Exam 13: Capacity and Genuine Assent

At common law, a minor cannot be held contractually liable for his or her necessary medical expenses when the parent is unable or unwilling to pay.

Marquez agrees to buy Dale's pickup truck so he can pull his trailer. Both Marquez and Dale believe that the truck is big enough to do the job. After they complete the deal, Marquez finds that the truck is not strong enough to handle the trailer. The contract between Marquez and Dale can be rescinded because of:

In order for fraud liability to arise, the listener must actually rely on the false statement of fact.

Contractual capacity is the ability to:

Factual incapacity is imposed because of the class or group to which a person belongs.

A contract made by an incompetent person after a guardian has been appointed is voidable.

An apparently voluntary agreement may in fact not be voluntary if:

A factual incapacity may exist when, because of a mental condition caused by medication, drugs, alcohol, illness, or age, a person does not understand that a contract is being made or understand its general nature.

As a general rule, the nondisclosure of information that is not asked for does not impose fraud liability or impair the validity of a contract.

Contractual capacity can exist even though a party does not understand every provision of the contract.

Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles. Fraud has occurred if:

When a minor avoids contracts, the minor always must return the other contracting parties to their original financial positions.

A unilateral mistake as to a fact does not affect the contract when the mistake is unknown to the other contracting party.

A minor cannot avoid a contract that has been:

Ordinarily, a party to a contract has no duty to volunteer information to the other party.

Assume Harvey buys a bull from Mike for the purpose of breeding, and Mike was aware of Harvey's purpose in purchasing the bull. Later, the bull was discovered to be sterile, although at the time of sale both Harvey and Mike believed the bull was not sterile. The contract is:

An incompetent person may ordinarily avoid a contract in the same manner as a minor.

Fraud requires intent that the listener rely on the false statement of fact.

An agreement is not binding when:

A contract obtained by physical duress is void.