Chapter 5Elements of a

Contract

Requirements of Capacity

What people may not be able to enter into a contract?

People with mental impairments

Minors

Intoxicated persons

Aliens, citizens of another country

What does it mean to reach the age of

majority?

What does it mean to be emancipated?

MinorsContracts made by a minor are voidable by the minor.

Minors have the right to disaffirm or avoid their contracts if they choose.

Return merchandise within reasonable time

Minors may be searched at school for any reason! Freedom of speech is not so free at schools. Why?

Parents and Guardians

Parents have the right to discipline their children and manage their children's property. Adoptive parents have the same rights.

Cannot abuse those rights.

The law protects children through the parents patriae

Parents and Guardians

Parents have the duty to provide the necessities.

If minors are forced to purchase the necessities on their own, the parents are liable for that contract.

If emancipated, a parental duty comes to an end.

Parents can name a guardian in a will. This person will look after the child as a parent.

Agreements that Break Statutes

Usury Statutes

Usury is charging more than the maximum legal interest rate.

The Truth in Lending Act make consumers aware of the cost of borrowing money. Must clearly state the annual percentage rate to borrower.

Gambling Statutes

If you win money gambling but have trouble collecting, the court will not enforce the debt, and may consider you to be in violation of the law.

Giveaway games by stores and businesses for promotion are legal as long as you are not required to buy a ticket.

Sunday Statutes

Also called blue laws.

An offer made on a day other than Sunday, but accepted on Sunday, is void.

Licensing Statutes

Requiring a license to do certain jobs.

Licenses protect people from dealing with unqualified people.

Elements of a Written Contract

Letter, sales slip, an invoice, or several words placed on a check.

Must identify the place, date, parties, subject matter, prices and terms, and intent of the parties.

Should also contain the signature of the party who may be charged.

Contracts that MUST be in writing

Contracts to pay someone else's debt

Contracts to pay debts of a person who has died

Contracts requiring more than a year to perform

Contracts in consideration of marriage

Contracts for the sale of goods

Contracts to sell real property.

Real-WorldHave you been asked to sign a blank invoice? Sales slip?

Don't sign it unless you completely understand it!

Ask for clarification

Make changes, if necessary

Refuse to sign?