Restatement (Second) of Contracts · Section § 12
This section discusses the capacity to contract, outlining when individuals or entities may enter into enforceable agreements.
Source: Restatement Restatement (Second) of Contracts § § 12
A person has the capacity to enter into a contract unless they are a minor, mentally incompetent, or intoxicated, in which case the contract may be voidable.
Individuals generally have the legal ability to enter into contracts unless they fall into specific categories such as being underage (a minor), not mentally sound, or heavily intoxicated. In those cases, they may choose to void the contract.
Capacity to contract is essential for contractual enforceability.
Minors have a special status in contracts, allowing them to void agreements.
Mental incompetence and intoxication can also limit a person's capacity to contract.
Illustration 1
A 17-year-old enters into a contract to buy a car; this contract may be voidable at their discretion.
Illustration 2
An individual who is declared mentally incompetent commits to a service contract; the contract is not enforceable.
Illustration 3
A person who is intoxicated signs a lease agreement; they may disaffirm the contract upon regaining sobriety.
This case applied Section 12 by ruling that a minor could void a contract for the sale of land.
The case involved assessing a contract's enforceability where one party claimed mental incompetence, highlighting how courts evaluate such claims.
Understanding the capacity to contract is crucial for both parties in a contract, as it affects enforceability and the ability to hold others to agreements. Lawyers must assess a client's capacity to avoid future disputes relating to the validity of contracts.