Transcript CHAPTER 9 Legal Capacity to Contract

9-2
Limits on the Rights of Those
Without Capacity
 GOALS
 Recognize the time frame during which a contract
can be disaffirmed
 Identify contracts that cannot be disaffirmed
 Discuss the effects of misrepresentation of age
on contractual responsibilities
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 1
WHEN CAN DISAFFIRMANCE OCCUR
AND WHAT MUST BE DONE AT THAT
TIME?
 Any time while still under the incapacity
 Within a reasonable time after attaining
capacity
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 2
WHAT MUST BE DONE UPON
DISAFFIRMANCE?
 Loss of value
 Obligations of party with capacity
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 3
DISAFFIRMANCE TIMELINE
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 4
CHECKPOINT

 When can a person who lacks contractual
capacity disaffirm a contract?
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 5
CONTRACTS THAT CANNOT BE
DISAFFIRMED
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Court-approved contracts
Major commitments
Banking contracts
Insurance contracts
Work-related contracts
Sale of realty
Apartment rental
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 6
CHECKPOINT

 What contracts entered into by minors
cannot be disaffirmed in any of the 50
states?
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 7
CONTRACTUAL EFFECT OF
MISREPRESENTING AGE
 Other party to the contract may collect
damages
 Minor still may be able to disaffirm contract
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 8
CHECKPOINT

 If minors lie about their age, what happens in
most states with regard to their ability to
disaffirm contracts for goods and services
that are not necessaries?
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 9
PREVENT
LEGAL
DIFFICULTIES
 In making contracts . . .
 Always observe and remember factors about the
other person indicating whether or not they have
full contractual capacity. If you are dealing with a
representative of a business, ask questions about
the person’s ability to bind the organization in
contract.
 Ask for identification for anyone who looks like
they are within a decade of the age of majority.
Continued on the next slide
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 10
PREVENT
LEGAL
DIFFICULTIES
 If the people you want to contract with have
alcohol on their breath, watch for signs of
drunkenness. If they display these symptoms and
you still want to contract with them, be sure you
have a witness or other proof of the fact that they
know they are making a contract.
 Remember the other party in a transaction is
seldom primarily concerned with your best
interest and generally is not obligated to volunteer
information about their capacity.
Continued on the next slide
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 11
PREVENT
LEGAL
DIFFICULTIES
 When contracting with the elderly, be certain that
they can understand the consequences of any
contract you enter into with them.
 If you are a minor, do not misrepresent your age.
The consequences may hurt you more than not
being allowed to contract.
LAW for Business and Personal Use
Chapter 9
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 12