Term
| What is a minor's capacity to contract? |
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Definition
| A minor can enter into any contract that an adult can as long as it is not against the law (purchase of alcohol) |
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Term
| What causes a person's minority status to be terminated? |
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Definition
(1) Age of majority - 18 in most states
(2) Marriage - in some states
(3) Emancipation - Parents have relinquished control |
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Term
| What is a minor's right to disaffirm? |
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Definition
| A minor can disaffirm a contract by expressing an intent not to be bound to the contract. |
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Term
| What can an adult recover from a minor who has disaffirmed their contract? |
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Definition
(1) in most states, the minor must return the goods or pay their value
(2) in many states, if the goods are used, damaged, or ruined the adult must be restored to the position he or she held before the contract. |
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Term
| What can a minor recover if they disaffirm a contract? |
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Definition
| all property that he or she transferred to an adult as consideration, even if it is in the possession of a third party. If it cannot be returned, the adult must pay the minor its value |
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Term
| What are the exceptions to a minor's right to disaffirm? |
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Definition
(1) misrepresentation of age - some states still allow the minor to disaffirm, others do not.
(2) contracts for necessaries - if a minor disaffirms a contract for necessaries, they will be liable for the reasonable value.
(3) insurance and loans - most states: a minor can recover all premiums paid, but must repay a loan used to purchase necessaries. |
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Term
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Definition
| whatever is reasonably needed to maintain a minor's standard of living... Food, clothing, shelter, and medical services... |
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Term
What is ratification?
Express ratification v. Implied ratification |
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Definition
the act of accepting and agreeing to be legally bound by a contract.
Express: upon reaching the age of majority, a minor can state, orally or in writing, that he intends to be bound by a contract
Implied: a minors conduct is inconsistent with disaffirmance or fails to disaffirm an executed contract within a reasonable time after reaching majority. |
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Term
| What are the parents' liability to a minor's contractual obligations? |
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Definition
| generally, parents are not liable for contracts made by their minor children acting on their own. A parent may be liable if they know or should know that this poses a risk of harm to others. |
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Term
| What are the contractual obligations of an intoxicated person? |
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Definition
(1) if person is sufficiently intoxicated to lack mental capacity, the contract is voidable at the option of the person whether intoxication was voluntary or involuntary.
(2) if a person understands the legal consequences of a contract, despite intoxication, the contract is usually enforceable. |
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Term
| How does mental incompetence affect the contractual obligations of an individual? |
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Definition
(1) if a person is found mentally incompetent by a court and a guardian is appointed, any contract by that person is void.
(2) a contract is voidable if a person does not know he is entering into the contract or lacks the capacity to comprehend its nature, purpose, and consequences
(3) a contract is valid if a mentally incompetent person understands the nature and effect of entering into a certain contract. |
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Term
| What is the legality of a contract to commit a crime? |
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Definition
| a contract to commit a crime is illegal. If the contract is rendered illegal by statue after it has been entered into, the contract is discharged. |
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Term
| What is the legality usury? |
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Definition
| usury is the act of charging a rate of interest on a loan higher than the state allows. Some states allow recovery of interest and premium, others just premium, some nothing at all. |
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Term
| What is the legality of a gambling obligation (contract)? |
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Definition
| Some states enforce gambling contracts but others do not. In general, gambling contracts considered illegal. However, it can sometimes be difficult to distinguish a gambling contract from other types of contracts. |
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Term
| What is the legality of a contract with an unlicensed individual (doctor, contractor, etc...) |
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Definition
| If the purpose of the licensing statute is to protect the public, the contract is illegal; if the purpose of the licensing statute is to raise revenue, the contract is enforceable. |
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Term
| What is the legality of contracts in restraint of trade? |
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Definition
(1) contracts that restrain trade, adversely affect the public, or violate an antitrust statute are prohibited
(2) contracts including a covenant not to compete are acceptable if reasonable, determined by the time and size of area in which the party agrees not to compete. In some states the courts will remake the terms reasonably and enforce the covenant. |
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Term
What is unconscionability?
Procedural v. substantive |
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Definition
A bargain that if unfairly one-sided is unconscionable.
Procedural: due to trick or complex language, fine print, legalese, buried clauses, etc. No time to read or review or get responses to questions. May involve an adhesion contract (iphone agreement, rental care).
Substantive: contract is grossly unfair, too harsh. (ex) rent to own agreement with someone with little education or ESOL.
often, both can exist in the same agreement |
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Term
What is an exculpatory clause?
Legality? |
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Definition
contract clause that absolves a party of negligence or other wrong. sometimes found in rental agreements and real property leases.
legality: often held to be unconscionable. |
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Term
| Contract illegality exception: Justifiable ignorance |
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Definition
| a party who is innocent may recover benefits on a partially executed contract or enforce a fully executed contract. |
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Term
| Contract illegality exception: Members of protected classes |
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Definition
| when a statute is designed to protect a certain class of people, a member of that class can enforce a contract in violation of the statute (the other party cannot) |
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Term
| Contract illegality exception: withdrawal from an illegal agreement |
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Definition
| if the illegal part of an agreement has not been performed, the party rendering performance can withdraw and recover the performance or its value |
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Term
| Contract illegality exception: Fraud, Duress, or Undue Influence |
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Definition
| a party induced to enter into an illegal bargain can enforce the contract or recover for its value |
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Term
| What happens if a contract has both a legal and illegal portion? |
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Definition
| a court may enforce the legal part if the illegal part does not affect the essence of the bargain. |
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