Chapter 9 Capacity to Contract

Aim: How does capacity effect a contract?

I. Contracts of Minors

  1. Minority- less than 18 years of age- “minors”- stage of “infancy”
  2. Majority- anyone over 18 years- day before your 18th birthday
    1. 26th Amendment stating this was passed 1972

1. Voidable Contracts

  • Minors are regarded by federal law to be incapable of entering into major contracts
  • Minors may disaffirm their contract
  • This privalege is supposed to protect minors who, because of immaturity and inexperience, might be taken advantage of or make a poor decision
  • The right does not intend to take advantage of others
  • “Infancy is a shield, not a sword”
  • Infancy=minority
  • Disaffirm– to avoid contractual obligations due to limited contractual capacity

a. Returning the Merchandise– If a minor still has the merchandise he or she recieved upon entering a contract, that merchandise must be returned when the contract is disaffirmed

b. Misrepresenting Age- If a minor claims to be over the age of majority, then he or she has commited fraud

    • fraud is a wrongful act and minors are responsible for their actions
    • when a minor lies about their age, then dissafirms the contract, the other party may sue the minor for fraud
    • all five elements must be present including actual loss
    • NY Alcoholic Beverage Control Law provides for arrest, probation, and a fine of up to $100 for misrepresenting ones age to buy alcohol

c. Disaffirming the Whole Contract– A minor may not affirm parts of a contract that are favorable and disaffirm the unfavorable parts

d. Disaffirming Contracts Made With Other Minors– When two minors enter into a contract with each other, both of them have to right to disaffirm the contract.

2.  Ratification of Minors’ Contracts- After reaching the age of majority, a person can ratify (approve) contracts made during minority.

3. Contracts for Necessaries- A minor is held responsible for the fair value of necessaries (necessities include food, clothing, shelter, and medical care)

4. Special Statutory Rules- Many states have made changes in their statutes that control the capacity of minors to enter into contracts

II. Other Contractual Capacity Rules

1. Mentally Impaired Persons- The right given to minors to disaffirm contracts is also given to the mentally impaired for the same reason

2. Intoxicated Persons- Persons who are intoxicated at the time they enter a contract are sometimes able to disaffirm those contracts

3. Other Capacity Limitations- Other classes of persons lack capacity to enter into certain types of contracts

tender- offer to return it

guardian-person who is appointed to look after his pr her affairs

aliens– people who are living in this country but who owe their allegiance to another country

  • have limitations placed on their capacity to contract

disaffirm- avoid or not be bound to

ratify- approve


necessaries- necessities include food, clothing, shelter, and medical care

minority– someone who has not yet reached the age of majority which is 18 for voting and 21 for alcohol


criminal minors


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