Presentation on theme: "Chp 5 Elements of a Contract"— Presentation transcript: 1 Chp 5 Elements of a Contract Show
2 Age guidelines…. A minor is 17 years, 363 days old Age of “majority” legal adult starts at 17 years (legal adult starts on the day before your 18th birthday).
3 Emancipation and Abandonment 4 Misrepresentation of Age 5 Contracts of Minors The law shields minors when
they make contracts to protect them from unscrupulous adults. Minors may be vulnerable because of Immaturity Inexperience Lack of education Naïveté (Innocence) 6 Voidable
Contracts Contracts made by minors are voidable by the minor. 7 Voidable Contracts To disaffirm a contract means to show the intent not to live up to the contract by a statement or some other act. By permitting minors to have the privilege of disaffirming contracts, the law provides young people with a second chance when they use poor judgment.
8 Returning Goods If a minor still has the merchandise he or she received upon entering a contract, this merchandise must be returned when the contract is disaffirmed.
9 Disaffirming the Whole Contract
10 Ratification of Minors’ Contracts
11 Contracts for Necessaries
12 Other Contractual Capacity Rules (for certain types of contracts) 13 Contracts that must be in writing; 14 Homework… (answer in complete sentences) Contractual capacity is the third element of a valid contract. A contract entered into by a party who lacks the requisite capacity may be either void or voidable. If one of the parties to a contract has been adjudged incompetent or insane by a court after a competency hearing, that contract will normally be judged “void” by the court. In other cases, a party may allege and will have to prove that he or she lacked the ability to enter into a contract for one or more of the following reasons: the contract was entered into under the influence of drugs or alcohol; mental incompetence (perhaps the onset of senility or Alzheimer’s disease); mental retardation; intoxication; the side effects of medication; temporary delirium deriving from physical injuries sustained in an accident; extreme confusion; etc. Generally, unless there has been an adjudication of incompetency, contractual capacity is a question of fact for a jury, rather than a question of law to be decided by a judge. In order to set aside a contract on grounds of lack of capacity, it is necessary to show that a party did not “understand the nature or consequences of the transaction” or that “by reason of mental illness or defect… [a party] is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of this condition.” Thus, upon such a showing, a party may exercise its option to disaffirm or remove him or herself from a contract. The contract is voidable. One major topic of in the discussion of contractual capacity is a contract entered into by a party considered by the legal system to be a minor or an “infant.” Minor’s ContractsSome preliminary considerations are in order. A minor is any person who has not yet attained the required “age of majority” as determined by a given state. This age (usually 18, but in some states the age may still be 21) may or may not be the same age as is the age for voting, getting married, or purchasing or consuming alcoholic beverages. Each state by statute determines its own “age of majority” for entering into a contract. The word “minor” may be synonymous legally with the word “infant.” In some states, if a minor becomes emancipated (that is, the minor is considered to be “on his own”) that minor will be treated legally as an adult for the purposes of entering into a contract. Minors who might be considered emancipated are those who are married, who are serving in the armed forces, who make significant incomes (i.e., child stars, like Gary Coleman or Shirley Temple), or who live on their own. Unless adjudicated by a court, emancipation is likewise a question of fact for a jury. An adult who enters into a contract with a minor has no right to terminate the contract. Only the minor enjoys the right to disaffirm the contract. If both parties to a contract are minors, then each of the minor parties will have the right to disaffirm the contract. A contract entered into by a minor is thus an example of a voidable contract. Three Rules of Minor’s ContractsThere are three rules that generally apply to minors’ contracts: the Majority Rule; the New York Rule; and the Third Rule. Majority RuleUnder the majority rule, still applicable to more than two-thirds of the states, a minor may, at any time prior to reaching his/her age of majority, and for a reasonable time thereafter (usually no more than 30 days), disaffirm a contract, return the consideration in his/her possession or under his/her custody control at the time of disaffirmance in whatever form it is currently in, and receive back his/her full consideration. The majority rule provides maximum protection to a minor who has entered into a contract during the period of his or her minority. New York RuleUnder the New York rule, a minor may disaffirm the contract, but is responsible in either quasi-contract or under a theory of restitution for the depreciation, wear and tear, damage, fair use, or reasonable rental value of the items under his/her care, custody, or control pursuant to the contract. This approach seeks to balance the rights of both parties to the contract. Third RuleUnder the “third rule,” a minor may only disaffirm a contract if he/she can return the consideration in its exact original form. The third rule will normally apply to so-called “lay away” contracts, where goods remain with the seller until they have been fully paid for. In all cases, no particular form of language or conduct is required to effectuate a disaffirmance as long as the minor makes his or her intention clear. Read the following case, Harvey v. Hadfield, carefully. Note especially the reasoning cited behind the minors’ contract rules discussed in this case. How do you know which rule a given state will apply to a contract entered into by a minor?
