Chapter 7 Business Law - Contacts
how much of a voidable contract may a minor ratify?
A minor cannot ratify part of a contract and disafirm another. All or none of it must be ratified.
Minors' Torts
A minor is fully liable for torts, as an adult is Misrepresentation of age can result in unavoidable contract; non-uniform rule law varies throughout the US
Minor contact facts
A minor's contract is voidable at the minor's choosing. An adult cannot avoid a contract made with a minor, if the minor avoids it. Contracts between two minors are voidable for both.
when a contract is made between an adult and a minor, how enforceable is it against each of the parties?
Almost all contracts involving minors are voidable by the minor. The adult is accountable but minor is not.
if a minor contracts for necessaries, to what extent is the minor liable?
The contract is voidable, but the minor is liable for the reasonable value of whatever has been received.
generally, what presumption does the law make regarding parties legal and mental capacities to contract
The parties must be competent to enter into an enforceable contract. If later found that they are not, contract is void.
if Gordon, a minor, lies about his age to induce an adult to enter a contract, is he guilty of a tort? Can any resulting contract be enforced?
if minor's misrepresent their age, and the adults with whom they contract rely on the misrepresentation to their detriment, the minors HAVE committed a tort.
Ratification
indication by an adult that a contract made while a minor is binding Minor indicating willingness to be bound by contract All or none of the contract must be ratified
Minors business contracts cont.
many states either by statutory provision or by court decisions have made a minor's business contracts fully binding. if a minor engages in a business or employment in the same manner as someone who has legal capacity, then contacts that arise from such business or employment cannot be set aside
Almost all of a ___ contracts are voiddable at the ___ opinion
minor's
For an agreement to be enforceable,
, all parties must have contractual capacity Law presumes parties have capacity. Some parties lack capacity based on age, physical condition, or public policy.
Minor's Liability for Necessaries
-Minors are obligated to pay for the necessaries of life. ~Food, shelter, clothing, medical services -Based on quasi-contract. ~Minor must pay only reasonable value of the goods or services.
what types of contacts cannot be avoided by a minor?
Contracts for necessaries, business contracts, and other specially enforced contracts such as student loan agreements.
Intoxicated People
Contracts made with people who are intoxicated are voidable. When sober, that person may affirm or disaffirm contract made when intoxicated. Person legally declared habitual drunkard cannot make contracts. These rules apply to those using drugs.
Contracts That Cannot be Avoided
Contracts of Minors for Necessaries Minors' Business Contracts Other Enforceable Contracts Educational loans Legal duties Medical care Disaffirmance Repudiation of a contract Minor can disaffirm voidable contract at any time during minority Brief disaffirm window after legal age Ratification Minor indicating willingness to be bound by contract All or none of the contract must be ratified
what is the obligation of a minor on disaffirming a contract?
Dissafirm means to avoid it or set it aside. On electing to disaffirm, minors must return whatever they have received under the contract as long as they still have it. Even if they do not still have it, this does not mean they still cannot dissafirm the contract (they can).
Mentally Incompetent People
Incompetence or insanity can be a result of: stroke, senile dementia, retardation. Contracts made with persons formally adjudicated incompetent are void. For a person not declared by court to be incompetent, contracts are voidable. Person must understand a contract is being made at the time it is made.
Necessaries
Items required for living at a reasonable standard ex: food, clothes, shelter, education, medical care
Convicts and contracts
Many states repealed laws restricting convicts from entering contracts. Limitations may prevent convicts from entering contracts until out of imprisonment or parole.
Does an intoxicated person have the capacity to enter into an enforceable contract? why or why not?
Not if they have become so intoxicated that they cannot understand the meaning of their acts. They can either affirm or disaffirm their acts once sober.
Can a person who has not been judicially declared insane and has only intervals of insanity or delusions make a binding contract?
Such a person is considered incapable of making a valid acceptance of an offer, no matter how fair the offer is. when a person is later re-declared to be sane, and is officially declared competent by a court, the compacity to contact will be the same of any other sane person.
what is the safest way for an adult to be protected when contracting with minors?
The safest way to contract with minors is to have an adult such as a parent or guardian join in the contract as a cosigner with the minor. This allows the other party to sue the adult
convict
person found guilty by a court of a major criminal offense
Minor
person under the legal age to contract (18 in most states, 19 in a few)
The purpose of the law (in the case of minors and contracts) is to
protect minors from unscrupulous adults. people deal with minors at their own risk
Disaffirmance defined
repudiation of a voidable contract a minor has legal rights to dissafirm a voidable contact at any time during minority or within a reasonable time after becoming legally aged. in some states, if the minor has received no benefits, they do not have to dissafirm the contact within a reasonable time
Contracting Safely with Minors
safest way: Require an adult (parent/guardian) cosign with minor Other party has right to sue that adult who cosigned with minor -merchants accept risk of handing deals with minors because minors have right to refund years later.