Question

Read the facts below and answer the questions that follow.

Henry and Jacob have been friends for many years and decide to go into business together. Henry is 25 years old and Jacob has just turned 17 years old two weeks ago. They have now saved up enough money to purchase a Macbook from Simon, their mutual friend, to start their graphic design business. Henry and Jacob approach you for advice on the following:

1.2 Advise Jacob on his capacity to enter into a sale agreement with Henry and Simon. (20)

Answer 1

Capacity to contract means the legal competence of a person to enter into a valid contract. Usually the capacity to contract refers to the capacity to enter into a legal agreement and the competence to perform some act. The basic element to enter into a valid contract is that he much have a sound mind.

Certain class of people are exempted from the category of people who are capable of entering into contract:

1. Infants/minors

2. Insane

3. people under the influence of drug

4. bankrupt;and

5. enemy alien

Parties to an agreement must have contractual capacity before the agreement will be binding on both parties. Contractual capacity is the ability to understand that a contract is being made and to understand its general nature. If any party to a contract does not have contractual capacity, the contract is either void or voidable. The term "voidable" means that it can be declared void, but is not automatically void. Some sort of affirmative action must be taken to avoid the liability under a contract that is said to be voidable.

Some classes of persons such as people under the age of 21, or in most states, under the age of 18, are deemed by law to lack contractual capacity. With some exceptions, a contract made by a minor is voidable. The minor, in other words, may avoid the legal liability under a contract. Upon reaching the age of majority, a minor may affirm or ratify the contract and therefore make it contractually binding on him.