BLAW - Chapter 16 - Alex Fish Chapter 16: Capacity and...

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Alex Fish Chapter 16: Capacity and Legality Capacity A person who has legal capacity to contract is one who has the mental ability to understand his rights and obligations under a contract and therefore will know how to comply with the agreement. Incompetence is some sort of mental or physical defect that prevents a natural person from being able to enter into a legally binding contract. Minors: minors can only enter into voidable contracts, unless emancipated. o Disaffirmance of the contract: minors have the right to void their contracts. An adult in a contract with a minor cannot void the same contract. All the minor has to do is manifest their intention to disaffirm the contract, by actions or words; they can only void the entire contract. The minor must return any and all consideration upon voiding. Some states give the minor a duty to return the other party to their original state upon voiding. Must void within a reasonable amount of time. o Exceptions to the minors right to disaffirm the contract: life insurance, health insurance, psychological counseling, contracts with finances (stocks, bonds, etc), education loans, child support, marriage, and armed services contracts. If the minor misrepresents their age, they cannot void. o Liability of minors for necessaries: contracts for necessaries are sometimes considered an exception to the rule for minors. Technically, they can still void. A contract for a necessary is a contract that supplies the minor with the basic necessities of life. Determining a necessity depends on the minor maintaining their standard of living, what their parents will provide, and the nature of the item o Ratification: once a minor comes of age, they can ratify (legally affirm) an existing contract. Express ratification is oral or in writing. Implied ratification is when the former minor takes some action that is consistent with ratification. o Parent’s liability for their children’s contracts, necessaries, and torts: parents are generally not liable, unless they cosigned. They can be held liable if they deny their children necessities and the minors enter into contracts to get these necessities. Minors are generally held responsible for their own torts.
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BLAW - Chapter 16 - Alex Fish Chapter 16: Capacity and...

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