Ch 4-outline - Ch 4: Policing the Bargain I. Competency to...

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Ch 4: Policing the Bargain I. Competency to Contract a. Minors i. General Rule: Contract of a minor for items which are not necessities is void or voidable at the minor’s option 1. Necessity in TX: a. Yes- must pay for it (restitution) b. No- voidable K 2. Designed to protect minors 3. Effect: Minors shall not contract except for necessities ii. R2K 62: 1. A minor who disaffirms a contract is entitled to recover all consideration he has conferred incident to the transaction 2. In return, the minor is expected to restore as much of the consideration as, at the time of disaffirmance, remains in the minor’s possession iii. Halbman v Lemke- minor disaffirmed contract for purchase of vehicle 1. Minor Halbman sued for $1100 he paid toward purchase of the car a. Lemke counter-claimed for the $150 still owed on the contract i. He also wants damages for vehicle up to disaffirmance 2. All court levels: judgment for minor a. When a minor disaffirms a contract for the purchase of an item, he need only offer to return the property remaining in his hands without making restitution for any use or depreciation i. When minor no longer possesses the property, the rule requiring the return of property does not apply ii. Property cannot be returned in its entirety because it’s damaged 3. Olson: A K of a minor for purchase of items which are not necessities may be disaffirmed even when the minor cannot make restitution iv. Webster Street Partnership v Sheridan- 2 minors lease an apartment and can’t make rent 1. Neither minor was in need of shelter but each decided voluntarily to move out, they could return whenever they desired 2. Therefore, they get their $500 back b. Mental Incompetence i. General Rule: A mental incompetent’s contract is voidable at her option IF: 1. the other party can be restored to the status quo 2. the other party knew of the incompetence OR 3. the transaction is not fair and reasonable to the mental incompetent a. If other party didn’t know of incompetence AND deal was fair; then NOT voidable by the incompetent ii. Dexter v Hall 1. The fundamental idea of a contract is that it requires the assent of two minds 2. A lunatic, or a mentally incompetent person, has nothing which the law recognizes as a mind, and it would seem, therefore, upon principle, that he cannot make a contract that will have any efficacy as such iii. Faber v Sweet Style Mfg. Co. (NY)- manic depression 1. A K may be avoided only if a party is so affected as to be unable to see things in their true relations and to form correct conclusions in regard thereto 2. Incompetence to a K also exists when a K is entered into under the compulsion of a mental disease or disorder but for which the K would not have been made
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Contracts CH 4: 2 iv. R2K 15: Mental Illness or Defect 1. A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect a. he is unable to understand in a reasonable manner the nature and consequences of the transaction
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This note was uploaded on 04/18/2008 for the course LAW Contracts taught by Professor G.flint during the Fall '07 term at Saint Mary's University Texas.

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Ch 4-outline - Ch 4: Policing the Bargain I. Competency to...

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