforceable by law?

must have liability to understand that a contract is being made, have the ability to understand its general nature, and have the legal competence to contract those who law considers to be incompetent are minors, mentally incompetent people, intoxicated people and convicts

minor

person under the legal age to contract

Disaffirmance

repudiation of a voidable contract, the election to avoid or set it aside minor has right to disaffirm avoidable contract at any time must return what received while under contract, adults may not (most times) recover damages from minor who returns property in damaged condition

convicts

some states jurisdiction still have limitations to capacity of convicts • These range from depriving convicts of rights as needed to provide for the security of the penal institutions in which they are confined and for reasonable protection of the public, to classifying convicts as under a disability, as are minors and insane persons. • In these instances, the disability lasts only as long as the person is imprisoned or supervised by parole authorities.