Name: Chapter 8
Uploaded: 2017-11-25T19:09:55.000Z
Duration: 13 min 20 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

>> In chapter 8, we're going to look at contractual capacity,

Contractual capacity is the legal ability to enter

A person who is determined by court to be mentally incompetent

In other situations, the capacity may exist

Minors can enter into contracts, generally at the age of 18,

a person in emancipated and has a legal capacity

However, a contract entered into by a minor is voidable

at the option of that minor and can be disaffirmed.

The Majority Rule is that the minor has an obligation

only to return the goods or other considerations

subject to the contract, provided the goods

are still in the possession of the minor.

Minority Rule is that the minor must restore the adult

to the position held before the contract was made.

In other words, most states don't require the minor

Generally, a minor can disaffirm a contract,

However, there are some states that prohibit disaffirmance

and hold a minor liable once the minor commits fraud

Contracts for necessaries-- things like food, clothing,

but somebody will be held responsible for it.

"Ratified" means to go ahead with a contract

And the author says it occurs when a minor

on or after reaching the age of the majority.

Well, technically, they would no longer be a minor so--

a minor who enters into a contract can ratify it

or for a reasonable period of time afterwards.

They could say that they don't wish to avoid the contract

or they could impliedly ratify it by just staying in it.

Generally, parents don't have a liability for contracts entered

into by minors unless they were required to co-sign.

Intoxicated persons could avoid a contract if they lack capacity

If they still have the capacity to understand

One thing they could do is, after they sober up,

they could decide they want to remain in the contract.

So "voidable" means "at the option of the person

If a person has been determined to be mentally incompetent

by a court, and a guardian has been appointed,

then any attempt for them to enter into contract is void.

If the person hasn't been declared to be incompetent

by a court, but does lack the mental capacity at the time

they entered into a contract, the contract is voidable.

If they did understand the nature and effect

of the contract, then the contract is valid.

in other words, if they have a lucid interval,

if they understand what they're doing, it would be valid.

If, at the time, they lacked the capacity,

You could have a clause in the contract that's illegal

but the rest of the contract could be legal and enforceable.

Were a contract to commit a tort or a crime, it would be illegal.

If there's a federal or a state law that prohibits something,

you can't contract to do it and it would be void.

In other words, it would be not a contract from the start.

Usary-- which means charging an excessive interest rate

Gambling would be another example of a contract

that wouldn't be enforced unless of course it's sanctioned

In licensing statutes-- attempt to enter into a contract

However, if it's to protect the public safety--

for example, licensing for attorneys, doctors, etcetera--

then you're not going to be able to enter into contract

Contracts that are contrary to public policy--

such as a restraint of trade-- are generally void.

However, a covenant not to compete could be enforceable

Subtitles ListPlay Video

Chapter 8

mental

material

majority

situation