Who cannot contract?

Some people do not have the legal capacity to create a binding contract.
By The Law Office of Yoel Molina.
For a contract to be legally binding, the people who signed the agreement must have "contractual capacity." What is contractual capacity? It is a legal term that refers to the minimum mental capacity required to enter into a contract. That is, it is said that people who cannot contract do not know what they are doing and can "cancel" or annul the contract.
 
The law recognizes three categories of people who cannot contract: minors, people with mental disabilities and people who are intoxicated. If someone from these categories creates a contract, the agreement has the characteristic of being considered "voidable" by them. This in way of protection towards the party that cannot be forced to continue with a deal that takes advantage of its lack of intelligence or reasoning.

Can a minor sign a contract?

Minors (under the age of 18, in most states) cannot contract. That is, a minor who signs a contract can either honor the deal or void the contract. but, there are some exceptions. For example, in most states, a minor cannot void a contract for personal needs (food, lodging, etc.).
A minor can annul a contract for lack of capacity only when he is still a minor. In most states, if the minor is already 18 years old and has not manifested the cancellation of the contract, it can no longer be canceled.

Disaffirmation by a minor

A minor may "reject" or cancel a contract if she declares her intention not to perform the contract. The minor may express his or her intention verbally (orally or in writing) or by actions that indicate that he or she does not intend to enforce the contract. For example, if a child agrees to paint the walls of his neighbor down the street and then sells her painting supplies, that action is understood to indicate his intention to reject the contract.
However, the disaffirmation as mentioned above must occur before the minor reaches the age of majority, and the minor cannot choose which parts of the contract to set aside. That is, if the minor paid the compensation provided, such as money, to the other party involved, the other party is forced to make a return for consideration to the minor after the disaffirmation.
 
Example of a minor voiding a contract

Marta, a 17-year-old skateboarder, signs a long-term endorsement deal for a new staker clothing brand. She endorses the products and deposits her compensation for the endorsements over several years. At 19, Marta decides that she wants to cancel the agreement to have a better endorsement deal. She claims that she lacked ability when she signed the contract at age 17.
The court will probably not allow Marta to void the agreement. For another example of underage contracts, see Is a 15-year-old's contract with cell phone service valid?

Mental Incapacity and Contracts

A person who lacks mental capacity can void, or have a guardian void, most contracts (except necessity contracts). As with contracts with minors, the contract may be voidable and not automatically voidable. That is, the person who could not make the contract can terminate it or allow it to continue as agreed in the clauses.
In most states, the standard for mental capacity is whether the party understood the meaning and effect of the words that make up the contract or transaction. This is called a "cognitive" test.
Some states use what is called an "affective" test: a contract may be voided if one of the parties to it cannot act reasonably or regularly and the other party has reason to know its condition.
And some states use a third measure called a "motivational" test. Courts in these states measure capacity by the person's ability to judge and analyze whether or not she should be involved in the settlement. All of these tests can perform or reproduce variable results when applied to mental conditions such as bipolar disorder or multiple personality disorder.

Mental Disability Assessment Example

Mr. Smith contracted to sell an invention and later claimed that the contract was void because he lacked capacity. Smith had been diagnosed as manic-depressive and had been in and out of psychiatric hospitals. His doctor stated that Mr. Smith was unable to evaluate business when he was in a "manic" state.
A court of appeal nes of San Francisco refused to rescind the contract and stated that Smith, in his manic state, was capable of contracting. "The manic phase of the disease under discussion is not, however, a weakness of the mind that renders a person incompetent to contract." In other words, the Court's view of the manic-depressive was cognitive: that the condition may have affected Smith's judgment but not his understanding at the time of hiring.

Can a drunk person sign a contract?

In general, people intoxicated by drugs or alcohol are not usually considered to lack the capacity to contract. Courts generally rule that those who are intoxicated should not be allowed to voluntarily evade their contractual obligations, but should instead take responsibility for the results of their self-induced altered mental state.
But, if one of the parties is so far from reality that he cannot even understand the nature of the matter and the consequences of the agreement, and the other party (totally sober) takes advantage of the person's condition, then the contract can be voided by the party that was under the influence of alcohol.
 
 
If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020, option 1