CH5 Capacity

- Capacity is a required element of a legally enforceable contract.

- Contractual capacity: mental and legal ability of a person to understand that they’re
entering a binding agreement enforceable by law.
- Capacity: mental and legal ability to gain right and impose duties.
- Categories of incompetent people to enter contracts:- [voidable contracts]
1. Minors
 minors’ liability on ordinary contracts
o Minor return received consideration from adult then disaffirms
 misrepresentation of age by a minor
o When a minor lies to an adult about is or her age.
 ratification by a minor [approved]
o Minors can not ratify only a part of an agreement and disaffirm another part. The
entire agreement must be either ratified or disaffirmed.
 minors’ liability for necessaries
o Minors are responsible for payment for necessaries purchased from adults.
o Necessaries: are those things a person actually needs to maintain the minor’s
standard of living. Traditionally, necessaries are food, clothing and shelter.
o Emancipated minor: is one who is self supporting and is no longer subject to
parental control and authority.
 parents’ liability for minors’ contracts
o Parents generally have no legal lability for contracts made by their minor children
unless they agree to become liable.
 minors’ liability for torts
o Minors can disaffirm most contracts they make, but they are liable for their torts.
o Parents are not usually responsible for the torts of their children.
o Incompetent = no capacity = voidable. Exp. Contract between minor and adult, because
the minor can disaffirm at any time till the age of maturity.
2. People under the influence of alcohol/drugs
 Party may disaffirm an agreement made while intoxicated only if the other party
purposely caused the person to become drunk or knew that the person was drunk
and unable to understand the consequences of the transaction.
3. Mentally ill people
A. Declared by count order-> void
B. Without count order declaration-> voidable