The Necessaries DoctrineIt is now well settled that a minor is liable for the reasonable value of necessaries furnished him or her under the theory of quasi-contract. While there is no one universally accepted definition, necessaries generally include those items furnished to a minor for his/her “life, health, or safety.” A list of necessaries (often termed as “necessities” under the common law) might include such items as food, clothing, shelter, medical, and educational expenses. Two special aspects of the necessaries doctrine must be considered. First, there has been a tendency by courts to expand the category of items that would be considered as necessaries (i.e., items such as life or health insurance, automobiles, sporting goods, audio equipment, a college loan; etc., may be considered as necessaries if these items are used in connection with one of the traditional categories). Second, a court will often look to the value or price of the item in question and the station or status in life of the minor to determine if a contract is for necessaries. Thus, a $25 cloth coat may be a necessary item for all minors; but a $5,000 mink jacket is only likely to be a necessity for someone of unusual means. Finally, most courts will apply the New York rule to contracts where the minor has been furnished a personal service (i.e., dance or karate lessons; babysitting jobs; employment assistance), on the theory that the minor cannot return the service already rendered to him or her. RatificationRatification is an act or an expression in words by which a minor, after having reached his or her age of majority, indicates an intention to be bound by the contract entered into during minority. An effective ratification cannot take place prior to the attainment of majority. Ratification may be express, that is, a minor may give actual notice that he or she will be bound to the contract. The notice may come in the form of a letter, a telegram, or a phone call. Ratification may also be implied from conduct, such as making a payment on account after reaching the age of majority, or retaining or continuing to use property after attaining majority. Ratification might also result from a minor literally doing nothing after reaching his/her age of majority, although courts remain divided on the issue of silence and its effect on the issue of ratification. A Minor’s Misrepresentation of AgeSuppose a minor is asked about his/her age. The minor lies (also known as making a misrepresentation) and states that he/she is over the age of majority and is no longer a minor. According to the majority rule, a minor may still disaffirm the contract, even though he/she has misrepresented his/her age. There are several other rules or variations of the rule that individual jurisdictions may follow. These include: If a minor misrepresents his or her age, he/she may not disaffirm. Period. This represents the extreme view on the matter and seeks to punish a minor for their misrepresentation. If a minor misrepresents, he/she will be prohibited (estopped) from using minority as a defense. This view affords practically no protection at all to the minor who has misrepresented his or her age, unless he/she can return the consideration “as delivered,” in its exact original form. Some courts will permit a minor who has misrepresented his/her age to disaffirm, but will then allow the minor to be sued in tort for fraud, resulting in an effective “set-off” of any amount of disaffirmance. As was noted before, it is important to determine the views of an individual jurisdiction on these matters. Ethical ConsiderationsDisaffirmance By A Minor Larry Derry, who is 16, purchases a car from Cruiser Motors. Larry one night is invited to a party where is has a bit too much to drink. On the way home, he cracks up the car. It is now worthless. Larry now attempts to get his money back, claiming minority as a defense. Should courts continue to protect minors from the consequences of their conduct by relying on common law rules relating to disaffirmance of contracts? Disaffirmance By Adults Should the “other party” to a contract (not the minor) be afforded the same opportunity to disaffirm a contract as now possessed by the minor? Under what circumstances? Entertainment And Sports Do “minors” who work in show business or sports deserve more protection than others relating to contracts they might enter into? Questions
Harvey v. Hadfield
Copyright © 2017 Hunter | Shannon | Amoroso | O’Sullivan-Gavin What is the purpose of the minor's right to Disaffirm contracts?People who can prove they lacked the capacity to enter a legally binding contract—intoxication, mental incompetence, etc. —can disaffirm a contract and therefore avoid any and all legal obligations set forth in the contract. In many cases, this can apply to minors.
When a minor who has entered into a contract?Minors (those under the age of 18, in most states) lack the capacity to make a contract. So a minor who signs a contract can either honor the deal or void the contract. There are a few exceptions, however. For example, in most states, a minor cannot void a contract for necessities like food, clothing, and lodging.
Can a minor enter into a contract of sale Philippines?Minors and insane and demented persons are incapacitated to signify their consent to a contract of sale. But, minors must pay a reasonable price for necessaries, or everything indispensable for their sustenance, dwelling, clothing, medical attendance, education and transportation, which they may have purchased.
When it is said that a contract made by a minor is voidable Which of the following is true?Terms in this set (22) When it is said that a contract made by a minor is voidable, which of the following is true? While still a minor, he can disaffirm the contract and return the property.
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