Legal Capacity to Contract...Protec3ons for Those Who Lack • Minors Capacity – Disaffirmance -...

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Transcript of Legal Capacity to Contract...Protec3ons for Those Who Lack • Minors Capacity – Disaffirmance -...

Page 1: Legal Capacity to Contract...Protec3ons for Those Who Lack • Minors Capacity – Disaffirmance - refusal to be bound by a previous legal commitment – A minor may disaffirm a contract
Page 2: Legal Capacity to Contract...Protec3ons for Those Who Lack • Minors Capacity – Disaffirmance - refusal to be bound by a previous legal commitment – A minor may disaffirm a contract

LegalCapacitytoContract

Page 3: Legal Capacity to Contract...Protec3ons for Those Who Lack • Minors Capacity – Disaffirmance - refusal to be bound by a previous legal commitment – A minor may disaffirm a contract

Aim:Iden3fypar3eswholackcontractualcapacity.DoNow:TakeoutyournotebookandcopydowntheAim.AnswerundertheAim:•  Aliciais16yearsoldinastatewheretheageofmajorityis18.Aliciaplanstobeginworkingatarestaurantnextmonth.Herparentsarewillingtoletheruseoneoftheircars,butAliciawantsherowncar.IfAliciabuysacarforfairmarketvalue,doyouthinkshewouldbeabletoreturnthecarandgetafullrefund?

•  Explainyouranswer.

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6RequirementstoContracts(MustbesaCsfiedbeforecourtswilltreatatransacConaslegally

enforceable)1.  OfferandAcceptance

•  Mustbeagenuineofferandtheoffermustbeacceptedwithoutchangingtheoffer

•  Persongivingtheofferistheofferor;personreceivingtheofferistheofferee.

2.  GenuineAssent•  Theoffercannotbebasedonsomeonetrickingsomeoneelseor

puRngunfairpressureonthemtoaccepttheoffer3.  Legality

•  Whatthetwopeopleagreetomustbelegal4.  Considera3on

•  Theessen3alreasonforapartyenteringintoacontract.•  Bothpeopleinthecontractmustreceivesomethingofvalue

5.  Capacity•  Mustbe18tohavethecapacitytocontract

6.  Wri3ng•  Some,butnotall,agreementsmustbeinwri3ngtobeenforced

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Ques3ons

1.  Definecontractualcapacity.2.  Whatistheageofmajorityinmoststates?3.  Whendoesminorityend?4.  Contractsofpar3eswholackcapacityareconsideredwhat?5.  Whatdoesincapacitatedmean?6.  Whatdoesitmeanwhenaminordisaffirmsacontract?7.  Ifaminordisaffirmsacontract,whathappenstoeachpar3es

considera3on?8.  Listthecontractsthatcannotbedisaffirmedbyaminor.9.  Explainemancipa3onandwhenitoccurs?10.  Besidesbeingaminor,whencanapersonbeincapacitated?11.  Explainscopeofauthority.

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Aim:Iden3fypar3eswholackcontractualcapacity.DoNow:•  Takeouttheanswerstoyesterday’s

quesCons.•  Takeouttheworksheet.

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ContractualCapacityCapacitydoesnotmeanunderstandingtheactualtermsofthecontractornotunderstandingaparaphrasingoftheterms…..

…itistheabilitytounderstandtheconsequencesof

acontract.

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Protec3onsforThoseWhoLackCapacity

•  Minors– ageofmajorityis18formoststates– minorshavenotyetreachedtheageofmajority

– minorityendsthedaybeforethebirthdayoftheagesetastheageofmajority

– contractsofmostpar3eswholackcapacityareconsideredvoidable

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Protec3onsforThoseWhoLackCapacity•  Minors

–  Disaffirmance-refusaltobeboundbyapreviouslegalcommitment

–  AminormaydisaffirmacontractduringtheirminorityandforareasonablelengthofCmeaKertheirmajority•  AKertheageofmajority,thepowertodisaffirmacontractiscutoffifthepersonraCfiesthecontract

•  Ra#fica#on–ac#ngtowardthecontract–  Bylaw,theprotectedparty(minor)istoreceivebackanythingtheyputin(theirconsideraCon)BUTtheotherpartymayormaynotgetbacktheirconsideraCon

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ContractsthatCANNOTbeDisaffirmed•  EXCEPTIONS:–  Ifaminormisrepresentshisorherage,he/shewillbeboundbythecontracthe/shemakesandisnoten3tledtogetoutofthem

– Minorsmustpayatleastareasonablevaluefornecessaries(food,clothing,shelter)eveniftheydisaffirmtheactualpurchasecontract

–  CourtApprovedContracts–athletes,actors,actresseswhoareminorsareheldtocontract

–  BankingContacts–openingaccountsinabankandmakingdepositsandwithdrawals

–  Theyarealsoheldtoeduca3onalloansandcontractssignedwhenenlis3nginthearmedservices

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Emancipa3on

…severingofthechild-parentrela3onship(endsthedutyoftheparenttosupportachildandthedutyofthechildtoobey

theparent)

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Parentandminoragreethattheparentwillceasesupport.

