CHAPTER 13

CHAPTER 13 - Commercial Law Chapter 12 CHAPTER 13 CAPACITY...

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Commercial Law Chapter 12 CHAPTER 13 CAPACITY AND LEGALITY I. Contractual Capacity- the legal ability to enter into contractual relationships. Parties to a contract must have mental capacity to understand the seriousness of their legal obligation A. Minors 1. General Rule: Contracts enter into by minors are avoidable at the option of the “minor!” 2. Rules of Disaffirmance: A minor may disaffirm the contract at any time while still a minor and within a reasonable time after reaching the age of majority. Most states do not require restitution (return to owner) a. Orally b. Writing 3. Exceptions to basic rule of disaffirmance a. Necessaries—minors remain liable for the reasonable value of the necessaries (goods and services) b. Ratification—after reaching the age of majority, a person can ratify a contract that he/she formed as a minor, becoming fully liable thereon c. Fraud or misrepresentation—misrepresentation of age in many jurisdictions prohibits the right of disaffirmance B. Intoxicated Persons 1. General Rule: If a person was sufficiently intoxicated to lack mental capacity to comprehend the legal consequences of entering into the contract, the contract may be voidable at the option of the intoxicated person. If, despite intoxication, the person understood these legal consequences, the contract will be enforceable
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CHAPTER 13 - Commercial Law Chapter 12 CHAPTER 13 CAPACITY...

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