Defenses to enforceability - Incapacity to contract

Learning Outcomes

After reading this article, you will be able to identify when a party lacks capacity to contract, explain the legal consequences of incapacity, distinguish between types of incapacity (minors, mental incapacity, intoxication), and apply these principles to MBE-style questions. You will also understand exceptions and limitations, such as contracts for necessities and ratification after capacity is regained.

MBE Syllabus

For MBE, you are required to understand when a contract is unenforceable due to incapacity. This article focuses your revision on the following syllabus points:

  • Recognize who lacks capacity to contract (minors, mental incapacity, intoxication).
  • Identify the legal effect of incapacity on contract enforceability.
  • Explain exceptions for contracts for necessities.
  • Understand ratification and disaffirmance.
  • Apply incapacity rules to MBE-style scenarios.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. A 17-year-old enters a contract to buy a laptop. After receiving the laptop, she continues to use it after turning 18. Is the contract enforceable against her?
  2. Which of the following is most likely to be enforceable against a minor? a) A contract for a luxury watch b) A contract for food and shelter c) A contract for a used car as a gift d) A contract for concert tickets
  3. A person, due to severe intoxication, signs a contract to sell his car. The other party knows he is extremely drunk. Is the contract enforceable?
  4. If a mentally incompetent person enters a contract for medical care, what is the likely result?

Introduction

A contract may be unenforceable if one party lacked legal capacity at the time of agreement. Incapacity is a defense that protects certain individuals from being bound by their contracts. The main categories are minors (infants), those with mental incapacity, and persons who are intoxicated. Understanding who is protected, the consequences, and the exceptions is essential for MBE success.

Key Term: Incapacity to Contract The legal inability of a party to enter into a binding contract due to age, mental condition, or intoxication, making the contract voidable or unenforceable.

Types of Incapacity

Minors (Infants)

A person under 18 generally lacks capacity to contract. Contracts made by minors are voidable at the minor’s option. The minor may disaffirm (avoid) the contract during minority or within a reasonable time after reaching majority.

Key Term: Disaffirmance The right of a party lacking capacity (usually a minor) to avoid or cancel a contract, rendering it unenforceable against them.

If a minor affirms (ratifies) the contract after turning 18, for example by continuing to use the goods or making payments, the contract becomes fully enforceable.

Key Term: Ratification The act of accepting and giving legal force to a contract after the incapacity has ended, making the contract binding.

Exception: Necessaries

A minor remains liable for the reasonable value of necessities—goods or services essential for living, such as food, clothing, shelter, or medical care.

Key Term: Necessaries Items or services essential for a minor’s health and welfare (e.g., food, shelter, medical care), for which the minor is liable in quasi-contract.

Mental Incapacity

A contract is voidable if, at the time of contracting, a party lacked the ability to understand the nature and consequences of the transaction. This includes persons adjudicated incompetent or those unable to act reasonably due to a mental condition, if the other party knew or had reason to know.

If a guardian has been appointed, contracts made by the ward are void (not merely voidable).

Intoxication

A contract is voidable if a party was so intoxicated that they could not understand the nature and consequences of the transaction, and the other party knew or had reason to know of the intoxication. If the intoxicated person later affirms the contract after becoming sober, it becomes enforceable.

Worked Example 1.1

A 16-year-old signs a contract to rent an apartment. She pays rent and lives there for six months. After turning 18, she continues to pay rent and live in the apartment for another year. The landlord sues for unpaid rent after she moves out.

Answer: The contract was voidable while she was a minor, but by continuing to pay rent and live in the apartment after turning 18, she ratified the contract. She is now liable for rent due after ratification.

Worked Example 1.2

A person with a court-appointed guardian enters a contract to sell his car. The buyer seeks to enforce the contract.

Answer: The contract is void, not just voidable, because the seller was under guardianship. The buyer cannot enforce the contract.

Worked Example 1.3

A minor buys a winter coat from a store. She wears the coat for several months, then tries to return it for a refund, claiming incapacity.

Answer: The store can recover the reasonable value of the coat as a necessary, even if the minor disaffirms the contract.

Legal Effect of Incapacity

  • Contracts with an incapacitated party are generally voidable at that party’s option.
  • The incapacitated party may disaffirm the contract, returning any goods still in their possession.
  • If the contract is for necessities, the other party may recover the reasonable value of those goods or services.
  • If the incapacitated party ratifies the contract after capacity is regained, the contract becomes fully enforceable.

Limitations and Exceptions

  • Misrepresentation of age by a minor may limit the right to disaffirm in some states.
  • Contracts for necessaries are enforceable to the extent of reasonable value, not contract price.
  • If the other party did not know of the incapacity (in cases of mental incapacity or intoxication), the contract may be enforceable if fairness requires.

Exam Warning

In MBE questions, always check if the contract is for a necessary. Minors are liable for the reasonable value of necessities, even if they disaffirm the contract.

Revision Tip

If a question involves a minor or someone with questionable capacity, ask: Is the contract for a necessary? Has the party ratified the contract after regaining capacity?

Key Point Checklist

This article has covered the following key knowledge points:

  • Incapacity to contract is a defense making a contract voidable or void.
  • Minors can disaffirm most contracts but are liable for necessaries.
  • Mental incapacity and intoxication can make contracts voidable or void.
  • Ratification after regaining capacity makes the contract enforceable.
  • Contracts for necessaries are enforceable to the extent of reasonable value.
  • Guardianship makes contracts void, not just voidable.

Key Terms and Concepts

  • Incapacity to Contract
  • Disaffirmance
  • Ratification
  • Necessaries
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Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

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