Allow members of that class to enforce contracts that

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allow members of that class to enforce contracts that will benefit them. Under this theory the contract is enforceable against the party who is not to be protected by the incapacity rule. Legal incapacity may arise from infancy, mental illness or defect, intoxication, or if a person is under guardianship by reason of mental illness or defect. 4 Legal incapacity may arise from: Infancy. Infancy means a person under the age of 18. Mental illness or defect. Mental illness or defect means a person who is unable to understand in a reasonable manner the nature and consequences of the transaction, or is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of their condition. Intoxication. A contract is void by reason of intoxication if the other party has reason to know that a person is unable to understand in a reasonable manner the nature and consequences of the transaction, or is unable to act in a reasonable manner in relation to the transaction, due to being intoxicated. Under guardianship by reason of mental illness or defect. A person is not considered to have the capacity to enter into a contract if their property is under guardianship by reason of mental illness or defect. 1.2.2 Mutual Assent Generally the formation of a contract requires a manifestation of mutual assent. Manifestation of mutual assent to an exchange requires that each party either make a promise, or begin or render performance. This normally takes the form of an offer or proposal by one party followed by an acceptance by the other party. An offer is an expression of a willingness to enter into a contract by one part (the offeror) if the offer is accepted by the other party (the offeree). Acceptance is the offeree's agreement to the terms of the offer in the manner required by the offer. 4 Restatement (Second) of Contracts, Chapter 2 Test question will come from here
LESSON 1 | CONTRACT FORMATION PRINCIPLES 86 © Management Concepts. See inside front cover for additional details. Mutual assent does not occur if the parties attach materially different meanings to the terms of the offer or if there is a misunderstanding. There must be a “meeting of the minds.” 5 Example: The Peerless Case The case that established the necessity for a mutual agreement between the parties in order for a binding contract to have been formed is “The Peerless Case” ( Raffles v. Wichelhaus , Court of Exchequer, 1864). The parties entered into an agreement to buy and sell cotton delivered from India on the ship called the Peerless. Unbeknownst to both parties, there were two ships named Peerless, one that sailed in October and another that sailed in December. The agreement did not specify which of the Peerless ships would be used to deliver the cotton. The buyer was expecting delivery on the ship that sailed in October, but when the goods arrived on the second ship, the buyer refused to pay the seller for the goods because the cotton was two months late. The court found that since the evidence showed that each party meant a different ship in their understanding of which

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