Chapter 9 in the text. Gary Nelson Capacity to Contract Chapter 9 in the text. Gary Nelson

Contracts Require Offer Acceptance Genuine Agreement Capacity Consideration Legality

Capacity to Contract This just means that the law recognizes the ability of the person to bind himself to a contract.

Incapacity at Common Law Common law did not allow women, minors, insane people, or intoxicated people to be bound by a contract. The incapacity of women has been completely removed.

Minors A person under the age of majority - 18 in Texas - is a minor. You will reach the age of majority on the day before your 18th birthday.

Contract of Minors Contracts by minors are voidable by the minor. The other party may not disaffirm unless the other party is also a minor. Minors may choose to disaffirm their contracts if they choose. Must disaffirm the entire contract Must disaffirm before an act of ratification after reaching the age of majority.

Issues in Disaffirming Contracts If the minor has the merchandise, it must be returned when disaffirming. In Texas, a minor may disaffirm even if she no longer has the merchandise. Misrepresenting one’s age (i.e. claiming to be 18 when you’re not) is fraud. The minor may still disaffirm the contract. The other party may sue the minor for fraud.

Ratification Ratification is when a person, having attained the age of majority, approves a contract entered into as a minor. Once ratified, a contract can no longer be disaffirmed.

Ratification can occur by verbally (orally or in writing) expressing the desire to ratify, using the items, selling the items, making a payment on the items, or keeping the items for a reasonable time after majority.

Necessaries Necessaries are food, clothing, shelter, medical care, etc. What is a necessary depends upon the circumstances of a particular minor. Minors may be held responsible for the “fair market value” of necessaries. That is, the minor may disaffirm the contract, but the other party may sue the minor to recover the “fair market value” of the necessaries.

Mentally Impaired Persons Unless a guardian has been appointed, these contracts follow the same rules as those of minors. Once the court has appointed a guardian, contracts made by mentally impaired persons are void (instead of voidable).

Intoxicated Persons Contracts entered into by people who are so intoxicated at the time of the contracting that he did not understand the purpose, nature, or effect of the transaction are voidable.