Capacity to Contract

1
Capacity to Contract
2
Capacity to Contract

• Capacity legal ability to enter a contract
• Majority age of legal adulthood
• Minor not yet reached legal age (minority)
• NC Age of Majority 18 years old
• Voidable Contracts minors may disaffirm or
  avoid their contracts if they so choose
• Infancy minority minor under 18 yrs old

3
Capacity to Contract

• Returning Merchandise must be returned if
  disaffirming a contract
• Tender offer to return
• Misrepresenting Age fraud
• - if contract disaffirmed, you may be sued
  for fraud

4
Capacity to Contract

• Disaffirming the Whole Contract - cant
  disaffirm parts of a contract
• -- must disaffirm all or none
• Disaffirming Contracts made with Minors
• both can disaffirm contact

5
Ratification of Contracts with Minors

• Ratify approve contract
• - after reaching majority age, a minor can
  ratify a contract made while he or she was a
  minor
• - ratification ends all rights given to a
  minor
• Contracts for Necessaries necessities food,
  clothing, shelter, and medical care
• - responsible for the fair value of item

6
Ratification of Contracts with Minors

• Special Statutory Rules minors have capacity to
  buy car/life insurance
• - married adult
• - limited capacity if you own a business
• - renting apartment is a necessity

7
Other Contractual Capacity Rules

• Mentally impaired persons if declared insane
• Prior to guardian being appointed Contract is
  voidable
• After guardian appointed - all contracts are void
• Intoxicated person must not understand the
  purpose, nature, or effect of the transaction
• - fair value of necessities

8
Other Capacity Limitations

• Convicts have certain limitations
• Aliens people who live in U.S. but own
  allegiance to a different country
• - limited capacity
• ex war