Chapter 14 - Capacity to Contract

Capacity is the ability to know the details of the legal rights in a contract.

• True
• False

Ratification is the actual signature on the written contract.

• True
• False

Disaffirmance is the right to avoid a contract due to incapacity.

• True
• False

A minor’s right to disaffirm a contract ends on the day the minor achieves the age of majority.

• True
• False

Intoxicated persons are always allowed to disaffirm a contract.

• True
• False

Persons with a mental incapacity may disaffirm a contract, but cannot ratify the contract.

• True
• False

The “benefit rule” states that when a minor disaffirms a contract:

• They have no further duties
• Recovery of full purchase price is subject to deduction for the minor’s use
• They have the duty to return the subject goods

Ted is emancipated & 17, bought and damaged a car, returns it for a refund. Company must:

• Give Ted back the full amount
• Pay Ted only the present value of the car
• Pay Ted the purchase price less the current value of the car