Question

Mr. Smalley, who had been diagnosed as manic-depressive and had been in and out of mental hospitals, contracted to sell an invention, and then later claimed that the contract was void because he lacked capacity due to his illness. His doctor testified in court that Mr. Smalley was not capable of evaluating business deals when he was in a "manic" state. Using these facts and these facts only, how should the court rule? Is there other information that would be helpful to you in making your decision? To state that "this is a tough issue to decide" is not an acceptable answer and points will be taken off for not choosing a side and defending it. You are advocating a position after all. Use the facts and the legal doctrines in your text to support your position.

Answer 1

Mental Incapacity

A person who lacks mental capacity can void, or have a guardian void, most contracts (except contracts for necessities). In most states, the standard for mental capacity is whether the party understood the meaning and effect of the words comprising the contract or transaction. This is called the "cognitive" test. Some states use what's called the "affective" test: a contract can be voided if one party is unable to act in a reasonable manner and the other party has reason to know of the condition. And some states use a third measure, called the "motivational" test. Courts in these states measure capacity by the person's ability to judge whether or not to enter into the agreement. These tests may produce varying results when applied to mental conditions such as bipolar disorder.

The court should rule that the contract was void as claimed by Mr. Smalley since it was evident from his doctor that he was not capable of evaluating business deals when he was in a "manic" state.

Yes, there is other information that would be helpful in making your decision, that is, the type of invention Mr. Smalley was selling.