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LegalCapacitytoContract
Aim:Iden3fypar3eswholackcontractualcapacity.DoNow:TakeoutyournotebookandcopydowntheAim.AnswerundertheAim:• Aliciais16yearsoldinastatewheretheageofmajorityis18.Aliciaplanstobeginworkingatarestaurantnextmonth.Herparentsarewillingtoletheruseoneoftheircars,butAliciawantsherowncar.IfAliciabuysacarforfairmarketvalue,doyouthinkshewouldbeabletoreturnthecarandgetafullrefund?
• Explainyouranswer.
6RequirementstoContracts(MustbesaCsfiedbeforecourtswilltreatatransacConaslegally
enforceable)1. OfferandAcceptance
• Mustbeagenuineofferandtheoffermustbeacceptedwithoutchangingtheoffer
• Persongivingtheofferistheofferor;personreceivingtheofferistheofferee.
2. GenuineAssent• Theoffercannotbebasedonsomeonetrickingsomeoneelseor
puRngunfairpressureonthemtoaccepttheoffer3. Legality
• Whatthetwopeopleagreetomustbelegal4. Considera3on
• Theessen3alreasonforapartyenteringintoacontract.• Bothpeopleinthecontractmustreceivesomethingofvalue
5. Capacity• Mustbe18tohavethecapacitytocontract
6. Wri3ng• Some,butnotall,agreementsmustbeinwri3ngtobeenforced
Ques3ons
1. Definecontractualcapacity.2. Whatistheageofmajorityinmoststates?3. Whendoesminorityend?4. Contractsofpar3eswholackcapacityareconsideredwhat?5. Whatdoesincapacitatedmean?6. Whatdoesitmeanwhenaminordisaffirmsacontract?7. Ifaminordisaffirmsacontract,whathappenstoeachpar3es
considera3on?8. Listthecontractsthatcannotbedisaffirmedbyaminor.9. Explainemancipa3onandwhenitoccurs?10. Besidesbeingaminor,whencanapersonbeincapacitated?11. Explainscopeofauthority.
5
Aim:Iden3fypar3eswholackcontractualcapacity.DoNow:• Takeouttheanswerstoyesterday’s
quesCons.• Takeouttheworksheet.
ContractualCapacityCapacitydoesnotmeanunderstandingtheactualtermsofthecontractornotunderstandingaparaphrasingoftheterms…..
…itistheabilitytounderstandtheconsequencesof
acontract.
7
Protec3onsforThoseWhoLackCapacity
• Minors– ageofmajorityis18formoststates– minorshavenotyetreachedtheageofmajority
– minorityendsthedaybeforethebirthdayoftheagesetastheageofmajority
– contractsofmostpar3eswholackcapacityareconsideredvoidable
8
Protec3onsforThoseWhoLackCapacity• Minors
– Disaffirmance-refusaltobeboundbyapreviouslegalcommitment
– AminormaydisaffirmacontractduringtheirminorityandforareasonablelengthofCmeaKertheirmajority• AKertheageofmajority,thepowertodisaffirmacontractiscutoffifthepersonraCfiesthecontract
• Ra#fica#on–ac#ngtowardthecontract– Bylaw,theprotectedparty(minor)istoreceivebackanythingtheyputin(theirconsideraCon)BUTtheotherpartymayormaynotgetbacktheirconsideraCon
9
ContractsthatCANNOTbeDisaffirmed• EXCEPTIONS:– Ifaminormisrepresentshisorherage,he/shewillbeboundbythecontracthe/shemakesandisnoten3tledtogetoutofthem
– Minorsmustpayatleastareasonablevaluefornecessaries(food,clothing,shelter)eveniftheydisaffirmtheactualpurchasecontract
– CourtApprovedContracts–athletes,actors,actresseswhoareminorsareheldtocontract
– BankingContacts–openingaccountsinabankandmakingdepositsandwithdrawals
– Theyarealsoheldtoeduca3onalloansandcontractssignedwhenenlis3nginthearmedservices
Emancipa3on
…severingofthechild-parentrela3onship(endsthedutyoftheparenttosupportachildandthedutyofthechildtoobey
theparent)
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Parentandminoragreethattheparentwillceasesupport.
