Ratification
Minor, or after reaching
majority, indicates (expressly or impliedly) an intention to become bound by a
contract made as a minor.
Executed v. Executory
contracts.
Friday, 22 March 2013
Exceptions to Minor’s Right to Disaffirm
Exceptions
to Minor’s Right to Disaffirm
Misrepresentation
of Age.
§ Generally, minor
can disaffirm the contract.
§ But some states
prohibit disaffirmance and hold the minor liable.
Contracts for
Necessaries.
§ Contracts for
food, clothing, shelter may be disaffirmed by minor is liable for reasonable
value of goods or services.
Insurance.
§ Not viewed as necessaries, so minor can
disaffirm contract and recover all premiums paid.
Loans.
§ Seldom
considered to be necessaries.
§ Exception:
•
Loan
to a minor for the express purpose of enabling the minor to purchase
necessaries.
Minor’s Obligation on Disaffirmance
Minor’s
Obligation on Disaffirmance
In most states, minor need only
return the the goods (or other consideration) subject to the contract, provide
the goods are in the minor’s possession or control.
In increasing number of states,
the minor must restore the adult to the position held before the contract was
made.
Case 12.1: Dodson v.
Shrader (1992).
Minor’s Right to Disaffirm
Minor’s
Right to Disaffirm
A contract can be disaffirmed at
any time during minority or for a reasonable period after the minor comes of
age.
Minor must disaffirm the entire
contract.
Disaffirmance can be expressed or
implied.
Minors
Minors
In most states, a person is no
longer a minor for contractual purposes at the age 18.
A minor can enter into any
contract that an adult can.
A contract entered into by a
minor is voidable at the option of that minor.
Contracts: Capacity and Legality
Contracts:
Capacity and Legality
Contractual
Capacity
The legal ability to enter into a
contractual relationship.
•
Full
competence.
•
No
competence.
•
Limited
competence.
Legality.
§ The agreement
must not call for the performance of any act that is criminal, tortious, or
otherwise opposed to public policy.
Problem Areas Concerning Consideration
Problem
Areas Concerning Consideration
ü Uncertain
Performance.
ü Settlement of
Claims.
ü Promises
enforceable without consideration.
ü Uncertain
Performance
ü Illusory Promises.
§ Promisor has not
definitely promised to do anything (no promise at all).
ü Option-to-Cancel
Clauses.
ü Requirements and
Output Contracts.
Settlement
of Claims
Debtor offers to pay a lesser
amount than the creditor purports to be owed.
Accord and Satisfaction.
Liquidated Debt.
Ø Amount has been
ascertained, fixed, agreed on, settled, or exactly determined.
Unliquidated
Debt.
Ø Parties give up
legal right to contest the amount in dispute, and thus consideration is given.
Release bars any further recovery
beyond the terms stated in the release.
Case 11.3: Mills v.
Berlex Laboratories (1999).
Convenant not to Sue is an
agreement to substitute contractual obligation for some other type of legal
action based on a valid claim.
Promises
Enforceable Without Consideration
Promises to Pay Debt Barred by a
Statue of Limitations.
Detrimental Reliance and
Promissory Estoppel:
§ Must be definite
promise.
§ Promisee must
justifiably rely on the promise.
§ Reliance is
substantial.
Justice will be
served by enforcing promise.
Agreements That Lack Consideration
Agreements
That Lack Consideration
Preexisting Duty.
§ Promise to to
what one already has a legal duty to do does not constitute legally sufficient
consideration.
§ Exceptions:
•
Unforeseen
Difficulties.
•
Recession
and New Contract.
Past Consideration is no consideration
because the bargained-for exchange element is missing.
Adequacy of Consideration
Adequacy
of Consideration
A Court will not question the
fairness of the bargain if legally sufficient.
§ Law does not
protect a person for entering into an unwise contract.
§ In extreme
cases, a court may find that a party lacks legal capacity or that contract was
unconscionable.
Case 11.2: Powell v.
MVE Holdings (2001).
Elements of Consideration
Elements
of Consideration
Consideration for a promise must
be either:
§ Legally
detrimental to the promisee, or legally beneficial to the promisor.
“Legal Value”:
§ Promise,
§ Performance, or
§ Forbearance.
Case 11.1: Hamer v.
Sidway (1891).
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