Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 6

To settle a lawsuit concerning ownership of their childhood home, sisters Frances Sparrow and Susan Demonico engaged in voluntary mediation. During mediation, Demonico slurred her words and cried much of the day. Before leaving the mediation, she authorized her attorney to execute a settlement agreement. The agreement required sale of the property, and Demonico to pay Sparrow $100,000. When Sparrow asked the court to enforce the agreement, Demonico claimed she had lacked the capacity to contract at the time of agreement. However, she testified that she had known she was participating in mediation to negotiate settlement of the lawsuit and that the subject of the mediation had been the childhood home. She had participated in the mediation and listened to the lawyers' arguments, and "couldn't believe how things [were] turning out." Did Demonico lack capacity to contract?