Do the limitations on contract imposed by the element of capacity make sense from a public policy perspective? What are we trying to achieve by limiting the rights of some people to contracts?
One of the elements of contracts in the American legal fraternity is competency and capacity. According to this element, any individual who wishes to enter a deal must possess complete legal capacity and competency. These limitations are valid when it comes to considering the nature of contracts that a person can enter, whose disavow, or disaffirmation can have dire consequences on both parties involved. Therefore, these limitations ensure that a person, or party, can be held legally liable for the duties they agree to undertake, and can be sued in a court of law for breaching these duties. The element of capacity stipulates that minors, mentally incapacitated persons, and those individuals under the influence of alcohol and drugs (intoxicated) do not have the legal ability to enter into a contract (Series, 2015). By limiting the rights of these individuals to contract, the law manages to establish their capability to be held accountable for their end of the bargain, since they have a sound mind and moral judgment, and can read and understand the terms of agreements of the contract. A minor is defined as a person under the age of 18 years, or 21 depending on the state of jurisdiction, while the mentally incapacitated include individuals with medical conditions which directly impact their ability of sound judgments, such as individuals under heavy medication. Intoxicated individuals are those individuals under the influence of alcohol and drugs. These people are limited or legally incapacitated to enter into a contract since the law would argue they did not have the mental capacity to read and process the terms of the agreement (Series, 2015). Hence their termination of the contract would not be considered a breach of contract, while the older party or the legally capacitated party in the deal would have to bear with the losses incurred.
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Fully describe the differing outcomes for the following three contractual scenarios:
A minor who lives with his parents leases an apartment for a year. May the minor disaffirm after three months? What are the rights of the minor tenant and the landlord at the time the minor disaffirms?
A minor who lives with his parents is considered by the law a child who lacks the legal capacity to enter into any binding contract and therefore is guaranteed the right to disaffirm the contract and avoid any legal obligations outlined in the contract. To disaffirm is to retain the right of renouncing a deal and thereby voiding any legal obligations resulting from the agreement. A minor living with the parents retains the right to disaffirm the leasing contract after a year, renouncing any legal requirements of the lease (Series, 2015). In this case, the minor has the right not to hold his end of the bargain of the termination of the leasing contract, such as compensating for any lost or damaged property or relocating without giving the landlord a prior notice. Should the landlord refuse to pay the tenant after the termination of the country, the minor has the right to sue the landlord in a court of law for the breach of contract, and the right to file any legal lawsuit against the landlord. However, the landlord remains bound by the terms of the lease (Series, 2015) and can therefore not lease the property to another tenant although after the disaffirmance he has the legal right to contest this provision in a court of law and have it repealed.
A minor who does not have an adult to provide him shelter leases an apartment for a year. May the minor disaffirm after three months? What are the rights of the minor tenant and the landlord at the time the minor disaffirms? How is the resolution to this scenario different from the result in part A?
A minor in this scenario is protected by emancipation. Emancipation is the legal process in which an individual who has not yet reached the age of majority is declared to be no longer a minor if they pay their bills, supply their place of residence, and are no longer reliant upon their parent (Governatori, 2018) . In this case, even though the tenant can be said to be a minor, the fact that he pays his bills and supplies his place of residence would imply they have the mental and legal capacity to enter into a contract of their free will. In this scenario, even though the minor may disaffirm the contract after three months, he would have fewer rights as compared to the minor in part A. this is because his rights will only be limited to the termination of the contract, and the right to be compensated the initial amount deposited to the landlord. However, the landlord at this point has the right to be paid for any damages of property, or loss incurred during the three months of leasing. The man difference in this scenario is that the landlord has the right to ask for compensation of any loss or damage to property incurred (Governatori, 2018) . In the first part, the law turns a deaf ear to the pleas of the landlord, holding him fully accountable to his end of the bargain. This is regardless of the inconveniences suffered, although in this second case the law tries to maintain a balance between the two individuals, ensuring the tenant is granted the right to disaffirm, provided no damage or loss is reported.
An adult leases an apartment for a year. May the adult disaffirm after three months? If the adult moves out of the apartment after three months, what are the rights of the adult tenant and the landlord at the time of the move-out? How is the resolution to this scenario different from the result in part A and Part B?
In this third scenario, an adult tenant can only disaffirm the contract after three months if a prior notice had been issued to the landlord as per the agreements of the deal, and that the landlord failed to hold his end of the bargain. For instance, the contract may require the tenant to make a two-month notice of the termination of the agreement, upon which assessment of the property will be done before the landlord compensates the tenant (Governatori, 2018) . Should the landlord fail to assess the property as stipulated thereby consequently holding the tenant in the property against the term of the agreement, then the tenant has the right to disaffirm the contract, demanding compensation for any inconveniences caused. In this scenario, the court may direct the landlord to compensate the tenant the full amount of deposit in addition to paying an extra fee for the inconveniences caused. If on the other hand, the tenant terminates the contract without following the due process as set for by the terms of the agreement, then the landlord has the legal right to sue the tenant in a court of law demanding compensation for the inconvenience caused (Governatori, 2018) . In some cases, the tenant might be denied the full amount in settlement of the initial deposit made to the landlord. The main difference between this scenario and the first two is that I this case the tenant is considered of full legal capacity, and therefore is judged on the same ground with the landlord. The law does not favor any side, but instead, listen to determine the right and wrong parties accordingly.
References
Governatori, G., Idelberger, F., Milosevic, Z., Riveret, R., Sartor, G., & Xu, X. (2018). On legal contracts, imperative and declarative smart contracts, and blockchain systems. Artificial Intelligence and Law , 26 (4), 377-409.
Series, L. (2015). Relationships, autonomy and legal capacity: Mental capacity and support paradigms. International Journal of Law and Psychiatry , 40 , 80-91.
