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Incapacity and Illegality Defenses in Contract Law
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Necessaries and Minors
Contracts for necessaries (basic needs like food, clothing, shelter) with minors may be enforceable to ensure the minor's survival and well-being.
Misrepresentation
Contracts based on misrepresentation are voidable if the misled party entered the contract relying on incorrect information.
Duress affecting capacity
Contracts entered into under duress, where one party is forced to act against their will, are voidable.
Undue Influence
A contract is voidable if one party exerts undue influence over the other, overcoming their free will.
Illegal Purpose and Contracts
Contracts with an illegal purpose, such as agreements to commit crimes, are void from the outset.
Intoxication and Contracting
Contracts entered into while one party is intoxicated can be voidable if the intoxication impaired their capacity to understand the nature of the contract.
Usury and Illegality
Contracts with illegal interest rates or terms (usury) are unenforceable or subject to statutory interest rate limits.
Illegality due to Statutory Violation
Contracts that require the breach of law are void and unenforceable.
Ratification of Minor's Contract
If a minor affirms a contract upon reaching the age of majority, it becomes binding and the voidability is removed.
Incapacity due to Limited Understanding
Contracts with individuals who have limited understanding due to factors such as age or cognitive impairments may be void or voidable.
Mental Incapacity
A contract is voidable if one of the parties was mentally incapacitated and unable to understand the nature and consequences of the transaction.
Contracts Involving Restraint of Trade
Contracts that unreasonably restrain trade or competition may be void as against public policy.
Contracts Promoting Corruption
Contracts that involve bribes or that promote corruption are void as they violate ethical and legal standards.
Incapacity due to Illiteracy
Contracts with illiterate parties may be voidable if the incapacity to read or understand the terms was exploited.
Licensing Requirements and Contract Enforcement
Contracts entered into without a required professional license may be void if the license is mandatory for public protection.
Minor's capacity to contract
Contracts with minors are voidable at their option due to their lack of legal capacity to enter binding agreements.
Contracts Contrary to Public Policy
Contracts that are in violation of public policy are unenforceable. Public policy is determined by prevailing societal norms and legal principles.
Disaffirmance by Minors
Minors may disaffirm contracts, which releases them from any contractual obligations, often without having to return consideration received.
Status of Void v. Voidable
Void contracts are null from the start, while voidable contracts may be affirmed or rejected by the party with the power to void.
Contractual Capacity and Elderly
Contracts with elderly individuals may be voidable if issues such as diminished capacity or susceptibility to undue influence are present.
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