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Questions and Answers
What is a valid contract?
A deliberate agreement between two (or more) competent parties, supported by mutual consideration, to do some legal act voluntarily.
Who does not have the legal capacity to contract?
Individuals who are intoxicated can always enter into valid contracts.
False
What type of contracts can minors generally enter into?
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What must intoxicated persons prove to repudiate a contract?
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Corporations have the same contractual rights as individuals.
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Can enemy aliens enter contracts during wartime?
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Persons who are considered 'undischarged bankrupts' may be limited to the ______ of the contracts they may make.
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What happens when a person is discharged from bankruptcy?
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Study Notes
Capacity to Contract
- Individuals with limited legal capacity to contract include minors, intoxicated individuals, mentally handicapped persons, enemy aliens, certain corporations and unions, bankrupts, and incarcerated individuals.
Minors/Infants
- Minors are protected from contracts that are not deemed to be for necessities.
- Minors can enter into contracts for necessities (lodging, automobiles), which may not be voidable.
- Minors can repudiate their agreements (within a reasonable time period) and ratify their agreements.
- Parents may have some liability for their children's contracts.
Intoxicated Persons
- Intoxicated individuals are protected from contracts (other than necessities) by repudiating agreements within a reasonable time after sobering up, provided that the other party knew or should have known of their condition.
- The intoxicated individual must prove they were unaware of the legal consequences of entering into the contract.
- It is rare for contract disputes to be settled in favor of the intoxicated individual.
Mentally Handicapped Persons
- Mentally handicapped persons are protected from contracts (other than necessities) by repudiating agreements within a reasonable time (if possible), provided that the other party knew or should have known of their condition.
Enemy Aliens
- It is illegal to contract with an "enemy" during wartime.
- The right to contract is suspended during hostilities but may be reinstated after resolution.
- Individuals without legal status in the eyes of the law may be difficult to sue.
Corporations
- Corporations are "artificial persons" chartered by various levels of government.
- Corporate charters may restrict contracting capacity.
- Not everyone working for a corporation has the right or legal capacity to bind the corporation to contracts.
Bankrupts
- Individuals considered "undischarged bankrupts" may be limited in the contracts they can make.
- They must disclose their bankruptcy status when dealing with other parties.
- When discharged from bankruptcy, individuals are released from their obligations, completing the bankruptcy process.
Incarcerated Persons
- Incarcerated individuals may not have the ability to carry out their contractual obligations.
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Description
Test your understanding of the legal capacity to contract, focusing on individuals such as minors, intoxicated persons, and others with limited capacity. This quiz covers key concepts regarding contractual obligations and protection under the law. Ensure you are familiar with the specifics of how different groups are treated in contract law.
