Business Law: Contracts with Minors & Mentally Incompetent, Slides of Commercial Law

Download Business Law: Contracts with Minors & Mentally Incompetent and more Slides Commercial Law in PDF only on Docsity! Business Law Chapter 11 Capacity Docsity.com Objectives • Understand the right of minors to disaffirm their contracts • Identify obligations that minors cannot avoid • Recognize when a minor has ratified a contract Docsity.com Capacity • Minors • Intoxicated persons • Mentally incompetent persons Docsity.com Minors • Age of majority – 18 years • Ratifying – accepting and validating the contract • Disaffirming – renouncing the contract • Only the minor has the option Docsity.com Disaffirmance • The legal avoidance, or setting aside, of a contractual obligation. • The minor needs only to express an intention not to be bound by the contract. • The disaffirmance needs to be timely. • Cannot disaffirm without returning goods or paying for their reasonable use Docsity.com Disaffirmance • Liability for necessaries, insurance, and loans – Liable for reasonable value of the goods • Theory of quasi-contract • Offset seller’s reluctance to deal with minors – Insurance not a necessary • Some jurisdictions prohibit disaffirmance – Financial loans not a necessary Docsity.com Ratification • The act of accepting and giving legal force to an obligation that previously was not enforceable. • Minor who reaches the age of majority – Express ratification – Conduct – By a failure to disaffirm within a reasonable time period Docsity.com Parents’ Liability • Generally, parents are not liable • Minor is held liable for torts committed • Parents of a minor can also be held liable in certain circumstances – Under direction of parent – Performing an act requested by parent • Parents liable in many states for a statutory amount for malicious acts committed by minor living at home Docsity.com