Term
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Definition
1. All parties have full legal capacity
2. Result: Contract is valid |
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Term
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Definition
1. One or more parties have been adjudicated mentally incompetent
2. Result: Contract is void -> not enforceable by either party |
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Term
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Definition
| 1. One or both are minors, highly intoxicated or mentally incompetent (without adjudication) |
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Term
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Definition
| Avoidance of a contract by a person with a legal disability |
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Term
| Typical steps to Disaffirmance: minors |
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Definition
1. Expressing the intent, by words or conduct, not to be bound to the contract -> while under a disability or within a reasonable time thereafter
2. Restoration: Requires _________ of property purchased before
3. Restitution: Requires payment for any damage to property prior to its return |
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Term
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Definition
| Using SPECIFIC LANGUAGE to manifest agreement to the contract a legal disability removed |
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Term
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Definition
| Failure to disaffirm within a reasonable time after the removal of a disability is an implied ratification (no longer voidable) |
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Term
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Definition
1. Items necessary for health and maintenance, such as: food, clothing, medical care, etc.
2. Incompetent persons are often partially liable for necessaries so that they have more chance of receiving what they need to live.
3. Flexible standard: e.g. car may be a necessary if needed for job |
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Term
| Liability for Necessaries: Effect of Liability |
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Definition
| May disaffirm actual contract but the person with limited competence is sill liable for reasonable value of goods or services in quasi contract -> a contract implied in law to avoid unjust enrichment |
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Term
| Minors: Three Requirements for Disaffirmance |
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Definition
1. Express the intent not to be bound within the required time period
2. Fulfill only the duty of restoration under the _________ __________ (the rule in most states); a minority of states would also require duty of restitution (such as paying for any damages to an item purchased)
3. Must be a type of contract for which disaffirmance is allowed |
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Term
| Three types of contracts not voidable because of minority |
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Definition
1. Marriage
2. Joining the Military
3. Student loans |
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Term
| What if a minor lies about their age? |
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Definition
| Most states require the minor who lies about age to either fulfill the contract or to pay least the reasonable value of goods or services in quasi contract |
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Term
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Definition
| If a minor is not under the care of an adult with the ability to pay for the minor's needs, the minor must pay the reasonable value of necessaries |
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Term
| Typical steps to disaffirmance: intoxicated persons |
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Definition
1. Express an intent not to be bound while intoxicated or within reasonable time after becoming sober
2. Duty of Restoration
3. Duty of Restitution |
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Term
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Definition
| The intoxicated person is liable for the reasonable value of goods or services even if the contract is disaffirmed |
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Term
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Definition
Persons who at the time of the contract do not understand the nature or substance of the transaction because of a mental condition
1. Adjudicated -> Contract is void
2. Non-adjudicated -> contract is voidable and may be disaffirmed by the incompetent party |
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Term
| Incompetent Persons: Lucid Intervals |
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Definition
1. Periods when the person with the incapacity is clear-minded
2. Result where there has been no adjudication of incompetence: the contract is valid |
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Term
| Three Requirements for Disaffirmance: Incompetent Persons |
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Definition
1. Manifestation of intent -> while incompetent or within a reasonable time after becoming competent
2. Duty of Restoration
3. Duty of Restitution |
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Term
| Five Types of Illegal Agreements |
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Definition
1. Violation of usury laws (laws which set a max interest rate on loans or credit) - typically cannot collect interest
2. Gambling Laws - a gambling contract is void, but the loser may sue to recover losses; 3 months statute of limitations
3. Blue Laws (Sabbath laws) -> certain contracts prohibited on Sundays - contracts for food and medicine were usually exceptions - now very few contracts are legal on Sunday |
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Term
| Five Types of Illegal Agreements: Continued |
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Definition
4. Contracts by unlicensed professionals - for licensed professions from surgery to cutting hair, a license is necessary
5. Contracts to perform illegal acts |
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Term
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Definition
1. Professionals generally may not exempt themselves from liability to clients and patients
2. More likely to be against public policy if the exculpatory clause is placed in the contract y person with much greater bargaining power |
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Term
| Three Types of Agreements in Restraint of Trade |
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Definition
1. Price fixes schemes are against public policy
2. Market divisions are against public policy
3. Covenants not to compete are enforceable only if: a) If in connection with the sale of a business or an employment contract and not too broad in terms of time and territory covered |
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Term
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Definition
| Violation of equal protection law |
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Term
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Definition
1. Contracts involving commission of a tort are against public policy
2. Example: Hiring someone to defame a candidate |
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Term
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Definition
| In equal fault (contract is void) |
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Term
| Exception to Results of Illegality of Public Policy |
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Definition
| Protected classes, such as minors or employees |
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