Mastering Contract Law Defenses: Minors, Mental Illness, & Intoxication

Table of Contents

1. Introduction
2. Capacity to Enter into a Contract
   1. Minors
   2. Persons with Mental Illness
   3. Parties under the Influence of Drugs or Alcohol
3. Determining Capacity
   1. Second Restatement of Contracts
   2. Testing Contract Law
4. Minors' Capacity to Enter into a Contract
   1. Per Se Lack of Capacity
   2. Voidable Contract
   3. Disaffirmation and Ratification
   4. Necessities Exception
5. Persons with Mental Illness
   1. Section 15 of the Second Restatement of Contracts
6. Parties under the Influence of Drugs or Alcohol
7. The Necessities Exception
   1. Goods and Services
   2. Reasonable Value
   3. Quasi-Contract Theory
8. Mental Illness and Capacity to Enter into a Contract
9. Parties under the Influence and Capacity
10. Conclusion

Capacity to Enter into a Contract

In the field of contract law, one of the fundamental defenses to consider is the capacity of the parties involved. Capacity refers to whether a party has the legal capability to enter into a contract. In this article, we will Delve into the concept of capacity and the various factors that determine it. We will explore the three main categories of incapacity: minors, parties with mental illness, and parties under the influence of drugs or alcohol. Additionally, we will discuss how capacity is determined and the implications for each category.

Minors' Capacity to Enter into a Contract

When it comes to minors, who are individuals under the age of 18, the rule is relatively straightforward. In most states, minors lack the capacity to enter into a contract. Regardless of their intelligence, maturity, or level of understanding, minors are considered per se incapable of entering into a contract. As a result, contracts entered into by minors are deemed voidable. This means that the minor is free to disaffirm or walk away from the contract at any time before reaching the age of 18 or the time of ratification.

Disaffirmation and Ratification

Upon turning 18, the minor has a period of time within which they can disaffirm the contract. However, if the minor continues to receive the benefits of the contract without taking any steps to disaffirm it within a reasonable amount of time, the contract becomes ratified. Once ratified, the contract becomes enforceable and binding. It is important to note that the necessities exception applies in cases involving minors as well. If a contract involves goods or services necessary for the minor's well-being, the minor may be held liable for the reasonable value of those necessities, even if they attempt to disaffirm the contract.

Persons with Mental Illness and Parties under the Influence of Drugs or Alcohol

Another category of incapacity pertains to persons with mental illness and parties under the influence of drugs or alcohol. The Second Restatement of Contracts, specifically Section 15, addresses the capacity of these individuals to enter into contracts. Similar to minors, individuals with mental illness or under the influence lack the necessary capacity to enter into a contract. However, the necessities exception applies to both these categories as well. If the contract involves goods or services necessary for their well-being, they may be held liable for the reasonable value of those necessities.

In conclusion, capacity is a critical consideration in contract law. Minors, persons with mental illness, and parties under the influence of drugs or alcohol may lack the capacity to enter into a contract. While these contracts are generally voidable, exceptions such as the necessities exception can impose liability on these parties for the reasonable value of the goods or services received. By understanding the nuances of capacity, both parties can ensure they enter into enforceable contracts while protecting the rights of vulnerable individuals.