Contracts Entered Into by a Person Who Lacks Mental Capacity

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Contracts Entered Into by a Person Who Lacks
Mental Capacity
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someone enters into a contract to sell property,
but there is
What happens if
evidence that they have some mental capacity
issues? What if the mental capacity issues are
serious, like dementia, and they are so
significant that they warrant the appointment of
a guardian shortly after the contracts are
entered into? Are the contracts valid? The In the
Estate of Montemayor, No. 09-21-00054- CV (Tex.
App.Beaumont 9th Dist. 2023) case helps to
answer these questions.
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FACTS PROCEDURAL HISTORY
Guardianship proceedings were commenced and
the guardianship proceedings halted the real
estate transaction from closing. This
resulted in the buyer filing suit against
the decedent and his guardians alleging that they
failed to perform their contractual obligations
for the sale of the properties.
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MENTAL CAPACITY TO CONTRACT VS. TESTAMENTARY
CAPACITY

• To help explain mental capacity to contract, it
  is helpful to consider how this compares to
  the testamentary capacity to execute a will.
• In Texas, testamentary capacity for creating a
  valid will typically has a higher standard
  to prove compared to mental capacity to
  enter into a contract. The key reason for this
  difference lies in the nature and significance of
  the legal documents involved.

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UNDERSTANDING THE NATURE OF A WILL
The person must understand that they are creating
a will, a legal document that dictates how their
property and assets will be distributed after
their death. KNOWLEDGE OF THEIR PROPERTY The
testator (the person making the will) must
have a reasonable understanding of their assets
and property. UNDERSTANDING THE
BENEFICIARIES The testator should be aware of
who the natural beneficiaries of their estate
are, such as family members, friends, or
charitable organizations. FREE FROM UNDUE
INFLUENCE The testator must not be unduly
influenced or coerced by others while making
the will. They should be creating the will
voluntarily, free from external pressures or
manipulation.
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MENTAL CAPACITY TO CONTRACT
Contracts, by their very nature,
necessitate mutual understanding and consent
from all parties involved. This is often stated
with the phrase, ready, willing, and able,
which means Ready The party has taken all
necessary steps to finalize the deal Willing The
party intends to complete the sale Able The party
has the resources and capacity to conclude the
deal Based on this testimony, the jury
found that the decedent had the requisite
mental capacity to enter into a contract. The
appeals court did not overturn the jurys finding
given that it is up to the jury to
evaluate the witnesses and evidence to reach a
decision, not the appeals court.
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THE TAKEAWAY
Do you need help with a probate matter in San
Antonio or the surrounding area? We are San
Antonio probate attorneys. We help clients
navigate the probate process. Call today for a
free confidential consultation.
CONTACT
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