• Theminormarries.Theminormovesoutofthefamilyhome.
• Theminorbecomesamemberofthearmedforces.
Theminorgivesbirth.
Emancipa3onofaMinor
• Theminorundertakesfull-3meemployment.
12
Peoplewithseverementalillness,severe
mentalretarda3on,orseveresenilitylackcapacity.
Apersonwholackstheabilitytounderstand
theconsequencesofhisorher
contractslackscapacity.
Apersonruledas
permanentlyinsanehasmental
incapacity.
MentallyIncapacitated
13
IntoxicatedLackCapacity• …fromusingalcoholinformssuchasbeerorvodka
• …fromusingdrugssuchasmarijuanaorcrackcocaine,orinhalingproductssuchasglueoraerosols
14
WhoHasContractualCapacityinOrganiza3ons?
• Someonewhohascapacityiswithinhisorherscopeofauthoritytosignagreements.
• Whentheorganiza3onleadsotherstobelievethatapersonhascertainauthority,thepersonhascontractualcapacity.
• Whentheemployertellsanemployeethattheyareauthorizedtobindtheorganiza3on,theindividualhascapacity.
15
CaseJenniferwasawholesalerofflowers.Herfriend,Carrie,workedforagrocerystoreasachecker.OnedayJenniferstoppedbyduringCarrie’sbreakandaskedifshecouldsellherflowersthroughthatstore.Carriesaidyesandsignedacontracttopurchase20dozenrosesforthestore.WhenJennifertriedtodelivertheroses,theywererefusedbythestoreandJennifersued.CanJenniferwinthelawsuit?
16
Aim:Iden3fypar3eswholackcontractualcapacity.DoNow:• TakeoutyourHomeworkfromThursday
(theworksheet).• Takeoutyournotesfromlastclass
(answerstothequesCons)
ContractualCapacityCapacitydoesnotmeanunderstandingtheactualtermsofthecontractornotunderstandingaparaphrasingoftheterms…..
…itistheabilitytounderstandtheconsequencesof
acontract.
18
ContractsthatCANNOTbeDisaffirmed1. CourtApprovedContracts–Minorscannotvoidany
contractsapprovedforthembythecourt• Ex:athletes,actors,actresseswhoareminorsareheldtocontract
2. MajorCommitments• EnlistintheArmedForces• EducaConalLoans• MarriageContracts
3. BankingContracts–openingaccountsinabankandmakingdepositsandwithdrawals
4. InsuranceContracts5. BusinessorTradeAgreements6. SaleofRealty(property)7. ApartmentRental
LackCapacity
• Minors– AgeofMajority
• MentallyIncapacitated– Ruleinsanebythecourts
• Intoxicated– Degreeofintoxica3onishighenoughthattheydonotevenknowtheyarecontrac3ng
– DeclaredhabitualdrunkardBusiness• LackofScopeofAuthority
20
Assignment• Usingachromebook,researchlawsinNewYorkStateregardingtheageofmajorityandthetreatmentofemancipatedminors.
• Writeaparagraphdescribingtheselawsandanswertheques3onsontheworksheet.– Resources:
• Homework– Readpages174-179– CompletetheLegalVocabularyonpage175
21
Midterm
Thursday,January19th
• 50Mul3pleChoiceQues3ons• Scantron• Pencil
22
LegalPurpose&ProperForm
Chapter10
Aim:Iden3fyvariousformsofunenforceableillegalagreements.DoNow:• TakeoutyourLegalVocabularyHW
IllegalAgreements
1. IllegalLoperies2. UsuriousLoans3. Discriminatoryagreements4. Agreementsthatobstructlegalprocedures5. Agreementsmadewithoutacompetencylicense6. Agreementsthataffectmarriagenega3vely7. Agreementsthatrestraintradeunreasonably8. Agreementsnottocompete
WhichAgreementsareIllegal?
