7.1 b a c kn e x t h o m e Chapter 7 Objectives  Identify classifications of individuals who may not have the capacity to contract.  Define disaffirmance.

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7.1 b a c kn e x t h o m e Chapter 7 Objectives  Identify classifications of individuals who may not have the capacity to contract.  Define disaffirmance.  Explain how a minor’s contract can be ratified.  Discuss reasons other than age that may impair a person’s ability to contract. © 2002 West Educational PublishingTo accompany Law for Business, 14e, by Ashcroft and Ashcroft

7.2 b a c kn e x t h o m e Capacity to Contract  Can a mail-order company void a contract with a minor if the minor bought items for personal use?  No.  Would $125 jeans be considered necessaries for a minor?  Not usually, though the minor may think so!  Can a minor purchase a car then disaffirm the contract after wrecking it?  Yes, perhaps with some provisions  Is a minor who owns a lawn service responsible to uphold contracts for the payment of fertilizer?  Yes, they are liable for business contracts. Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz

7.3 b a c kn e x t h o m e When Contracting with a Minor...  Remember in many cases the minor can disaffirm a contract.  The minor may choose to ratify the contract after attaining majority.  Minors’ business contracts are enforceable and binding.  Some states prevent a minor from avoiding educational loan agreements, contracts for medical care, contracts made with court approval, and contracts involving bank accounts.

7.4 b a c kn e x t h o m e Incapacity  Mentally incompetent people - Must be judicially declared insane.  Intoxicated persons - Must be so intoxicated that they can’t understand the meaning of the contract.  Convicts - Are subject to laws which vary from state to state.