BL-Chapt13 - Capacity and Legality Chapter Introduction...

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Unformatted text preview: Capacity and Legality Chapter Introduction 13-1 Contractual Capacity 13-1a Minors 13-1b Intoxication 13-1c Mental Incompetence 13-2 Legality 13-2a Contracts Contrary to Statute 13-2b Contracts Contrary to Public Policy 13-2c Effect of Illegality Chapter Recap Page 1 of 22 Print Chapter 2010-8-30 http://atext.aplia.com/controller/ChapterPrint.aspx?isbn=0324655223&mod=0&ch=13... Chapter Introduction In addition to agreement and consideration, for a contract to be deemed valid the parties to the contract must have contractual capacity – the legal ability to enter into a contractual relationship. Courts generally presume the existence of contractual capacity, but in some situations, such as those involving mentally incompetent persons or minors, capacity is lacking or may be questionable. Similarly, contracts calling for the performance of an illegal act are illegal and thus void–they are not contracts at all. In this chapter, we examine contractual capacity and some aspects of illegal bargains. Realize that capacity and legality are not inherently related other than that they are both contract requirements. We treat these topics in one chapter merely for convenience and reasons of space. Page 2 of 22 Print Chapter 2010-8-30 http://atext.aplia.com/controller/ChapterPrint.aspx?isbn=0324655223&mod=0&ch=13... 13-1 13-1a Contractual Capacity Minors A Minor's Right to Disaffirm A Minor's Obligations on Disaffirmance Majority Rule Minority Rule Exceptions to a Minor's Right to Disaffirm Historically, the law has given special protection to those who bargain with the inexperience of youth or those who lack the degree of mental competence required by law. A person who has been determined by a court to be mentally incompetent, for example, cannot form a legally binding contract with another party. In other situations, a party may have the capacity to enter into a valid contract but also have the right to avoid liability under it. For example, minors–or infants , as they are commonly referred to in legal terminology–usually are not legally bound by contracts. In this section, we look at the effect of youth, intoxication, and mental incompetence on contractual capacity. Today, in virtually all states, the age of majority (when a person is no longer a minor) for contractual purposes is eighteen years. 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, minors who leave home to support themselves are considered emancipated. Several jurisdictions permit minors to petition a court for emancipation themselves. For business purposes, a minor may petition a court to be treated as an adult....
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This note was uploaded on 10/12/2011 for the course ACCT 362 taught by Professor Mint during the Fall '11 term at CUNY Queens.

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BL-Chapt13 - Capacity and Legality Chapter Introduction...

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