Mental Capacity in Contract Law

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After her husband`s death, a lawyer was also appointed for Ms. Rick because her deteriorating mental state was known. A neighbour held this appointed position. Less than 2 years later (and apparently without the intervention of the lawyer of record), Ms. Rick transferred land without payment to a company owned by Sailer and his family. The mental capacity to contract is one of the most important elements of a contract. All contracting parties must be mentally capable of concluding a contract, otherwise the contract may be considered void and void. It is important that all contracting parties are mentally competent. There are tests that determine the mental performance of people over the age of 18. They are complex and vary in all states. Some states opt for the « Estimating Effects » test.

It asks if a person is able to understand what they are involved in and if they estimate the impact. The « control test » asks if someone can control themselves, if they understand or not. A minor is a person who has not yet reached the legal age of mental capacity in a jurisdiction. In general, a person must be 18 years of age or older to have the mental capacity to contract. Therefore, a minor who concludes a contract may terminate the contract at any time before reaching the age of majority. The exception to this rule is if the contract includes goods or services necessary for the survival of the child. This could include food, water, shelter, etc. If necessary, the child is required to pay the fair value of the goods or services received. If the child does not terminate the contract at that time, he or she ratifies the contract and is bound for the future. An intoxicated person may not have the mental capacity to contract.

In general, this requires extreme intoxication. If the drunkard concludes a contract, he must terminate the contract within a reasonable time after regaining his legal capacity and becoming aware of the contract. If it fails to do so within a reasonable time, it has ratified the treaty and is bound. Guardianship requires the filing of an application with the court to appoint a guardian to take charge of the day-to-day financial and/or health decisions of a person with a disability who is unable to fully manage his or her affairs. Guardianship can be avoided if the legally incapable person has signed valid powers of attorney for health care and property. In addition, persons declared disabled may still have testamentary capacity that can be exercised with judicial approval. It is not necessary for the person to actually know these things. It is only necessary that she has the mental capacity to know them. « Capacity » is not a universal concept. The answer depends on the decisions mom has to make and the type of documents she has to sign. For example, the legal standard of legal capacity for the execution of a power of attorney for health care is lower than for the signing of a contract or instrument.

Mom is 78 years old and lives alone after Dad`s death. She was recently diagnosed with early-stage Alzheimer`s disease. Mom doesn`t have a will or power of attorney for health care or property, and you`ve heard that these are important. You`ve also heard that if mom doesn`t have mental capacity, she can`t sign these important estate planning documents. If you enter into a contract with a person who has a mental disability such that they cannot understand the contract or cannot understand that they have a choice, they can take a subsequent action to cancel the contract. State and federal laws give the courts the power to decide whether a contract is invalid or not, so if a mentally disabled person wants to cancel a contract, they will often sue in court. Next, the court must decide whether the mental disability is such that a person could not accept the contract. For example, a person with a mental disorder who is receiving medication and treatment may still be able to enter into a contract. But if a person is severely mentally disabled without having the ability to understand a contract or understand that they are signing something binding, the contract could be null and void. If you know someone who is considering entering into a contract, or if you want to enter into a contract, it is essential that you know that intellectual contractual capacity is a crucial feature of contract law. So, if you are looking for someone to help you assess your mental capacity to contract, you should contact the Mental Capacity Assessment.

Neither Illinois law nor Illinois jurisprudence is clear on what level of capacity is required to execute a trust. The key is to determine whether the trust in question is more like a will or a contract.