Contract Formation Discussion and Responses

Contract Formation Discussion and Responses

Instructions/Descriptions

Contract Formation Discussion and Responses

Discussion 2

Tom, Stacey’s sole survivor and her very mature and intelligent 17-year-old son, who graduated from high school early and is a Senior in College, where he has completed his business law class. He wants to continue live in the new home under construction, but wants to turn the property into a horse breeding ranch and build a 16 unit stable. He contacts Siegel who learns that Tom is about to graduate from college. As Siegel prepares the contract for Tom, he asks, “You are old enough to do this right?” Tom agrees he is a senior in college and signs an additional contract for the completion of a 16 unit stable for $65,000, due upon completion.  A year later the Stable Project is completed, and Siegel asks for his final payment of $65,000.  Tom never replies, and finally Siegel files suit for recovery of his $65,000.

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Do not discuss contract questions of Agreement – offer and acceptance, or Consideration.  Limit this discussion to legal theories covered in Chapters 14 & 15. (I’ve shared it with you)

Using F-IRAC consider the Contract Formation questions for this contract between Tom & Siegel.

RULE: In general, Capacity to enter into a contract is generally presumed with the exceptions for youth, intoxication, and mental incompetence. Minors (usually age 18) may enter into contracts allowed by law, but those contracts are voidable at option of the minor. Such contracts can be void by disaffirmance, which is the avoidance of a contractual obligation and must be expressed in words or conduct
not to be bound by any part of the contract. However, disaffirmance is not allowed in some circumstances including misrepresentation of age. Simultaneously, mistake of material fact makes a contract voidable, where unilateral mistake is generally enforceable unless the other party
knows or should have known the mistake was made or the error was due to significant
mathematical mistake. In those circumstances the mistaken party may avoid the
contract.

Simultaneously, fraudulent inducement to enter a contract may be avoided by innocent party if misrepresentation was of material fact, there was an intent to deceive and the innocent party relies on misrepresentation and harm must occur due to misrepresentation.

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Rule:

The court concluded that the contract between Tom and Siegel is not valid, although it was a written one, and Tom signed it because of the circumstances behind its making. Also, the judge explained that signing an agreement does not make it automatically legal as the court must consider other factors before the ruling is made. Consequently, the ruling found Siegel in the wrong because of how the contract was made, and Tom was declared innocent. However, he had not paid the full amount since before the law because he lacked the capacity of the contract since Tom was a minor when he signed it, making Siegel take all the blame.

RULE: Due to the fact that minors are often deemed not as legally responsible as adults, their legal decisions must often times be confirmed by an adult to be valid. In many states, minors do not possess the right to be held in any enforceable or legally binding contracts until they are of the age of 18 years old, unless they are legally emancipated or unless there is involvement of a parent or legal guardian of a minor by co-signing a contract. Otherwise, the minor does not maintain capacity, therefore the contract is considered invalid. In most cases, even if a minor involved in a contract never reveals or lies about their age, the minor still lacks legal capacity and the contract is deemed voided. Mistake of age is typically not an affirmative defense and can still invalidate the contract, even if the minor fraudulently establishes themselves and what determines their legal status, knowingly falsifying themselves upon the agreement. The disaffirmation of the suit of a breach of contract can be done by the minor for a limited amount of time. However, if the minor happens to turn the legal age without voiding or taking further action of the contract, they lose their right to do so if the court allowed time period after turning 18 is exceeded. When a contract is void, the defendant is not liable to cover the costs for breach.

Contract Formation Discussion and Responses

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