1. Legal Capacity to Contract
Ask students to write what they think capacity means in legal terms
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3. Contractual Capacity
… ability to understand the consequences of a contract
Ask students to give examples of people that they think do not understand the consequences of a contract
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4. Protections for Those Who Lack Capacity
Minors
age of majority is 18 for most states
minors have not yet reached the age of majority
minority ends the day before the birthday of the age set as the age of majority
contracts of most parties who lack capacity are considered voidable
Ask students to list what they can legally do at age 18 and age Does getting older mean taking on greater responsibilities ?
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5. Protections for Those Who Lack Capacity
Minors
Disaffirmance - refusal to be bound by a previous legal commitment
Minors must pay at least a reasonable value for necessaries (food, clothing, shelter) even if they disaffirm the actual purchase contract
Minors can usually get out of contracts; however, they are responsible for paying a reasonable amount for contracts involving food, clothing, and shelter.
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Emancipation
…severing of the child-parent relationship (ends the duty of the parent to support a child and the duty of the child to obey the parent)
Emancipation may mean freedom for some young people, but it also means more responsibilities.
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Emancipation of a Minor
Parent and minor agree that the parent will cease support.
The minor marries.
The minor moves out of the family home.
The minor becomes a member of the armed forces.
The minor gives birth.
There are many situations that can result in emancipation of a minor.
The minor undertakes full-time employment.
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8. Mentally Incapacitated
People with severe mental illness, severe mental retardation, or severe senility lack capacity.
A person who lacks the ability to understand the consequences of his or her contracts lacks capacity.
A person ruled as permanently insane has mental incapacity.
Entering into a contract with a person who lacks mental capacity is irresponsible. This type of agreement involves taking unfair advantage of a weaker party.
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9. Intoxicated Lack Capacity
…from using alcohol in forms such as beer or vodka
…from using drugs such as marijuana or crack cocaine, or inhaling products such as glue or aerosols
Getting out of a contract due to intoxication should be embarrassing. The courts will rule in favor of the person under the influence of mind-altering drugs.
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10. Who Has Contractual Capacity in Organizations?
Someone who has capacity is within his or her scope of authority to sign agreements.
When the organization leads others to believe that a person has certain authority, the person has contractual capacity.
When the employer tells an employee that they are authorized to bind the organization, the individual has capacity.
Power of attorney gives another individual the power to sign binding agreements. Many times the titles of individuals in the organization will determine who can sign binding contracts.
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Assignments
Independent Practice Assignments
1. Lacking Capacity PowerPoint Presentation: Design a PowerPoint presentation that shows which groups of individuals lack the capacity to be bound by a contract. The presentation should include politically correct and appropriate for classroom use pictures and captions.
Emancipated Minors Poster : Design a poster that illustrates six informal means of emancipation for a minor. The poster should include pictures and text.
3. Case Assignment: Jennifer was a wholesaler of flowers. Her friend, Carrie, worked for a grocery store as a checker. One day Jennifer stopped by during Carrie’s break and asked if she could sell her flowers through that store. Carrie said yes and signed a contract to purchase 20 dozen roses for the store.
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