•  Theminormarries.Theminormovesoutofthefamilyhome.

•  Theminorbecomesamemberofthearmedforces.

Theminorgivesbirth.

Emancipa3onofaMinor

• Theminorundertakesfull-3meemployment.

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Peoplewithseverementalillness,severe

mentalretarda3on,orseveresenilitylackcapacity.

Apersonwholackstheabilitytounderstand

theconsequencesofhisorher

contractslackscapacity.

Apersonruledas

permanentlyinsanehasmental

incapacity.

MentallyIncapacitated

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IntoxicatedLackCapacity•  …fromusingalcoholinformssuchasbeerorvodka

•  …fromusingdrugssuchasmarijuanaorcrackcocaine,orinhalingproductssuchasglueoraerosols

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WhoHasContractualCapacityinOrganiza3ons?

•  Someonewhohascapacityiswithinhisorherscopeofauthoritytosignagreements.

•  Whentheorganiza3onleadsotherstobelievethatapersonhascertainauthority,thepersonhascontractualcapacity.

•  Whentheemployertellsanemployeethattheyareauthorizedtobindtheorganiza3on,theindividualhascapacity.

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CaseJenniferwasawholesalerofflowers.Herfriend,Carrie,workedforagrocerystoreasachecker.OnedayJenniferstoppedbyduringCarrie’sbreakandaskedifshecouldsellherflowersthroughthatstore.Carriesaidyesandsignedacontracttopurchase20dozenrosesforthestore.WhenJennifertriedtodelivertheroses,theywererefusedbythestoreandJennifersued.CanJenniferwinthelawsuit?

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Aim:Iden3fypar3eswholackcontractualcapacity.DoNow:•  TakeoutyourHomeworkfromThursday

(theworksheet).•  Takeoutyournotesfromlastclass

(answerstothequesCons)

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ContractualCapacityCapacitydoesnotmeanunderstandingtheactualtermsofthecontractornotunderstandingaparaphrasingoftheterms…..

…itistheabilitytounderstandtheconsequencesof

acontract.

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Page 19: Legal Capacity to Contract...Protec3ons for Those Who Lack • Minors Capacity – Disaffirmance - refusal to be bound by a previous legal commitment – A minor may disaffirm a contract

ContractsthatCANNOTbeDisaffirmed1.   CourtApprovedContracts–Minorscannotvoidany

contractsapprovedforthembythecourt•  Ex:athletes,actors,actresseswhoareminorsareheldtocontract

2.   MajorCommitments•  EnlistintheArmedForces•  EducaConalLoans•  MarriageContracts

3.   BankingContracts–openingaccountsinabankandmakingdepositsandwithdrawals

4.   InsuranceContracts5.   BusinessorTradeAgreements6.   SaleofRealty(property)7.   ApartmentRental

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LackCapacity

•  Minors– AgeofMajority

•  MentallyIncapacitated–  Ruleinsanebythecourts

•  Intoxicated– Degreeofintoxica3onishighenoughthattheydonotevenknowtheyarecontrac3ng

– DeclaredhabitualdrunkardBusiness•  LackofScopeofAuthority

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Assignment•  Usingachromebook,researchlawsinNewYorkStateregardingtheageofmajorityandthetreatmentofemancipatedminors.

•  Writeaparagraphdescribingtheselawsandanswertheques3onsontheworksheet.– Resources:

•  Homework– Readpages174-179– CompletetheLegalVocabularyonpage175

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Midterm

Thursday,January19th

•  50Mul3pleChoiceQues3ons•  Scantron•  Pencil

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LegalPurpose&ProperForm

Chapter10

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Aim:Iden3fyvariousformsofunenforceableillegalagreements.DoNow:•  TakeoutyourLegalVocabularyHW

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IllegalAgreements

1.  IllegalLoperies2.  UsuriousLoans3.  Discriminatoryagreements4.  Agreementsthatobstructlegalprocedures5.  Agreementsmadewithoutacompetencylicense6.  Agreementsthataffectmarriagenega3vely7.  Agreementsthatrestraintradeunreasonably8.  Agreementsnottocompete

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WhichAgreementsareIllegal?

