Law For Personal And Business Use Chapter 10 Law Of Capacity

What Is Capacity? Offer, acceptance, genuine assent and consideration satisfy major requirements of contract Contractual capacity Ability to understand contract being made and its general meaning Chapter 10 – Law Of Capacity 2

What Is Capacity? Certain parties to contract assumed by law to lack maturity, experience or capacity Minors Mentally incapacitated Legally insane can’t understand consequences of acts Intoxicated Stricter standards used because intoxication is voluntary Chapter 10 – Law Of Capacity 3

What is Capacity? If minor, may become emancipated Minors are under 18 in most states, 19 or 21 in some others Emancipation Severing of child-parent relationship Ends duty Naturally occurs at age of majority May formally be done by courts Chapter 10 – Law Of Capacity 4

What is Capacity? Emancipation may be informal Parent or minor agree parent will cease support Marry Move out of family home Join armed forces Gives birth Full-time employed Chapter 10 – Law Of Capacity 5

Which Contracts Can Be Disaffirmed? Two basic protections granted to those who lack capacity when purchasing— Necessaries Protected parties need pay only fair market value Must not already possess those goods or services Chapter 10 – Law Of Capacity 6

What Is Capacity? Two basic protections granted to those who lack capacity when purchasing— Non-necessaries (luxuries) Must pay contracted price but have right to disaffirm Chapter 10 – Law Of Capacity 7

Capacity In Organizations Scope of authority Range of acts organization authorized a person working for it to do Capacity to contract can be created when employer tells employee authorized to bind organization Chapter 10 – Law Of Capacity 8

Capacity In Organizations Scope of authority (cont.) Important that person signing contract have scope of authority to bind organization People acting outside scope of authority may be held personally liable Chapter 10 – Law Of Capacity 9

Review Think About Legal Concepts, page 146 Think Critically About Evidence, page 146 Label and include in notebook Chapter 10 – Law Of Capacity 10

Time Of Disaffirmance And Ratification Protected parties can disaffirm contract for non-necessaries Any time while still under the incapacity Within a reasonable length of time after attaining capacity Chapter 10 – Law Of Capacity 11

Time Of Disaffirmance And Ratification For minor, must occur after achieving majority May consist of: Giving new promise to perform as agreed Any act that clearly indicates party’s intention to be bound Chapter 10 – Law Of Capacity 12

Return Of Goods or Services In most states, if minor unable to return exactly what received under contract, minor can still get back everything gave Reason merchants have adults, not minors contract Chapter 10 – Law Of Capacity 13

What Contracts Cannot Be Disaffirmed? Court-approved Major commitments Educational loans, enlisting in military Banking contracts Insurance contracts Work-related contracts Sale of realty Apartment rental Chapter 10 – Law Of Capacity 14

Misrepresenting Your Age Minor who lies may still disaffirm Minor may be sued for misrepresentation Chapter 10 – Law Of Capacity 15

Review Think About Legal Concepts, page 149 Think Critically About Evidence, page 149 Label and include in notebook Chapter 10 – Law Of Capacity 16