Chapter 9-1 Contractual Capacity of Individuals and Organizations

Contractual capacity
Is defined by the law to mean the ability to
understand the consequences of a contract.
Adamson, John E., and Norbert J. Mietus. South-Western Law for Business and Personal Use. Cincinnati, OH: South-Western Educational Pub., 2000. 4-14. Print.
Age of Majority to contract
This is the age at which a person is entitled to the
management of his or her own affairs.
Most states it is the age of 18
A person who has not yet reached the age of
The state of being below the age of majority, ends
the day before the birthday of the age legally set as
the age of majority.
Things needed to maintain life-typically food,
clothing, and shelter.
Is the severing of the child-parent to support a
child. It ends the duty of the parent to support a
child and the duty of the child to obey the parent.
Contractual Capacity
The ability to understand that a contract is being
made and its general meaning.
Early Emancipation
Moving away of a minor from the family home.
Mental Incapacity
Under contract law mental incapacity means that a person
lacks the ability to understand the consequences of his or
her contracts. Thus people with severe mental illness,
severe mental retardation, or severe senility lack capacity.
Can arise from using legal or illegal drugs. If a
person’s degree of intoxication is high enough, the
law holds she or he loses the capacity to contract.
Scope of Authority
Range of acts an organization authorizes a person to do.
Parties who lack capacity due to mental
impairment, age, or intoxication.
An action with the intent to be bound by a contract.
Giving back of consideration of both parties.
Fair Labor Standards Act
Legislation that prohibited the employment of
children under 16.
Age of Minority
The age of 18 or younger