When two parties decide to enter a contract, both need to be fully aware and understand the legality and obligations of the contract. If one or both party’s lack knowledge to understand then there is no valid contract (Bevans,2006 p.128). Capacity in contracts means that the parties partaking in the agreement both know and understand what he/she is doing and voluntarily agreeing to the terms. To enter a contract, you must be able to engage in all the obligations that will affect one’s personal interests. When a person’s age is below a certain level legally they are presumed to lack capacity. The age to engage varies state to state but is generally 18 or 21 to be legally binding (Bevans,2006 p.130). When one of the …show more content…
The fact someone enters a contract with bad bargain does not give way to person’s lack of capacity. This can occur when one acts under the premise of good faith, everyone in the contract can know and understand potential consequences (Bevans,2006 p.142). If the party slighted wishes to pursue legal recourse in attempt to invalidate the contract they would have a hard time. Simply because a bad bargain does come into consideration if they are both deem capable and knowledgeable about the situation. When labor unions meet to negotiate terms, they are doing so with the intention that both sides agree with the set terms. But there are times when one party decides one negotiations are over to change their position on the terms. Like if a union and factory agrees that before any layoffs occur they will give prior notification to the labor union so they can prepare the workers. But during the first round of layoffs the factory simply goes about the layoffs without the notification breaking the good faith bargain they …show more content…
However, if it is found to have illegal activity or purpose the contract will be void and found illegal (Bevans,2006 p.147). Contracts are not found void unless the subject in question is found to be illegal by legislature (Bevans,2006 p 148). An example of contract for illegal purpose is one that violates common law. Jerry hires Bob to sell his appliances so Bob agrees. Unbeknownst to Bob, Jerry is receiving stolen appliances from major warehouses and selling them in his store. Bob has since entered a employment contract and is selling them to the public without knowledge of their origin. Jerry is breaking a common law of acquiring stolen goods to sell for a profit. Another example could be how investment bankers take their customer’s investments and move them to their personal accounts. All the while falsifying documents that state the person is making money on these supposed