1.  IllegalLoperies–  3elements:

•  Prize•  Chance•  Considera3on

•  Legalizedloperies:–  Casino–  Pari-mutuelbeRng–  State-runloperies–  Bingogames&pull-tabbeRng

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WhichAgreementsareIllegal?

2.  Agreementstopayusuriousinterest– Lendersofmoneymaynotchargemorethanaspecifiedmaxrateofinterest

– 18%iscommonmax– Lendinghigherthanstatemax=usury

3.  Agreementsinvolvingillegaldiscrimina3on– Unenforceableb/cviolatestatutes

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WhichAgreementsareIllegal?

4.  Agreementsthatobstructlegalprocedures– Delayorpreventjus3ce– Paynon-expertwitnesses– Bribejurors– Refrainfrominformingonallegedcrimeinexchangeformoney•  Compoundingacrime

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WhichAgreementsareIllegal?

5.  Agreementsmadew/oarequiredcompetencylicense– Personsincertainoccupa3ons&businesspassexams&receivelicense

– Contras3ng=revenuelicense•  Purposeisonlytoraiserevenueratherthanprotectpublic•  Madebyunlicensedpersonsarevalid

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WhichAgreementsareIllegal?

6.  Agreementsthataffectmarriagenega3vely

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WhichAgreementsareIllegal?7.  Agreementsthatrestraintradeunreasonably–  Pricefixing

•  Compe3ngfirmsagreeonsameprice•  Bidrigging–compe3torsbidonjobsagreethat1bidderwillhavethelowestbidforapar3cularjob

–  ResalePriceMaintenance•  “suggestedretailersprice”–mayrefusetosellifwon’tchargethatamt

–  Alloca3onofmarkets•  Sameinjurytocompe33onproducedbypricefixingcanbeachievedifcompe3torsdividemarketsb/wthemselves

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WhichAgreementsareIllegal?

8.  Agreementsnottocompete– Whenpersonsarehiredtheymayagreethattheywillnotcompetewithemployeravertheemploymentterminates

–  Illegalif:•  Timeperiodforthelimita3onistoolong•  Geographicareatowhichlimita3onapplies•  Employer’sinterestprotectedbylimita3on(tradesecrets)

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WhenwilltheCourtsEnforceIllegalAgreements?

•  Mostillegalagreementsarevoidandunenforceable

•  Illegalityisslightorapartyisrela3velyinnocentofwrongdoing–courtwillallowres3tu3on

•  Examplesinclude:

1.  Protected Victims

2.  Excusably Ignorant

3.  Rescind prior to illegal act

4.  Contract is divisible

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WhenwilltheCourtsEnforceIllegalAgreements?

1.  ProtectedVic3ms– Purchasesomethingthatdoesn’texist– Res3tu3on

•  Restoringofthepartyinvolvedtohisorheroriginalposi3on

2.  ExcusablyIgnorant– Don’tknowthatcontractisillegal– Otherpartyknowstransac3onisillegal–  Illegalityisminor

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WhenwilltheCourtsEnforceIllegalAgreements?

3.  Rescissionpriortoillegalact4.  DivisibleContracts–  Courtscanenforcelegalpartofcontractifitisdivisible–  Unconscionabilityoccurswhenthereisagrosslyunfaircontractthatpar3esunderordinarycircumstanceswouldnotaccept•  s/hewaspresentedw/atakeitorleaveitcontract•  Otherpartyhadoverwhelmingbargainingpower•  Noviablealterna3veinmarketplace•  Injus3cecanonlybeavoidedbyholdingcertainterms

Page 36: Legal Capacity to Contract...Protec3ons for Those Who Lack • Minors Capacity – Disaffirmance - refusal to be bound by a previous legal commitment – A minor may disaffirm a contract

WhyhaveaStatuteofFrauds?

•  Severaltypesofcontractsarerequiredtobeinwri3ngtobeenforceable…

1.  Contractstobuy&sellgoodsmore$5002.  Contractstobuy&sellrealproperty3.  Contractsrequiremore1yrtocomplete4.  Promisestostandgoodfordebtsofanother5.  Promisestogivesomethingofvalueinreturnfor

apromiseofmarriage


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