Chapter13 - Capacity and Legality In order for a valid...

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Capacity and Legality In order for a valid contract to exist the agreement must not call for the performance of an illegal act --that is, any act that is criminal, tortious, or otherwise opposed to public policy. Such contracts are normally void--that is, they really are not contracts at all and the parties have no legally enforceable rights. Realize that capacity and legality are not necessarily related to each other, however, both elements must be present in order to have a legally enforceable contract. Contractual Capacity Historically, the law has protected those who bargain with the inexperience of youth or those who lack the degree of mental competence required by law. Minors Today, in virtually all states, the age of majority (when a person is no longer a minor) for contractual purposes is eighteen years.
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In addition, some states provide for the termination of minority on marriage. Minority status may also be terminated by a minor's emancipation, which occurs when a child's parent or legal guardian relinquishes the legal right to exercise control over the child. Normally, a minor who leaves home to support himself or herself is considered emancipated. Minor's Right to Disaffirm. The definition of disaffirmance is the legal avoidance, or setting aside, of a contractual obligation. A contract can ordinarily be disaffirmed at any time during minority or for a reasonable period after the minor comes of age . (Note that the minor must disaffirm the entire contract, not merely a portion of it.) Minor's Obligations on Disaffirmance. Although all state laws permit minors to disaffirm contracts (with certain exceptions), states differ on the extent of a minor's obligations on disaffirmance. Courts in a majority of states hold that the minor need only return the goods (or other consideration) subject to the contract, provided the goods are in the minor's possession or control.
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For example, suppose that Danny, a seventeen-year-old, purchases a computer from the Bookstore. While taking the computer to his apartment, he negligently drops it, breaking the plastic casing. The next day, he returns the computer to the Bookstore and disaffirms the contract. Under the majority view, this return fulfills Danny's duty
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This note was uploaded on 03/31/2008 for the course FIN 3055 taught by Professor Cgiles during the Spring '08 term at Virginia Tech.

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Chapter13 - Capacity and Legality In order for a valid...

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