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Business Law and the Regulation of Business Chapter 14: Contractual Capacity

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... under Guardianship contracts made by a person placed under guardianship by ... Guardianship for. incompetency. Intoxication. Voidable. Voidable. Voidable. Void ... – PowerPoint PPT presentation

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Title: Business Law and the Regulation of Business Chapter 14: Contractual Capacity


1
Business Law and the Regulation of Business
Chapter 14 Contractual Capacity
  • By
  • Richard A. Mann
  • Barry S. Roberts

2
Topics Covered in this Chapter
  • A. Minors
  • B. Incompetent Persons
  • C. Intoxicated Persons

3
Minors
  • Definition persons who are under the age of
    majority (usually 18 years).
  • Liability on Contracts a minor's contracts are
    voidable at the minor's option.
  • Disaffirmance avoidance of the contract may be
    done during minority and for a reasonable time
    after reaching majority.
  • Ratification affirmation of the entire
    contract may be done upon reaching majority.

4
Minors
  • Liability for Necessaries a minor is liable for
    the reasonable value of necessaries (items that
    reasonably supply a person's needs).
  • Liability for Misrepresentation of Age
    prevailing view is that a minor may disaffirm the
    contract.
  • Liability for Tort Connected with Contract if a
    tort and a contract are so intertwined that to
    enforce the tort the court must enforce the
    contract, the minor is not liable in tort.

5
Incompetent Intoxicated Persons
  • Person under Guardianship contracts made by a
    person placed under guardianship by court order
    are void.
  • Mental Illness or Defect a contract entered
    into by a mentally incompetent person (one who is
    unable to understand the nature and consequences
    of his acts) is voidable.
  • Intoxicated Persons a contract entered into by
    an intoxicated person (one who cannot understand
    the nature and consequence of her actions) is
    voidable.

6
Contractual Incapacity
Effect on attempt to make a contract
Reason for Incapacity
Minority
Voidable
Mental illness or defect
Voidable
Guardianship for incompetency
Void
Intoxication
Voidable
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