When a Person Does Not Have the Legal Capacity to Form a Contract
When a Person Does Not Have the Legal Capacity to Form a Contract
In the world of business, contracts are a crucial part of making deals and agreements. However, not everyone has the legal capacity to form a contract. This can be due to various reasons such as age, mental capacity, or being under the influence of drugs or alcohol. In this article, we`ll explore who does not have the legal capacity to form a contract and what this means for businesses.
Minority
The age of majority varies from country to country, but generally, a person becomes an adult at 18. Before the age of majority, a person is considered a minor and does not have the legal capacity to form a contract. This means that any agreement they make is not binding, and the other party cannot hold them to it. However, there are exceptions to this rule. For instance, if a minor enters into an agreement for necessities such as food, clothing, or shelter, they can be held accountable for it.
Mental Capacity
Mental capacity refers to a person`s ability to understand and make informed decisions about a contract. If a person does not have the mental capacity to understand the terms and consequences of a contract, they do not have the legal capacity to form a contract. This can be due to mental illness, cognitive impairment, or being under the influence of drugs or alcohol. In such cases, the contract is considered voidable, and the person can choose to either affirm or rescind it.
Intoxication
When a person is under the influence of drugs or alcohol, they may not have the mental capacity to form a contract. This is because intoxication impairs a person`s judgment and decision-making skills. If a person was intoxicated at the time of entering into a contract, the contract may be voidable.
What does this mean for businesses?
Businesses must be aware of who has the legal capacity to form a contract when entering into agreements. If a business enters into a contract with someone who does not have the legal capacity to do so, the contract will not be enforceable. This can result in financial losses and legal disputes.
To avoid such situations, businesses should ensure that the person they are entering into a contract with has the legal capacity to do so. This can include verifying their age, mental capacity, and sobriety at the time of entering into the contract. If there are any doubts, it is best to seek legal advice.
In conclusion, not everyone has the legal capacity to form a contract. Businesses must be aware of this and ensure that they are entering into agreements with individuals who have the legal capacity to do so. This will help avoid legal disputes and financial losses in the future.