BUSINESS FOR LAW CHAPTER 7 QUESTIONS: CAPACITY OF CONTRACT

*10.) Can a person who has not been judicially declared insane and has only intervals of insanity or delusions make a binding contract?*

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.

*5.) How much of a voidable contract may a minor ratify?*

-*A minor may ratify a voidable contract only after attaining majority.* -*Ratification may be oral, written, or merely implied by conduct.*

*2.) When a contract is made between an adult and a minor, how enforceable is it against each of the parties?*

-*Almost all of the contracts are voidable at the minor's option.* -*If the minor so desires, the minor can avoid or repudiate the contract.* -*If a minor wishes to treat a contract made with an adult as valid, the adult is bound by it.* -*An adult cannot avoid a contract on the ground that the minor might avoid it.* -*If a contract is between 2 minors, each has the right to avoid it.*

*3.)What type of contracts cannot be avoided by a minor?*

-*Contracts for NECESSARIES, BUSINESS CONTRACTS, and the other SPECIFICALLY ENFORCED CONTRACTS, such as STUDENT LOAN AGREEMENTS*

*9.) Does an intoxicated person have the capacity to contract? Why or why not?*

-*Contracts made by people who have become so intoxicated that they cannot understand the meaning of their acts are voidable.* -This destroys contractual capacity. -On becoming sober, such persons may affirm or disaffirm contracts they made when drunk.

*4.) If a minor contracts for necessaries, to what extent is the minor liable?*

-*The minor is liable for the reasonable value of whatever has been received.*

*7.) What is the safest way for an adult to be protected when contracting with minors?*

-*The safest way is to have an adult (usually a parent or guardian) join the contract as a cosigner with the minor.* -This gives the other party to the contract the right to sue the adult who cosigned.

*1.) Generally, what presumption does the law make regarding parties' legal and mental capacity to contract?*

-This means that the parties must have the ability to understand that a contract is being made. -Have the ability to understand its general nature. -Have the legal competence to contract. *The general rule is that the law presumes that all parties have this capacity. This means that anyone alleging incapacity must offer proof of incapacity to overcome that presumption*

*6.) What is the obligation of a minor on disaffirming a contract?*

When disaffirming a contact, minors must return whatever they may have received under the contract provided they still have possession of it.

*8.) If Gordon, a minor, lies about his age to induce an adult to enter a contract, he is guilty of a tort? Can any resulting contract be enforced?*

Yes. If a minor misrepresents his or her age and the adult with whom he or she contracts relies on this misrepresentation to the adult's detriment, this is a tort. The law is not uniform as to whether minors are bound on contracts induced by misrepresenting their age.