Incapacity
In order for there to be a valid contract, the parties must have capacity to contract. If a party does not have capacity then the contract shall be unenforceable. Certain people are always considered to lack the legal capacity to contract. As a legal matter, basically they are presumed not to know what they are doing. These people, legal minors and the mentally ill, for example, are placed into a special category. If they enter into a contract, the agreement is considered "voidable" by them. Voidable means that the person who lacked capacity to enter the contact can either end the contract or permit it to go ahead as agreed on. This protects the party who lacks capacity from being forced to go through with a deal that takes advantage of their lack of savvy.
Minors Have No Capacity to Contract
Minors under the age of 18 do not have the capacity to enter into contracts. An exception to this is a contract for necessaries, which includes food, housing, clothing, training and education. In Nash v Inman [1908] 2 KB 1, a student purchased waistcoats from a tailor. However, the student later refused to pay for the waistcoats. The tailor’s claim for breach of contract failed because this was not a contract of necessaries because the student had no need of the waistcoats.
Mental Incapacity
A person who lacks mental capacity can void, or have a guardian void, most contracts (except contracts for necessities). In most states, the standard for mental capacity is whether the party understood the meaning and effect of the words comprising the contract or transaction. This is called the "cognitive" test. Some states use what's called the "affective" test: a contract can be voided if one party is unable to act in a reasonable manner and the other party has reason to know of the condition. And some states use a third measure, called the "motivational" test. Courts in these states measure capacity by the person's ability to judge whether or not to enter into the agreement. These
Minors Have No Capacity to Contract
Minors under the age of 18 do not have the capacity to enter into contracts. An exception to this is a contract for necessaries, which includes food, housing, clothing, training and education. In Nash v Inman [1908] 2 KB 1, a student purchased waistcoats from a tailor. However, the student later refused to pay for the waistcoats. The tailor’s claim for breach of contract failed because this was not a contract of necessaries because the student had no need of the waistcoats.
Mental Incapacity
A person who lacks mental capacity can void, or have a guardian void, most contracts (except contracts for necessities). In most states, the standard for mental capacity is whether the party understood the meaning and effect of the words comprising the contract or transaction. This is called the "cognitive" test. Some states use what's called the "affective" test: a contract can be voided if one party is unable to act in a reasonable manner and the other party has reason to know of the condition. And some states use a third measure, called the "motivational" test. Courts in these states measure capacity by the person's ability to judge whether or not to enter into the agreement. These