Incapacity to contract - Next Generation Bar Exam
- When may a minor disaffirm a contract?
- At any time during minority or within a reasonable time after reaching majority. Failure to disaffirm within a reasonable time after majority operates as ratification.
- What is a minor's liability for necessaries furnished under a contract?
- The reasonable value of the necessaries, not necessarily the contract price. Liability rests on quasi-contract, protecting suppliers of food, shelter, clothing, and medical care.
- What is the effect of a contract made by a person with a mental incapacity who is not under guardianship?
- It is voidable by the incapacitated person. Where the contract is on fair terms and the other party lacked knowledge, avoidance may be limited to protect performance already rendered.
- How does a person ratify a contract made during minority?
- By words or conduct affirming it after reaching majority. Ratification may be express or implied, such as by continuing to use the goods and make payments.
- When does intoxication make a contract voidable?
- When the other party has reason to know the intoxicated person cannot understand the transaction or act reasonably. Voluntary intoxication alone does not excuse a party whose condition was not apparent to the other side.
- What is the effect of a contract made by a person whose property is under a court-appointed guardianship?
- It is void. The guardianship is public notice that the person lacks power to contract.
- What is the volitional test for mental incapacity to contract?
- Inability to act reasonably in the transaction, where the other party has reason to know of the condition. The other party's knowledge is required because the person may appear to understand the transaction.
- Under the traditional rule, what must a minor return upon disaffirming a contract?
- Whatever consideration remains in the minor's possession. Many jurisdictions now permit an offset for use or depreciation, but the traditional rule requires only return of what remains.
- A 17-year-old buys a car, wrecks it, and disaffirms before turning 18. Under the traditional rule, what may she recover?
- The full purchase price, upon returning the wrecked car. The traditional rule requires return only of what remains, without deduction for damage or depreciation.
- What is the cognitive test for mental incapacity to contract?
- Inability to understand the nature and consequences of the transaction. The inquiry focuses on understanding at the time of the transaction.
- What is the status of a contract made by a minor?
- It is voidable by the minor. The adult party remains bound; only the minor may avoid.