Court has not declared someone mentally incompetent yet
What types of contracts are void
Illegal - Gambling, loan sharks
What are the two options a minor can take with a contract?
Disaffirmance: legal avoidance of a contractual obligation (void the contract)
Ratification: the acceptance, or affirmation of a legal obligation (make the contract valid)
What are the rules for disaffirmance of a contract by a minor?
the minor must disaffirm the entire contract
return the received goods
some court will not allow a minor to void a contract if they committed fraud (misrepresenting his/her age)
minors can void a contract for necessaries, but is still liable for the reasonable value of goods
what are the two different types of ratification of a contract by a minor
express ratification: occurs when the minor in writting or orally, explicitly assumes the obligations imposed by the contracts
Implied ratification: occurs when the conduct of the minor is inconsistent with disaffirmance or when the minor fails to disaffirm an executed contract within a reasonable time after reaching the age of majority
Are parents liable for contracts entered in by a minor
only for necessaries
When is a contract enforceable for an intoxicated person
if despite being intoxicated the person understood the legal consequences of entering into the contract
When is a contract voidable for a mentally incompetent person?
When the court has not previously declared the person to be mentally incompetent
What are some contracts that are contrary to statute
usury: Lender makes a loan at an interest rate above the lawful maximum
gambling: gambling contracts that go against state statutes
licensing statutes: contracts entered into by persons who do not have license, when one is required by state, will not be enforceable unless the underlying purpose of the statute is to raise government revenues.
What are types of contracts that are contrary to public policy
contracts in restraint of trade: contracts to reduce or restrain free competition are illegal and prohibited by statutes.
Unconscionable contracts and clauses: when a contract or contract clause is so unfair that it is oppressive to one party
Exculpatory clauses: An exculpatory clause is a clause that releases a party from liability in the event of monetary or physical injury
what happens when there is a unilateral mistake made in a contract
The mistaken party is bound by the contract unless 1) the other party knows or should have known of the mistake or 2) the mistake is an inadvertent mathematical error committed without gross negligence
What happens when there is a bilateral mistake made in a contract
when both parties are mistaken about the same material fact, such as identity, either party can avoid the contract
What elements are necessary to establish fraud in a contract
A misrepresentation of a material fact must occur
There must be an intent to deceive
The innocent party must justifiably rely on the misrepresentation
Define undue influence
one party's free will has been overcome by the undue influence exerted by the other party.
Define Duress under a contract
The tactic of forcing a party to enter a contract under the fear of a threat
What types of contracts fall under the statutes of fraud (required to be in writing)?
Interest in land (sales, leases, or mortgages)
contract that cannot be performed within one year
collateral promises: contracts made between a guarantor and a creditor whose terms make the guarantor secondarily liable
promises made in consideration of marriage, including promises to make a monetary payment or give property in consideration of a promise to marry and prenuptial agreements made in consideration of marriage
UCC: sale of goods priced at $500 or more
What are the requirements to constitute an enforceable contract under the statue of frauds
signed by the party against whom enforcement is sought
name the parties
identify the subject matter
state with reasonable certainty the essential terms of the contract