Chapter 14 Flashcards
Contractural Capacity
The mental capacity to legally enter a contact
You must be mentally capable to enter a contract
Can minors enter into any contracts?
Yes, except for contracts they legally can’t enter into
Can a contract be void if a court preciously deemed someone as being mentally incompetent?
Yes
A contract can be avoidable (avoided at option of 1 party) if the person…
- Didn’t know about entering into a contract
- Lacked the mental capacity to understand the contract
The contract can then be voided by the incompetent part if 1 or both are present
Intoxication
A condition in which a person’s normal capacity to act/think is affected by alcohol/drugs
A contract involving intoxicated persons can be…
Voided or valid
depending if the intoxicated person understood the legal consequences
Some contracts aren’t enforceable because…
It goes against public policy and/or statutes
Business contracts that either restrict trade or are unconscionable are…
Against public policy
We want to encourage trade
Covenants not to complete
A contracultural promise to not compete w/ another party for a certain period of time + within a geographic area
Exculpatory clauses
A colossus releasing one of the parties for any injury/loss they caused, even if they’re at fault
Courts hate this bc its unconscionable + violates public policy
Courts can enforce exculpatory clauses if they’re…
Reasonable, fair, and not ambiguous
Do discriminatory contracts violate public policy?
Yes
When the object/performance of a contract is deemed illegal after both parties enter into the contract…
The contract is discharged by law
Usury
Charging a rate of interest that exceeds the legal limit
Are gambling contracts legal?
No
