Ch 7 Capacity

Contractual Capacity

Chapter 7Pages 144-157

POINTS TO PONDER

Have you ever entered a contract and then reconsidered your choice?

Make a list of as many things as you can think of that would give a person the capacity to contract.

CAPACITY LEGAL ABILITY TO

ENTER A CONTRACT

Under the age of 18

What did the age of majority used to be?

21 years old

When does a person legally turn 18? Pg 148

LEGAL AGE

Why Does the Law Permit Minors to Rescind their Contracts? Protection from adults inexperienced

What is a Minor? Under the age of 18

What did the age of majority used to be?21 years old

Which types of minors are held responsible for their contracts? Emancipated

• Not under control of parents

• Married

Individuals who leave home abandon rights of a minor.

Misrepresentation of Age What happens if you enter an agreement as

a minor yet claimed to be of age?• This is Fraud• You will be responsible and may be sued

Why do you think the law prohibits minors from purchasing alcohol?• Protection, lack of maturity, & judgment

Can minors disaffirm a contract even if they have damaged the item purchased? YES. Some states may deduct some money

for damages.

VOIDABLE CONTRACTS Minors may disaffirm their contract.

DISAFFIRMStatement Act

Return MerchandiseDisaffirm in writing pg 153

Disaffirm the entire contractAll or none

Disaffirming Contracts Put in Writing Include:

• Sellers name & address• Minors Name• Date & Place of contracting• Time & Place of Return

You want to start a band with other minors can you enter a legally binding contract?

What can you do to make the agreements binding?Get parents to sign on behalf of the minor.

Ratify or Approve What happens if you buy a car as a

minor and still owe money on it after you become an adult?

Do you have the rights of a minor still or an adult?

By keeping, using, or selling products after reaching the age of majority, you ratify the contract.

Ratify or Approve Orally In writing Actions

• Using Item• Making Payments

Colleen bought a car as a minor. She paid a down payment and promised to pay installments over the next two years. After she reached 18 she continued to make payments. The act of making payments was a ratification. She could no longer return the car.

Contracts for Necessaries Minors are held responsible for

necessaries.• Courts must prove item was a necessary &

that parents weren't adequately providing for the child.

• Food, clothing, shelter, & medical care Read example 3 pg 156

Exceptions to capacity RuleIn Some Sates Life or Car Insurance Business in their name

Imagine you were a pop starHow might your ability to sign contracts

affect you? (financially etc..)