Exam 14: Contractual Capacity

The legal ability to avoid a contract is known as:

In the Keser v. Chagnon case, the Colorado court found that disaffirmance two months after reaching majority was within a reasonable time and that, since Chagnon had obtained the contract by false representation of his age, he could not recover his full consideration upon disaffirmance.

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 the skis to Sharon and disaffirmed the contract. Fay is:

A disaffirmance must come either during a minor's minority or within a reasonable time after he reaches majority.

If a minor sells property that the buyer then resells to a good faith purchaser for value and the minor then disaffirms the sales contract, under both the traditional view and the UCC, the minor can recover the property from the good faith purchaser for value since the minor has the power of avoidance and both purchasers had only voidable title.

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

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

The contracts of a person who is adjudicated insane and placed in care of a guardian are void.

A binding promise or agreement requires that the parties to the agreement have contractual capacity.

If a person is unable to understand the nature and effect of entering into a contract, he or she can avoid it.

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

Cornelio purchases an SUV from Barron Auto Sales. Cornelio is only 17 years of age. He wrecks the vehicle while off-roading and attempts to disaffirm the contract and have Barron repay him all that he has paid. In the majority of jurisdictions, Cornelio :

Discuss the concept of ratification and the ways in which a minor may ratify a contract. Give an example.

Ratification does need to be express; it may be implied from the minor's conduct.

Seventeen-year-old Terrence wants to disaffirm his student loan agreements. In most states, he will not be allowed to do so.

In Berg v. Traylor , the court found that:

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

By the majority view, a minor need only return any property he has received from the other party if the minor wishes to disaffirm the contract. He has no duty to return the property in the same condition in which he received it.

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

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: