Exam 14: Contractual Capacity

Sean had two beers and felt tipsy.He made a deal with Yoko to buy her stereo.He can avoid the contract because of lack of capacity.

Darrell goes to lunch with an office equipment salesman.After drinking two beers and eating a Reuben sandwich,Darrell signs a contract to purchase a $1200 machine for the office.Two hours later,he has second thoughts and decides a different machine might be a better buy,so he calls the salesman and wants to disaffirm the contract based upon intoxication.Darrell can avoid the contract on this basis.

An intoxicated person must have been so intoxicated as to have been unable to understand the consequences of his actions or have been unable to act in a reasonable manner in order to avoid a contract.

Wanda at age 17 purchased an expensive stereo system from Stereo Sales.If Wanda wishes to ratify this contract,Wanda:

Todd,a minor,rents an automobile from Rosa,an adult.Todd damages the vehicle when he negligently backs into a pole.Under the majority view,can Rosa recover damages from Todd?

Ratification of a contract,once effected,is final and cannot be withdrawn.

Percy,age 17,purchased a used mobile home from a mobile home dealer for $20,000.This price,however,was twice the reasonable value of the mobile home.One month later,Percy wishes to disaffirm the contract.If the mobile home is considered a necessary,then:

Steve purchases a four-wheel drive truck from Belk Auto Sales.Steve is only 17 years of age.He wrecks the vehicle and attempts to disaffirm the contract and have Belk repay him all that he has paid.In the majority of jurisdictions,Steve:

In general,if a minor lies about her age in order to induce the seller to contract with her,she cannot disaffirm that contract.

Fay,age 17,ordered a pair of skis on the installment plan.She paid $20 every month until she turned 18,the age of majority.The next day,she sold them to Sharon and disaffirmed the contract.Fay is:

Persons who lack mental capacity at the time they enter into a contract may avoid liability under the agreement.

Ratification can occur in which of the following ways?

In some states,minors are liable for contracts involving bank accounts and student loans and cannot avoid these contracts even though they can avoid other types of contracts.

A person taking a prescription medication that alters mental capacity will be treated the same as an incompetent under the cognitive ability test.

Intoxicated persons are liable in quasi contract for necessaries purchased during their incapacity.

Emancipated minors have no ability to avoid contracts based upon their minority.

Gerard,an adult,contracts with Communiserve to purchase,in installments over a period of five years,a very large quantity of services that he will probably never need.Although Gerard understands what he is doing when he enters the contract,he has a mental condition that impairs his ability to act in a reasonable and rational way.Under the Restatement:

A mental illness or defect of one of the parties to a contract automatically makes a contract void.

An automobile may be considered a necessary item for a minor.

A person under guardianship by court order has no contractual capacity.