Chapter 9 CONTRACTUAL

CAPACITY

Chapter Outcomes:
1. Describe the general legal presumptions
in regard to a party’s capacity to create a
contract.

2. Explain why the law allows minors to void

most contracts.
 Chapter 9 CONTRACTUAL
CAPACITY

Chapter Outcomes (continued):

3. Differentiate between the age of minority and

the age of majority under common law, and
explain how Amendment 26 to the U.S.
Constitution affects the age of majority.

4. Distinguish between emancipation and

abandonment and explain the meaning of
each concept.
 Chapter 9 CONTRACTUAL
CAPACITY

Chapter Outcomes (continued):

5. Assess the potential liability of minors who

lie about their age when entering into a
contract.

6. Contrast the legal liability of minors in

contracts involving necessaries with their
legal liability in contracts that do not involve
necessaries.
 Chapter 9 CONTRACTUAL
CAPACITY

Chapter Outcomes (continued):

7. Identify types of contracts that the law may
except from the general rule that states
contracts by minors are voidable by the
minor.

8. Contrast the contractual capacity of

persons declared legally insane with that of
persons who are mentally impaired, but who
have not been declared legally insane.
 Chapter 9 CONTRACTUAL
CAPACITY

Chapter Outcomes (continued):

9. Discuss the contractual capacity of drugged

or intoxicated persons.
9-1

Minors’ Rights and Obligations

• Definition of Minority
• Legal Age
• Emancipation and Abandonment
• Misrepresentation of Age
Chapter 9

LawLINKS
Many issues and concerns associated with
consumer law can be explored at
http://www.consumer law.com/
The website is named Consumer Action and
Information Center of Hawaii.
 9-1
A Question of Ethics
As noted in Example 9-1, most states
would allow Lewis a full refund when he
returns the car, even though the fender has
been damaged. Consequently, there would
be nothing illegal about Lewis accepting
the entire amount. However, ethically,
should Lewis accept the full $6749, or
should he acknowledge his culpability and
volunteer to deduct the $1100 needed to
repair the fender? Explain.
 9-1
Topic Quiz
Answer the following true/false questions:

1. The legal ability to enter a

contract is known as capacity.
TRUE
 9-1
Topic Quiz
Answer the following true/false questions:

2. The law has established a

general presumption that
anyone entering a contract has
the legal capacity to do so. TRUE
 9-1
Topic Quiz
Answer the following true/false questions:

3. An emancipated minor is one

who is no longer under control
of his or her parents.
TRUE
 9-2

Contractual Capacity of Minors

• Contract for Necessaries

• Other Contracts Not Voidable
• Ratification of Minors’ contracts
• Disaffirmance of Minors’ Contracts
Chapter 9

LawLINKS

The American Bar Association maintains a

website on Children and the Law at
http://www.abanet.org/child/home.html
 9-2
Topic Quiz
Answer the following true/false questions:

1. An executory contract may not be

repudiated by a minor at any time.
FALSE

The contract may be repudiated if they

have not been performed by both
parties.
 9-2
Topic Quiz
Answer the following true/false questions:

2. Necessaries are goods and

services that are essential to a
minor’s health and welfare.
TRUE
 9-2
Topic Quiz
Answer the following true/false questions:
3. The protection granted to minors is so
complete that they can even repudiate
contracts for goods and services
required by law.
FALSE

They may not repudiate contracts for

goods and services required by law.
9-3

Persons with Mental

Impairments and Persons
Drugged or Intoxicated
• Persons Mentally Impaired
• Persons Legally Insane
• Persons Drugged or Intoxicated
 9-3
Topic Quiz
Answer the following true/false questions:

1. A contract made by a mentally

impaired person is always voidable.
FALSE

It may be valid depending on the

circumstances.
 9-3
Topic Quiz
Answer the following true/false questions:

2. A contract made by a person

who has been declared insane
by competent legal authority is
always void.
TRUE
 9-3
Topic Quiz
Answer the following true/false questions:

3. A contract made by a person under the

influence of alcohol is always voidable.
FALSE

There are instances where the contract

may be valid.
 SUMMARY
9-1 The fourth element essential to a legally
effective contract is the legal ability to enter
into a contractual relationship.

9-2 A contract made by a minor for necessaries is

enforceable against the minor.

9-3 Contracts of persons who are mentally infirm

or mentally ill, but not legally declared
insane, may be valid or voidable, depending
on the seriousness of their mental problem.
 Chapter 9
Key Terms
abandoned affirmance
capacity disaffirm
emancipated majority
minority necessaries
rebuttable presumption ratification
 Chapter 9

Investigating on the Internet

Access the Consumer Action and Information
Center of Hawaii at
http://www.consumerlaw.com/
and write a report on the feature entitled “This
Month’s Issue.”
End of Presentation