1. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 1 9-2Limits on the Rights of Those Without Capacity GOALS Recognize the time frame during which a contract can be disaffirmed Identify contracts that cannot be disaffirmed Discuss the effects of misrepresentation of age on contractual responsibilities

2. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 2 WHEN CAN DISAFFIRMANCE OCCUR AND WHAT MUST BE DONE AT THAT TIME? Any time while still under the incapacity Within a reasonable time after attaining capacity

3. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 3 WHAT MUST BE DONE UPON DISAFFIRMANCE? Loss of value Obligations of party with capacity

4. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 4 DISAFFIRMANCE TIMELINE

5. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 5 CHECKPOINT When can a person who lacks contractual capacity disaffirm a contract?

6. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 6 CONTRACTS THAT CANNOT BE DISAFFIRMED Court-approved contracts Major commitments Banking contracts Insurance contracts Work-related contracts Sale of realty Apartment rental

7. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 7 CHECKPOINT What contracts entered into by minors cannot be disaffirmed in any of the 50 states?

8. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 8 CONTRACTUAL EFFECT OF MISREPRESENTING AGE Other party to the contract may collect damages Minor still may be able to disaffirm contract

9. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 9 CHECKPOINT If minors lie about their age, what happens in most states with regard to their ability to disaffirm contracts for goods and services that are not necessaries?

10. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 10 PREVENT LEGAL DIFFICULTIES In making contracts... Always observe and remember factors about the other person indicating whether or not they have full contractual capacity. If you are dealing with a representative of a business, ask questions about the persons ability to bind the organization in contract. Ask for identification for anyone who looks like they are within a decade of the age of majority. Continued on the next slide

11. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 11 PREVENT LEGAL DIFFICULTIES If the people you want to contract with have alcohol on their breath, watch for signs of drunkenness. If they display these symptoms and you still want to contract with them, be sure you have a witness or other proof of the fact that they know they are making a contract. Remember the other party in a transaction is seldom primarily concerned with your best interest and generally is not obligated to volunteer information about their capacity. Continued on the next slide

12. LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 9 SLIDE 12 PREVENT LEGAL DIFFICULTIES When contracting with the elderly, be certain that they can understand the consequences of any contract you enter into with them. If you are a minor, do not misrepresent your age. The consequences may hurt you more than not being allowed to contract.