Chapter 12 - Capacity

Leon believes himself to be Napoleon Bonaparte. Other than that one mental quirk, he is happy, healthy and quite a successful business person. He has not been judicially declared to be incompetent and is currently undergoing therapy to address his delusion. At a business lunch, he enters into a million-dollar agreement with Lena, a supplier of raw materials for one of his business ventures. At the time of signing the agreement, Leon was dressed in his normal attire--that of a 19th century French general, and was quite sober. The other party to the agreement had consumed three Martinis and two glasses of wine during the two-hour lunch meeting, but was showing absolutely no sign of intoxication and seemed quite lucid and sober at the time that she signed the contract. Discuss fully whether either party (or both) would be able to rescind the agreement the next day based on a claim of incapacity.

Chapter 13 - Genuine Assent

Alisha, an attorney, enters into a contract with Clint, her client, whereby Clint agrees to sell her 10,000 shares of XYZ Company at $20 per share, the market value of the shares at the time of the contract. A month after the transfer of the shares, the price of the stock climbs to $40 per share due to conditions that were not foreseeable by Alisha or Clint at the time of their contract. Clint, upon learning of the doubling in value of the shares, decides that Alisha took advantage of their relationship and sues to have the contract voided. What result?

Chapter 14 - Legality

Frank asks Gina to place an illegal bet of $500 with her bookie on an upcoming baseball game, and promises to give her 10% of his winnings for her service if his team wins. Gina takes the money and makes the bet. Frank's team wins, but Gina's bookie, who has been arrested since she placed the bet with him, cannot be found to make payment on the bet. Frank, furious at the turn of events, sues Gina for $1,000 (the amount he would have recovered from her bookie); Gina, on the other hand, counterclaims for $100, the amount Frank had promised to pay her if he won. You are the judge. What result on both claims? Explain.