Infancy
If a minor chooses to ratify a contract, does the minor have to expressly state that they want to continue to be bound to the contract?
No, ratification can be express or implied.
Capacity looks at the status of the party seeking relief from a contract. True or False?
True
Intoxication only applies when a person's ability to contract is impaired by alcohol? True or False?
False. A person can be intoxicated due to alcohol or any other substance.
A contract that is entered into by someone under guardianship is VOID or VOIDABLE?
(according to the restatement)
VOID
Applies when you have a(n) __________ contract?
a. open
b. bilateral
c. executory
d. written
c. Executory
Contracts with minors are generally void or voidable?
Voidable
If a person does not have capacity to contract in one circumstance, this means that they never have the capacity to contract. True or False?
False
Does the other party have to have reason to know of another party's intoxication in order for a contract to be voidable?
Yes.
Guardianship requires ____________?
a. adjudication
b. a court order
c. an informal guardian relationship
d. both a & b
d. both a & b
What is an executory contract?
When you have a contract, but performance has not yet happened.
When a minor wishes to enforce a contract instead of disaffirming it, the adult party _________.
a. has the option to ratify the contract
b. must perform as per the minor's wish
b. must perform as per the minor's wish
A party is generally assumed to have capacity unless they meet one of the exceptions? True or False?
True
If a person lacks capacity due to intoxication, the contract is void. True or False?
False
If a person lacks capacity due to mental illness or defect, the contract is VOID or VOIDABLE?
VOIDABLE
If a contract requires one party to pay $500 more and requires the other party to do more work ($100 value), is there a pre-existing duty issue?
No, because both sides have increased consideration.
If a minor disavows a contract for a car, do they have to return the car in its original condition?
No, they only have to make restitution to the extent that they are able to. This would mean returning the car in its current condition.
Which of the following is not an exception to the assumption that a party has capacity to contract?
a. intoxication
b. stupidity
c. guardianship
b. stupidity
Ellie enters into a contract while she is drunk at the FAC to buy a car. She was unable to walk and was taken to the hospital shortly after. The next week, she enters into a contract to buy a laptop. She now regrets her decisions. Can either contract be voided by Ellie?
The first contract is voidable by Ellie because she met the standard for intoxication. The contract for the laptop, however, is not voidable because nothing indicates that she did not have the capacity to contract.
If a party has a mental illness, and due to this mental illness, they are unable to understand in a reasonable manner the nature and consequences of the transaction, but the other party does not know or have reason to know of this, is the contract voidable?
Yes. this element does not require the other party to know or have reason to know.
"A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect
•he is unable to understand in a reasonable manner the natureand consequences of the transaction, or
•he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition."
Ellie contracts with someone to buy 500 apples. Ellie calls the apple dealer and asks if she can get 600 apples for the same price. Is this modification valid?
Yes, because under the UCC, modifications do not require additional consideration.
If a minor enters into a lease agreement because they were emancipated from their parents, can the minor disavow this contract?
No, because of the necessaries exception.
What are the 4 categorical exemptions to the assumption that a party has capacity?
1. Infancy
2. Guardianship
3. Intoxication
4. Mental Illness
A person incurs only voidable contractual duties by entering into a transaction if the other party has reason to know that by reason of intoxication
- he is unable to understand in a __________ ______ the nature and consequences of the transaction, or
- he is unable to act in a __________ ______ in relation to the transaction.
*hint - they are the same
reasonable manner
If a party has a mental illness, and due to this mental illness, they are unable to act in a reasonable manner in relation to the transaction, but the other party does not know or have reason to know of this, is the contract voidable?
No, this element DOES require the other party to know or have reason to know.
"A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect
•he is unable to understand in a reasonable manner the natureand consequences of the transaction, or
•he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition."
Ellie contracts with a landowner to build a log cabin for $100,000. It turns out that the cost of wood went up 50%. The landowner agrees to pay $150,000. Is this a valid modification?
Yes. There is an exception to the preexisting duty rule under the common law if if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made.