Legal Capacity to
Contract
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Contractual Capacity
… ability to understand the
consequences of a contract
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Protections for Those Who Lack
Capacity
• Minors
– age of majority is 18 for most states
– minors have not yet reached the age of
majority
– minority ends the day before the birthday of
the age set as the age of majority
– contracts of most parties who lack capacity are
considered voidable
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Protections for Those Who Lack
Capacity
• Minors
– Disaffirmance - refusal to be bound by a
previous legal commitment
– Minors must pay at least a reasonable
value for necessaries (food, clothing,
shelter) even if they disaffirm the actual
purchase contract
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Emancipation
…severing of the child-parent relationship
(ends the duty of the parent to support
a child and the duty of the child to obey
the parent)
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Emancipation of a Minor
Parent and minor agree that the parent will cease
support.
.
• The minor marries
The minor moves out of the family home.
• The minor becomes a member of the armed forces.
The minor gives birth.
•The minor undertakes full-time employment.
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Mentally Incapacitated
People with
severe mental
illness, severe
mental
retardation, or
severe senility
lack capacity.
A person who
lacks the
ability to
understand the
consequences
of his or her
contracts lacks
capacity.
A person ruled
as
permanently
insane has
mental
incapacity.
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Intoxicated Lack Capacity
• …from using alcohol in
forms such as beer or
vodka
• …from using drugs
such as marijuana or
crack cocaine, or
inhaling products such
as glue or aerosols
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Who Has Contractual Capacity in
Organizations?
• Someone who has capacity is within his or her
scope of authority to sign agreements.
• When the organization leads others to believe
that a person has certain authority, the
person has contractual capacity.
• When the employer tells an employee that
they are authorized to bind the organization,
the individual has capacity.
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Assignments
Independent Practice Assignments
•
1.
Lacking Capacity PowerPoint Presentation: Design a PowerPoint
presentation that shows which groups of individuals lack the capacity to be
bound by a contract. The presentation should include politically correct and
appropriate for classroom use pictures and captions.
•
2. Emancipated Minors Poster : Design a poster that illustrates six
informal means of emancipation for a minor. The poster should include
pictures and text.
•
3. Case Assignment: Jennifer was a wholesaler of flowers. Her friend, Carrie,
worked for a grocery store as a checker. One day Jennifer stopped by during
Carrie’s break and asked if she could sell her flowers through that store.
Carrie said yes and signed a contract to purchase 20 dozen roses for the
store.
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