lecture notes ch. 13

lecture notes ch. 13 - Chapter 13 Title:BusLawSeal.eps...

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Chapter 13 Title: BusLawSeal.ep picture was not saved with a preview (TIFF  Comment: This EPS  Capacity and Legality C HAPTER O UTLINE I. Contractual Capacity Generally, courts presume that parties to a contract have contractual capacity, but there are  some situations in which capacity is lacking or may be questionable.  In some situations, a  party may have capacity but also the right to avoid liability under it. A. M INORS In most states, the age of majority for contractual purposes is eighteen.  Some states  provide for the termination of minority on marriage.   A minor can enter into any  contract that an adult can enter into, except a contract prohibited by law for minors.  Subject to exceptions, contracts entered into by a minor are voidable at the option of the  minor.
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1.A Minor’s Right to Disaffirm For a minor to avoid a contract, he or she need only manifest an intent not to be  bound. A contract can ordinarily be disaffirmed at any time during minority or for  a reasonable time after coming of age. A minor must disaffirm an entire contract.  An adult who enters into a contract with a minor cannot avoid contractual duties  unless the minor opts to avoid the contract. 2.A Minor’s Obligations on Disaffirmance a. Majority Rule Generally, a minor need only return the goods (or other consideration), if they  are still within his or her control.  Their condition does not affect a minor’s  right to disaffirm. b. Minority Rule In a few states, minors have a duty of restitution (in accord with the maxim  that one’s youth may be used as a shield, but not as a sword) to return the  other party to the position he or she was in before the contract was made. 3.Exceptions to a Minor’s Right to Disaffirm a. Misrepresentation of Age In most states, a minor can disaffirm even if he or she misrepresented his or  her age.  In many states, however, this is enough to bar disaffirmance.  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. b. Contracts for Necessaries
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A minor who enters into a contract for necessaries (food, clothing, etc.) may  disaffirm the contract but must still pay the reasonable value of the goods.  What qualifies as a necessary depends on (1) what is needed for the minor’s  subsistence, (2) the minor’s standard of living or financial or social status, and  (3) whether the minor is under a parent or guardian’s care.
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