Chapter 13 - CONTRACTUAL CAPACITY Contractual Capacity: The...

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CONTRACTUAL CAPACITY Contractual Capacity: The minimum mental capacity required by law for a party who enters into a contract to be bound by it. Certain persons are generally not considered to have sufficient capacity to be bound by their contracts: Minors: In virtually all states, unmarried persons under the age of eighteen (18) are permitted to enter into any contract an adult can, provided that the contract is not one prohibited by law for minors ( e.g. , agreement to purchase cigarettes or alcohol). However, unlike those entered into by adults, contracts entered into by minors are generally voidable by the minor. Mentally Impaired or Incompetent Persons: Like- wise, contracts entered into by persons who are, at the time of contracting, intoxicated (voluntarily or not) or mentally incompetent are generally voidable . Unlike a void contract, which is unenforceable on its face, a voidable contract is presumed to be enforceable but for the presence of some factor – here, the contractual capacity of one of the parties – permitting a party lacking capacity to avoid his otherwise valid contractual obligations. Ch. 13: Contracts: Capacity and Legality - No. 1 Clarkson et al.’s Business Law (11th ed.)
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MINORITY: DISAFFIRMANCE Disaffirmance: Legally avoiding or setting aside a contractual obligation. In order for a minor to avoid a contract, he need only manifest an intention not to be bound by it. This intent to avoid, or “disaffirm,” the contract may be manifested by words or actions . Generally speaking, a minor may disaffirm a contract at any time during minority or for a reasonable time after the minor comes of age. When a minor disaffirms a contract, he can recover all property that he has transferred as consideration even if it was subsequently transferred to a third party. Disaffirmance must be timely . The contract must be disaffirmed in its entirety . Only the minor has the option of disaffirming his contractual obligations; any adult parties to the contract remain bound by it unless released by the minor’s disaffirmance. Ch. 13: Contracts: Capacity and Legality - No. 2 Clarkson et al.’s Business Law (11th ed.)
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MINORITY: EXCEPTIONS Misrepresentations Regarding Age: Most states will permit disaffirmance even if the minor misrepresented his age when entering into the agreement. However, some states prohibit disaffirmance in all cases where the minor misrepresented his age, prohibit disaffirmance in cases where the minor has engaged in business as an adult , refuse to allow minors to disaffirm fully performed contracts, unless they can return all consideration received, or permit disaffirmance but subject the minor to tort liability for his misrepresentation. Liability for Necessaries:
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This note was uploaded on 01/25/2011 for the course BLAW 3361 taught by Professor Bl during the Spring '10 term at Texas Brownsville.

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Chapter 13 - CONTRACTUAL CAPACITY Contractual Capacity: The...

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