Contract-Capacity and Legality Tommy Mccartney,

Contract-Capacity and Legality Tommy McCartney, a minor, buys an automobile from a dealership owner for $6,000. Six months later, on realizing that he needs money to pay for his higher education, he returns the car to the dealership owner claiming a full refund. At the time of its return to the dealership owner, the car has already clocked eight thousand miles and in addition to having its tires worn out, it also has a number of dents on its fender (front).

Can Tommy legally escape his obligations in regard to the contract? On what basis might he be able to do so? Further, would it be considered ethical to allow Tommy to escape his obligations in regard to the contract? Rule Natural individuals who are past the majority age can enter into legally binding contracts as they are considered to have the full legal capacity to do so.

However, in some instances, an individual may be presumed to have a limited contractual capacity if such an individual happens to be intoxicated, mentally unstable or of a minority age. Those taken to have no contractual capacity whatsoever include those for whom legal guardians have been appointed to act on their behalf and those who are considered to be habitual drunkards or insane (through adjudication).

Based on the particulars of this case, the legal capacity to contract as a vital element for a contract to be considered legally binding could be taken as a major consideration based on Tommy's age at the time of purchasing the automobile. In basic terms, any contract entered into with a person who happens to be a minor (below the majority age) is voidable. In that regard, a minor has an option of disaffirming or voiding contracts to which they are party.

It can be noted that for a minor in this case to void a contract, he or she only needs to demonstrate an intention to do so through the use of actions or mere words. There are no other formalities required for the same to take place. The minor in this case must however avoid the contract in its entirety and not in portions.

In most cases, the minor has some disaffirmance obligations which include the issuance of a disaffirmance notice to the competent party as well as the return of any contractual consideration (regardless of its condition) the minor may have taken possession of in the course of the contract. Under most circumstances, the other party to the contract does not have any recourse even if the minor returns the consideration in a worse condition than he or she received it.

In such a case, the minor is entitled to a full refund if he or she wishes to rescind the contract with no further obligation owed to the other competent party. However, in some instances, the minor is taken to have a duty of restoration in that he or she must restore the consideration to the condition it was in at the time of the contract.

The restoration figure in this case could be the difference between the value of the consideration at the time of the contract and its value at the time of its return. Whether the minor owes the other party restoration or not depends on the laws of the state. However, when it comes to the right of a minor to disaffirm a contract, there are some exceptions.

Though the intention behind allowing those who have not reached the majority age to disaffirm a contract is tailored to protect minors from unscrupulous competent parties, some instances bar minors from disaffirming a contract due to reasons related to public policy or otherwise. Some of the contracts which minors can't disaffirm include education loan contracts, insurance (health and life) contracts, armed forces enlistment contracts etc.

Further, in some states, if a minor who seems (in terms of appearance) to be of majority age misrepresents his age at the time of entering into a contract with a competent party, such a minor is treated as an individual who has attained the majority age and in such a case, the minor may not be able to disaffirm the contract.

In most cases, when a minor enters into a contract whereby he or she is provided with a necessity by a competent party, his or her right to disaffirm such a contract becomes limited. Though the minor may still disaffirm such a contract (technically speaking), he or she still remains liable for a significant value of the consideration. This exception is designed to ensure that minors are still able to access necessities such as food, shelter and clothing when their parents or guardians fail to provide for the same.

However, it sometimes becomes difficult for courts to determine whether a specific consideration is a necessity or not. Analysis Based on the fact that Tommy is a minor, the contract between him and the competent seller is voidable. This effectively means that Tommy has the option of disaffirming any contract to which he is party to until a specified time after he attains the majority age.

In this case, Tommy has already demonstrated an intention to disaffirm the contract by handing over the keys of the automobile to the seller and asking for a refund of whet he paid at the time of the purchase. If state laws allow the return of the consideration regardless of its condition without any requirement for restoration, then Tommy is entitled to a full refund of $6,000.

However, where the laws of the state dictate that restoration be done if the consideration has lost significant value; Tommy will be entitled to the difference of what he paid for the automobile and the value of the automobile at the time of its return. It should also be noted.