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stonybrook-chapter13guide - Chapter 13 Capacity and...

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Chapter 13: Capacity and Legality If a person lacks capacity, an essential element for a valid contract is missing, and the contract is void. Some persons have capacity to enter into a contract, but if they wish, they can avoid liability under the contract. Also, to be enforceable, a contract must not violate any statutes or public policy. Contractual Capacity Minors o A minor can enter into any contract that an adult can enter into, as long as it is not prohibited by law. o Age of Majority and Emancipation A person who reaches the age of majority (generally 18) is not a minor for contractual purposes. Minors, over whom parents have relinquished control, have full contractual capacity. o A Minor’s Right to Disaffirm A minor can disaffirm a contract by manifesting intent not to be bound. A contract can ordinarily be disaffirmed at any time during minority or for a reasonable time after a minor comes of age. An adult cannot disaffirm a contract with a minor on the ground that a minor can. o A Minor’s Obligation on Disaffirmance A minor cannot disaffirm a fully executed contract without returning whatever goods have been received or paying their reasonable value. What the Adult Recovers In Most States o If the goods, or other consideration, are in the minor’s control, the minor must return them without added compensation In a Growing Number of States o If the goods have been used, damaged, or ruined, the adult must be restored to the position he or she held before the contract What the Minor Recovers
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A minor can recover all property that he or she transferred to an adult as consideration, even if it is in a third party’s hands. If it cannot be returned, the adult must pay the minor its value o Exceptions to the Minor’s Right to Disaffirm Misrepresentation of Age In Most States o A minor can disaffirm a contract even if he or she misrepresented his or her age In Some States o In many states, disaffirmance is barred. Others prohibit a minor who engaged in business as an adult from disaffirming related contracts. Some refuse to allow minors who misrepresented their age to disaffirm executed contracts unless they return the consideration. Contracts for Necessaries
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stonybrook-chapter13guide - Chapter 13 Capacity and...

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