For A-Plus Writer Only
patisa
chapter_9_powerpoint.pptx
Business Law
Principles
and Practices 8e
Arnold J. Goldman William D. Sigismond
Chapter 9: Capacity
Capacity to Contract
Capacity to contract: legal and mental ability to understand the nature of an enforceable agreement.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2
Disaffirmance
Disaffirmance: refusal of incompetent party to carry out the terms of an agreement.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3
Minors
In virtually all states, a person (male and female) is considered a minor until age eighteen.
The law in all states grants minors the right to avoid or disaffirm agreements.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4
Guardian
Guardian: court appointed adult who has custody and care of an incompetent party.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5
Minors’ Liability on Ordinary Contracts
A minor may disaffirm an agreement with an adult at any time, from the time the agreement is made until the time the minor reaches the age of majority and for a reasonable time after reaching majority.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6
Minors’ Liability on Ordinary Contracts
The minor may disaffirm by informing the adult orally, in writing, through a formal lawsuit, or by any conduct that shows an unwillingness to be bound by the agreement.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7
Minors’ Liability on Ordinary Contracts
If the agreement between the minor and the adult is fully or partially executed, and the minor has transferred consideration—money, property, or other valuables to the competent party—the minor may still disaffirm and recover from the adult any consideration given.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8
Minors’ Liability on Ordinary Contracts
A minor may not recover personal property sold to an adult who in turn sells it to a third party, pursuant to the Uniform Commercial Code.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
9
Minors’ Liability on Ordinary Contracts
If two minors enter into an agreement, either or both may disaffirm and recover any consideration. The minor, if no longer in possession of the consideration, has no obligation to return it.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10
When is it Illegal for a Minor to Dissafirm?
Misrepresentation of age by a minor.
Ratification by a minor.
Ratify: to approve something.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11
Minors’ Liability for Necessaries
Necessaries: things a person needs to live, such as food, clothing, and shelter.
Courts usually hold that the decision about whether an item is a necessary actually depends on the minor’s station in life.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12
Minors’ Liability for Necessaries
A minor must pay only for necessaries actually furnished, not for necessaries to be furnished in the future.
The minor’s obligation to pay for necessaries is based on a quasi contract.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
13
Station in Life
Station in life: person’s economic and social status in a community.
Applying the station-in-life rule sometimes makes it difficult to determine whether an item is or is not a necessary.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
14
Emancipated Minor
Emancipated minor: minor who is no longer under the control and authority of his or her parents.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15
Parents’ Liability for Minors’ Contracts
Generally, parents have no liability.
Businesspeople often require parents to sign any contract made with a minor.
Parents do, however, have the legal duty to support their minor children until they reach the age of majority or if they are emancipated.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
16
Minors’ Liability for Torts
Minors can disaffirm most contracts they make, but they are generally liable for their torts.
Parents are not usually responsible for the torts of their children.
Parents are sometimes liable for intentional damage caused by children.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
17
Persons Under the Influence
Intoxication is not so much a factor as is a person’s ability to understand.
Intoxication is a voluntary act.
Like minors, intoxicated persons are liable in quasi contract for the reasonable value of necessaries actually furnished to them.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
18
Persons With Mental Illness
Considered incompetent because they are unable to comprehend either the making of a contract or its effect.
Court declared incompetence.
Mental incompetence not adjudged by a court.
Quasi contract.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
19
