Chapter 14

Chapter 14 - Chapter 14 Capacity to Contract No Brilliance...

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Chapter 14 Capacity to Contract “No Brilliance is needed in the law. Nothing but Common Sense, and some relatively clean fingernails.” - John Mortimer Learning Objectives: - The Meaning of Capacity - The classes of persons without capacity - The rights to disaffirm or ratify - The duties of disaffirmance Definition: - A person must have the ability to give consent before he can be legally bound to an agreement, thus capacity is the ability to incur legal obligations and acquire legal rights The Lack of Capacity - Groups lacking capacity: o Minors o Those suffering from a mental disability o Those who are intoxicated - Effect: a person who contracts without the requisite capacity may avoid the contract at his/her option Minor’s Right to Disaffirm: - Right to avoid a contract is Disaffirmance o Only the minor may avoid the contract - Example of a disaffirmance o Stroupes v. The Finish Line Inc. Court ruled that a minor’s employment contracts, including arbitration agreements were voidable by the minor - If the Minor wants to affirm the contract, adult party must perform Details About Disaffirmance: - Minors may not avoid contracts if statutory exceptions exist o Marriage, Educational Loans, Insurance - Emanicipation of minor froms parents does not give minor capacity to contract - Minor’s power to avoid contracts does not end on day he reaches age of majority, but continues for reasonable time thereafter Ratification: - Ratification occurs when a person who reaches maturity indicates that he intends to be bound by a contract made while still a minor
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o May be express or implied by conduct
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Chapter 14 - Chapter 14 Capacity to Contract No Brilliance...

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