1. IllegalLoperies– 3elements:
• Prize• Chance• Considera3on
• Legalizedloperies:– Casino– Pari-mutuelbeRng– State-runloperies– Bingogames&pull-tabbeRng
WhichAgreementsareIllegal?
2. Agreementstopayusuriousinterest– Lendersofmoneymaynotchargemorethanaspecifiedmaxrateofinterest
– 18%iscommonmax– Lendinghigherthanstatemax=usury
3. Agreementsinvolvingillegaldiscrimina3on– Unenforceableb/cviolatestatutes
WhichAgreementsareIllegal?
4. Agreementsthatobstructlegalprocedures– Delayorpreventjus3ce– Paynon-expertwitnesses– Bribejurors– Refrainfrominformingonallegedcrimeinexchangeformoney• Compoundingacrime
WhichAgreementsareIllegal?
5. Agreementsmadew/oarequiredcompetencylicense– Personsincertainoccupa3ons&businesspassexams&receivelicense
– Contras3ng=revenuelicense• Purposeisonlytoraiserevenueratherthanprotectpublic• Madebyunlicensedpersonsarevalid
WhichAgreementsareIllegal?
6. Agreementsthataffectmarriagenega3vely
WhichAgreementsareIllegal?7. Agreementsthatrestraintradeunreasonably– Pricefixing
• Compe3ngfirmsagreeonsameprice• Bidrigging–compe3torsbidonjobsagreethat1bidderwillhavethelowestbidforapar3cularjob
– ResalePriceMaintenance• “suggestedretailersprice”–mayrefusetosellifwon’tchargethatamt
– Alloca3onofmarkets• Sameinjurytocompe33onproducedbypricefixingcanbeachievedifcompe3torsdividemarketsb/wthemselves
WhichAgreementsareIllegal?
8. Agreementsnottocompete– Whenpersonsarehiredtheymayagreethattheywillnotcompetewithemployeravertheemploymentterminates
– Illegalif:• Timeperiodforthelimita3onistoolong• Geographicareatowhichlimita3onapplies• Employer’sinterestprotectedbylimita3on(tradesecrets)
WhenwilltheCourtsEnforceIllegalAgreements?
• Mostillegalagreementsarevoidandunenforceable
• Illegalityisslightorapartyisrela3velyinnocentofwrongdoing–courtwillallowres3tu3on
• Examplesinclude:
1. Protected Victims
2. Excusably Ignorant
3. Rescind prior to illegal act
4. Contract is divisible
WhenwilltheCourtsEnforceIllegalAgreements?
1. ProtectedVic3ms– Purchasesomethingthatdoesn’texist– Res3tu3on
• Restoringofthepartyinvolvedtohisorheroriginalposi3on
2. ExcusablyIgnorant– Don’tknowthatcontractisillegal– Otherpartyknowstransac3onisillegal– Illegalityisminor
WhenwilltheCourtsEnforceIllegalAgreements?
3. Rescissionpriortoillegalact4. DivisibleContracts– Courtscanenforcelegalpartofcontractifitisdivisible– Unconscionabilityoccurswhenthereisagrosslyunfaircontractthatpar3esunderordinarycircumstanceswouldnotaccept• s/hewaspresentedw/atakeitorleaveitcontract• Otherpartyhadoverwhelmingbargainingpower• Noviablealterna3veinmarketplace• Injus3cecanonlybeavoidedbyholdingcertainterms
WhyhaveaStatuteofFrauds?
• Severaltypesofcontractsarerequiredtobeinwri3ngtobeenforceable…
1. Contractstobuy&sellgoodsmore$5002. Contractstobuy&sellrealproperty3. Contractsrequiremore1yrtocomplete4. Promisestostandgoodfordebtsofanother5. Promisestogivesomethingofvalueinreturnfor
apromiseofmarriage