CAPACITY2.01 C

Understanding Contract Law

Understand elements and characteristics of a contract

Have you ever wondered what capacity is?

Probably not? But when looking at a contract you need to be able to identify what Capacity is. So lets take a look at Capacity!

CAPACITY

Legal ability to enter into a contract

• Minors• Mentally Incapacitated• Intoxicated

A person serving a prison sentence lacks capacity.

MINORS

Minor – not yet reached legal age (age of majority)

NC Age of Majority – 18 years old

Emancipation - severing of the parent-child relationship Formal – court decree Informal – arises from the conduct of the minor and the parent

Parent and minor agree that parent will end support Minor gets married Minor moves out of family home Minor joins armed forces Minor gives birth Minor takes on full-time employment

Ratification – agreeing to be bound by a contract that could be avoided Contracts made by minors are voidable; minors may disaffirm (or avoid

being bound by) contracts

MENTALLY INCAPACITATED

Lacking the ability to understand the consequences of his or her contractual acts

Severe mental illness

Severe mental retardation

Severe senility

Contracts made by mentally incapacitated are usually void unless involving necessaries.

INTOXICATED

People under the influence of drugs or alcohol

Intoxication is a voluntary act.

Most courts are reluctant to consider contracts entered into by intoxicated individuals as voidable.

Must be so intoxicated that the person did not know they were contracting.