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58 Cards in this Set

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  • Back
Legal Capacity
ability to effectively represent your interests
Anyone Lacking Capacity
Able to rescind (disaffirm) a contract
Who Lacks Capacity?
Minors, Legally Intoxicated, & Mentally Ill
Responsibility of Proving Incapacity is with who?
The person claiming it as a a defense ( to get out of a contract)
If both parties have full capacity...
k is VALID
If a party is a minor, mentally ill, or legally intoxicated....
k is VOIDABLE
If a party is judged incompetent (legally unqualified) before entering the k OR is unable to give consent (unconscious)...
k is VOID
Contracts of minors are generally...
VOIDABLE
Disaffirmance
to cancel a k
Who can disaffirm based on the minor's lack of capacity?
ONLY the minor or his legal representative
Who can win when disaffirming a k and why?
Only minor can win because only minor can disaffirm
By statute, minors CANNOT disaffirm what types of k's?
Marriage, Child Support, Educational Loans, Life/Medical Insurance, k's approved by court (minors compromise)
Age of Majority
18
Capacity towards emancipated minors?
Although parents do not have control of minor anymore, it does not give the minor capacity. EVEN IF MARRIED OR EMPLOYED (Supporting his/herself)
Time for Disaffirmance
A minor can disaffirm RIGHT AWAY and can STILL disaffirm for some time after reaching majority.
Time Limit to Disaffirm?
Most states DO NOT have a time limit. Minor has a REASONABLE TIME after majority to disaffirm.
What happens when that time limit is over?
If minor waits too long to disaffirm, he runs the risk of RATIFICATION of k.
Ratification
Accepting the k and going forth with it.
Duty to return consideration upon disaffirmance requires each party to...
return any consideration still in their possession (like rescission)
By law what is the minor responsible for especially if the k is fair?
Any destruction, loss, damage, or depreciation
Misrepresentation of age by a minor in majority of states say that a minor...
Can still disaffirm BUT adult CAN go after minor.
In minority states, the rules for a misrepresentation of age by a minor are split saying that...
-A minor can no longer disaffirm
-Minor can still disaffirm but disaffirming minor is responsible for losses suffered by the adult
Necessary
- Required by minor to survive
& - NOT provided by parent/guardian
What will an adult try to prove against a minor who is trying to disaffirm as a necessary?
The adult will try too prove that they provided the necessary
What is a disaffirming minor only liable for?
The reasonable value of necessaries received ( not liable for the k price unless it is reasonable, and is not liable for necessaries not received)
Who is most likely to argue that something is a necessary?
Adult
MENTAL DISABILITY: What are k's that are entered into by people with a mental disability ?
either VOID or VOIDABLE
When can an incapacitated person ratify a k?
After regaining capacity, therefore after regaining capacity she must disaffirm the k within a reasonable time or is risking ratification
What must a formerly incapacitated person do upon rescission/disaffirmance?
MUST return any items still in possession (same as disaffirming minors)
Is the k is fair and the other party had no reason to know of the incapacity...
the k CANNOT be disaffirmed unless the other party is paid for any use, loss or damage
A person disaffirming a k due to mental impairment is liable for...
the REASONABLE VALUE of NECESSARIES (same rule as for minors)
INTOXICATION: When do they lack capacity?
When it is so extreme that the person is unable to understand the nature of the contract.
Rule Regarding Disaffirmance & Ratification upon regaining Capacity are...
the same as for mental impairment ( must disaffirm the k within a reasonable time or risk ratification)
CH 10 ILLEGALITY
Any "illegal" contract is UNENFORCEABLE
Types of illegal agreements
-Agreements that VIOLATE STATUTES/LAWS
-Agreements that VIOLATE PUBLIC POLICY
- Unconscionable agreements and contract of adhesion
AGREEMENTS THAT VIOLATE STATUTES / LAWS:
Any contract that calls for performance that violates the law is unenforceable.
AGREEMENTS THAT VIOLATE PUBLIC POLICY:
A public interest that has been recognized by a court or legislature
How to determine is a k is illegal...
Use a balancing test
What do courts look at in a balancing test?
- importance of public policy
- how much the enforcement of the k would interfere with the public policy
- the seriousness of the wrongdoing
- the connection between the wrongdoing and the k
If a K goes against public policy it is....
ILLEGAL
LICENSING STATUTES: how can we see whether or not a k in violation of a licensing statute will be enforced?
Look at the reasons behind the licensing statute ( regulation [to protect the public] or revenue raising?)
What is a regulatory statute?
designed primarily to protect the public
What is a revenue raising statute?
designed primarily to raise money
NON-COMPETITION CLAUSES(courts don't like these): Where can we find non-compete clauses?
Typically found in empolyment contracts, partnership agreements, and contracts for sale of a business (violates public policy)
In a non-compete clause when is the k illegal?
If the only purpose of the k is to restrain competition (violates public policy)
How does competition affect k's in non-compete clauses?
Competition is the only thing that protects public. Less competition is bad for the public
When will courts ENFORCE non-compete clauses?
-The clause protects a LEGITIMATE BUSINESS INTEREST (goodwill/trade secrets/client list)
-Is REASONABLE in TIME, GEOGRAPHIC AREA, & SCOPE ( clause is no broader than needed to protect the business interest)
- The clause will not impose an undue hardship on the public or on the person whose freedom is restricted
What happens if a valid non-competition clause is BREACHED?
The injured person or company can SUE for damages or seek an INJUNCTION
What happens if a non-competition clause is TOO BROAD?
Courts can STRIKE the entire restriction or ADJUST it to make it reasonable
What is a common calling employee?
An employee whose job is primarily clerical and who does not possess any critical skills.
What do exculpatory clauses do?
They are disfavored by courts because they attempt to relieve a party from liability
An Exculpatory clause cannot be used...
- to protect a party from liability for wrongdoing GREATER than negligence
- in the party owes a duty to the public
- if a duty is imposed on it by statute/law (ie landlord cannot use exculpatory clause to escape his duty to provide a habitable premises)
- if the clause is UNCONSCIONABLE (ie the product of abuse/superior bargaining power)
What is knowing/voluntary consent and what factors show it?
It increases the likelihood that an exculpatory clause WILL be valid (ie bold letters, terms not hidden) and we look at if the public duty is owed, if the service is of great public importance, if the bargaining power is equal, and if the language is clear
What can a court do with unconscionability?
Court can refuse to enforce all or part of a k or can modify it unconscionable
What do courts look for to determine unconsicionability?
1. Absence of meaningful choice (lack of knowledge or voluntariness, etc)
&2. Unreasonably advantageous terms (large disparity between contracts terms and normal price, one-sided terms, etc) to one of the parties
Will unequal bargaining position alone result in an unconscionable contract?
No
CONTRACTS OF ADHESION: Where is and what is contracts of adhesion?
Usually found in form contracts and is offered by a party who is in a superior bargaining position on a "take it or leave it" basis
When will and won't a court enforce an adhesion k?
Courts will enforce an adhesion UNLESS the term is unconscionable OR is a term that the adhering party could not reasonably expect to be included in the k (even if fair).