Chapter 12 Capacity and Legality

Adjudged Insane
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Terms in this set (36)
Adjudged Insane
Declared legally insane by a proper court or administrative agency. A contract entered into by a person adjudged insane is void.
Age of Majority
The legal age, as set by state law, for a person to have the capacity to enter into a contract. The most prevalent age of majority is 18 years for both males and females.
Contract Contrary to Law
A contract to perform activities that are prohibited by law.
Contract Contrary to Public Policy
A contract to perform activities that have a negative impact on society or interferes with the public's safety and welfare that constitutes an illegal contract.
Contract in Restraint of Trade
A contract that unreasonably restrains trade. contract liability Liability of principals and agents for contracts entered into with third parties.
Contract of Adhesion
A preprinted contract prepared by a provider of goods or services where the contract terms are set and the consumer or other party cannot negotiate the contract terms and must accept the terms of the contract in order to obtain the product or service.
Contractual Capacity
The necessary capacity of parties to enter into the contract.
Covenant not to Compete (Noncompete Clause)
A contract that provides that a seller of a business, an employee, a franchisee, or another covered party will not engage in a similar business or occupation within a specified geographical area for a specified time following the sale of the business or termination of employment; also called a noncompete clause.
Disaffirm
The act of a minor to rescind a contract under the infancy doctrine. Disaffirmance may be accomplished orally, in writing, or by the minor's conduct.
Duty of Restitution
duty of an adult when a minor has disaffirmed a contract to return any money, property, or other valuables received from the minor, or if the consideration has been sold or has depreciated in value, then to pay the minor the cash equivalent; a minor owes a duty of restitution if the minor's intentional, reckless, or grossly negligent conduct caused the loss of value to the adult's property or if the minor misrepresented his or her age when entering into a contract.
Duty of RestorationA duty of a minor who has disaffirmed a contract to return the goods or property he or she has received from the other party in the condition it is in at the time of disaffirmance.Effect of IllegalityA doctrine that states that the courts will refuse to enforce or rescind an illegal contract and will leave the parties where it finds them.EmancipationA minor's act of legally separating from his or her parents and providing for him- or herself.Exculpatory Clause (Release of Liability Clause)A contractual provision that relieves one (or both) of the parties to a contract from tort liability for ordinary negligence; also known as a release of liability clause.Gambling StatuteStatutes that make certain forms of gambling illegal.Illegal ContractA contract that has an illegal object. Such contracts are void.Immoral ContractContracts whose objective is the commission of an act that society considers immoral. Immoral contracts may be found to be illegal as against public policy.In pari delictoA situation in which both parties are equally at fault in art legal contract.Indian Gaming Regulatory ActA federal statute that sets the requirements for establishing casino gambling and other gaming activities on tribal land.Infancy DoctrineA doctrine that allows minors to disaffirm (cancel) most contracts they have entered into with adults.Insane but not Adjudged InsaneBeing insane but not having been adjudged insane by a court or an administrative agency. A contract entered into by such person is generally voidable. Some states hold that such a contract is void.Intoxicated PersonA person who is under contractual ingestion of alcohol or drugs to the point of incompetence.Lawful ContractA contract whose object is lawful.Legal InsanityA state of contractual incapacity, as determined by law.Licensing StatuteA statute that requires a person or business to obtain a license from the government prior to engaging a specified occupation or activity.MinorA person who has not reached the age of majority.Necessaries of LifeFood, clothing, shelter, medical care, and other items considered necessary to the maintenance of life. Minors must pay the reasonable value of necessaries of life for which they contract.Period of MinorityThe period below the statutory age of majority, as set by state law for a person to have the capacity to enter into contracts.Quasi ContractAn equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed. The doctrine is intended to prevent unjust enrichment and unjust detriment. Also called implied-in-law contract.RatificationThe act of a person after he or she has reached the age of majority by which he or she accepts a contract entered into when he or she was a minor.Regulatory Licensing StatuteStatutes that are enacted to protect the public that require certain persons or businesses to obtain a license from the government before being able to practice certain professions or engage in certain types of businesses.Revenue-Raising StatuteA licensing statute whose primary purpose is raising revenue for the government.Unconscionable ContractA contract that courts refuse to enforce in part or at all because it is oppressive or manifestly unfair as to be unjust.Usury LawA law that sets an upper limit on the interest rate that can be charged on certain types of loans.Void ContractA contract that has no legal effect; a nullity.Voidable ContractA contract in which one or both parties have the option to void their contractual obligations. If a contract is voided, both parties are released from their contractual obligations.