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B SUMMARY An agreement that otherwise appears to be a contract may not be binding because one of the parties lacks contractual capacity. In such

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B SUMMARY An agreement that otherwise appears to be a contract may not be binding because one of the parties lacks contractual capacity. In such a case, the contract is ordinarily voidable at the election of that party who lacks contractual capacity. In some cases, the contract is void. Ordinarily, contractual incapacity is the inabil- ity, for mental or physical reasons, to understand that a contract is being made and to understand its general terms and nature. This is typically the case when it is claimed that incapacity exists because of insanity, intoxication, or use of drugs. The incapacity of minors arises because society is discriminating in favor of that class to protect them from unwise contracts. The age of majority is 18. Minors can disaffirm most contracts. If a minor received anything from the other party, the minor, on avoiding the contract, must return what had been received from the other party if the minor still has it. When a minor disaffirms a contract for a necessary, the minor must pay the reasonable value of any benefit received. Minors only are liable for their contracts. Parents of a minor are not liable on the minor's contracts merely because they are the parents. Frequently, an adult will enter into the contract as a coparty of the minor and is then liable without regard to whether the minor has avoided the contract. The contract of an insane person is voidable to much the same extent as the contract of a minor. An important distinction is that if a guardian has been appointed for the insane person, a contract made by the insane person is void and not merely voidable. An intoxicated person lacks contractual capacity if the intoxication is such that the person does not understand that a contract is being made. The consent of a party to an agreement is not gen- uine or voluntary in certain cases of mistake, decep- tion, or pressure. When this occurs, what appears to be a contract can be avoided by the victim of such cir- As to mistake, it is necessary to distinguish berween unilateral mistakes that are unknown to the other con- tracting party and those that are known. Mistakes that are unknown te the other party usually do not affect the binding character of the agreement. A unilateral mistake of which the other contracting party has knowledge or has reason to know makes the contract avoidable by the victim of the mistake. The deception situation may be one of innocent misrepresentation, nondisclosure, or fraud. A few courts RHOW reocwery 0f damages. thn one pa.l'ty' to the contract knows of a fact that has a bearing on the transaction, the failure to volunteer information about that fact to the other contracting party is called nondisclosure. The law ordinarily does not attach any significance to nondisclosure. Contrary to this rule, there is a duty to volunteer information when a confi- dential relationship exists between the possessor of the knowledge and the other contracting party. When concealment goes beyond mere silence and consists of actively taking steps to hide the truth, the conduct may be classified as fraud. A statement of opinion or value cannot ordinarily be the basis for fraud liability. The free will of a person, essential to the voluntary character of a contract, may be lacking because the agreement had been obtained by pressure. This may range from undue influence through the array of threats of extreme economic loss (called economic duress) to the threat of physical force that would cause serious personal injury or damage to property (called physical duress). When the voluntary character of an agreement has been destroyed by mistake, deception, or pressure, the victim may avoid or rescind the contract or may obtain money damages from the wrongdoer. When the mis- take consists of an error in putting an oral contract in writing, either party may ask the court to reform the writing so that it states the parties' actual agreement

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