Exam 14: Contractual Capacity

If a person with a mental condition that impairs her ability to act in a reasonable manner enters a contract that is grossly unfair, the contract is voidable.

Mel, who is age 17 but looks older than 18, makes a contract to buy a car from Maisie, who is the age of majority.Maisie finds out Mel's age.Maisie may avoid the contract even if Mel did not misrepresent his age.

In general, a minor may only disaffirm a contract after he has reached the age of majority.

Compare the liability of an intoxicated person to that of a person who is mentally ill.How are their situations similar? How are they different with regard to contractual capacity?

A mental condition that impairs a person's ability to act in a reasonable manner is one type of mental incompetence.

In the First State Bank of Sinai v.Hyland case, the Supreme Court of South Dakota held:

What are the two tests for mental competency?

In a contract to sell necessaries to a minor, these goods and services are limited to medical care, food, and shelter.

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

Only a minority of courts hold that, upon disaffirmance, a minor must return any property he has received from the other party to the contract.

Joanne, a minor, sold her laptop computer to Bruce, an adult.Bruce then sold the laptop to Anna, also an adult, who had no knowledge of the fact that the original owner was a minor.Under the Uniform Commercial Code, Joanne may:

Ratification does not need to be express; it may be implied from conduct.

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

Fourteen-year-old Marsha bought $120 worth of video games and DVDs at a local store, using her own money.Her parents insisted that she return the items and get her money back.Which of the following is true?

Anna is 88 years old and under the legal guardianship of her daughter.One day Anna receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy.The contract is:

Courts treat contracts of incompetents and intoxicated persons essentially the same, except they are stricter with intoxicated persons because of the voluntary nature of intoxication.

Seventeen-year-old Teresa wants to disaffirm her student loan agreements.In most states, she may do so.

At common law, a minor was a person who was under the age of twenty-one years.

Randy, a minor, buys a new four-wheel drive truck from the Jones Dealership.Randy sells this truck to his cousin, Steve, who is an adult.Steve conveys this vehicle to Arthur Smith.Arthur does not personally know Steve or Randy.Which of the following expresses the status of this situation?

Cheryl, age 16, ordered a new dress to wear to the school prom.She has contracted to pay $500 when the dress arrives.Before the dress arrives, Cheryl decides that the dress is too expensive, and she now wishes to cancel the order.Cheryl: