2.7 Capacity to Contract

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1 Introduction & FYLSE Examination Guide

1.1 FYLSE Exam Structure, Passing Standard & Administration 1.2 Study Method, Pacing & MBE-Style Technique

2 Contracts: Mutual Assent, Capacity & Contract Formation

2.1 The Offer & Objective Theory of Assent 2.2 Termination & Irrevocability of Offers 2.3 Acceptance & the Mailbox Rule 2.4 Mirror Image Rule & UCC 2-207 Battle of the Forms 2.5 Mistake in Contract Formation 2.6 Fraud, Duress, Undue Influence & Illegality 2.7 Capacity to Contract

3 Contracts: Consideration, Estoppel & Implied Obligations

3.1 Consideration & the Bargained-For Exchange 3.2 Past & Moral Consideration, Pre-Existing Duty & Modification 3.3 Promissory Estoppel & Detrimental Reliance 3.4 Implied-in-Fact Contracts & Quasi-Contract 3.5 Implied Covenant of Good Faith, Fair Dealing & Indefinite Terms

4 Contracts: Third-Party Beneficiaries, Assignment & Delegation

4.1 Third-Party Beneficiary Contracts 4.2 Assignment of Rights 4.3 Delegation of Duties

5 Contracts: Statute of Frauds, Parol Evidence & Interpretation

5.1 Statute of Frauds: Contracts Within the Statute 5.2 Satisfying the Statute: Writing, Signature & Exceptions 5.3 The Parol Evidence Rule 5.4 Contract Interpretation & Canons of Construction

6 Contracts: Performance, Conditions, UCC Warranties & Breach

6.1 Conditions: Express, Constructive & Excuse 6.2 Substantial Performance vs. Perfect Tender 6.3 Cure, Rejection, Revocation & Installment Contracts 6.4 UCC Article 2 Warranties & Risk of Loss 6.5 Anticipatory Repudiation & Insecurity

7 Contracts: Remedies, Discharge & Changed Circumstances

7.1 Expectation Damages & Their Limitations 7.2 Reliance, Restitution & Liquidated Damages 7.3 Specific Performance & Injunctive Relief 7.4 UCC Article 2 Buyer's and Seller's Remedies 7.5 Impossibility, Impracticability & Frustration of Purpose 7.6 Discharge by Agreement: Rescission, Novation & Accord and Satisfaction

8 Criminal Law: Principles of Criminal Liability & Mens Rea

8.1 Actus Reus, Voluntary Acts & Omissions 8.2 Criminal Causation & Intervening Causes 8.3 Common Law & Model Penal Code Mens Rea 8.4 Mistake of Fact, Mistake of Law & Concurrence

9 Criminal Law: Inchoate Offenses & Accomplice Liability

9.1 Criminal Attempt & Impossibility 9.2 Solicitation & the Merger Doctrine 9.3 Conspiracy & Merger Doctrine 9.4 Accomplice Liability: Actus Reus & Mens Rea 9.5 Scope of Accomplice Liability, Withdrawal & Parties to Crime

10 Criminal Law: Homicide & Crimes Against the Person

10.1 Common Law Murder & Malice Aforethought 10.2 Degrees of Murder, Premeditation & Deliberation 10.3 The Felony Murder Rule & Its Limitations 10.4 Voluntary & Involuntary Manslaughter 10.5 Non-Homicide Crimes Against the Person

11 Criminal Law: Property Crimes, Theft & Habitation

11.1 Common Law Larceny 11.2 Embezzlement & False Pretenses 11.3 Robbery & Extortion 11.4 Receiving Stolen Property 11.5 Burglary 11.6 Arson

12 Criminal Law: Defenses: Capacity, Justification & Excuse

12.1 Insanity: The Four Legal Tests 12.2 Intoxication, Diminished Capacity & Infancy 12.3 Self-Defense & Defense of Others 12.4 Defense of Property, Habitation & Law Enforcement Privileges 12.5 Duress & Necessity 12.6 Entrapment & Mistake as an Excuse

13 Torts: Intentional Torts to Persons & Property

13.1 Intent, Motive & Incapacity in Intentional Torts 13.2 Transferred Intent 13.3 Battery & Assault 13.4 False Imprisonment 13.5 Trespass to Land 13.6 Trespass to Chattels & Conversion

14 Torts: Privileges & Defenses to Intentional Torts

14.1 Consent: Express, Implied & Capacity 14.2 Exceeding & Vitiating Consent 14.3 Self-Defense & Defense of Others (Tort) 14.4 Defense of Property & Recapture of Chattels 14.5 Public & Private Necessity 14.6 The Shopkeeper's Privilege

15 Torts: Negligence — Duty of Care & Breach

15.1 Duty of Care & the Foreseeable Plaintiff 15.2 Affirmative Duties to Act & Special Relationships 15.3 Standard of Care: The Reasonable Person & Children 15.4 Professional Negligence, Informed Consent & Negligence Per Se 15.5 Land Possessor Liability & Premises Duties 15.6 Breach of Duty & Res Ipsa Loquitur

16 Torts: Causation, Defenses, Multiple Tortfeasors, Wrongful Death & Damages

16.1 Cause in Fact & Multiple Actors 16.2 Proximate Cause & Intervening Forces 16.3 Contributory, Comparative Negligence & Assumption of Risk 16.4 Joint and Several Liability, Contribution & Indemnity 16.5 Vicarious Liability & Non-Delegable Duties 16.6 Wrongful Death & Survival Actions 16.7 Statute of Limitations & Claim Accrual 16.8 Tort Damages: Compensatory, Nominal, Punitive & Mitigation

17 Torts: Strict Liability & Products Liability

17.1 Strict Liability for Animals 17.2 Abnormally Dangerous Activities & Scope of Risk 17.3 Strict Products Liability & Defect Categories 17.4 Products Liability Under Negligence, Warranty & Misrepresentation 17.5 Defenses to Products Liability

18 Torts: Emotional Distress, Defamation, Privacy & Economic Torts

18.1 Intentional Infliction of Emotional Distress 18.2 Negligent Infliction of Emotional Distress 18.3 Common Law Defamation: Elements, Libel & Slander 18.4 Constitutional Limits, Privileges & Defenses to Defamation 18.5 Invasion of Privacy 18.6 Nuisance & Economic Torts

2.7 Capacity to Contract

Key Takeaways Explain This Topic AI

A contract made by a party lacking capacity is voidable at that party's election only; the party with full capacity remains bound and cannot use the other's incapacity to escape.

A minor may disaffirm during minority and for a reasonable time after reaching majority, and under the majority rule may recover payments even when the goods cannot be returned in their original condition; ratification is possible only after majority, whether express, implied from conduct, or established by failure to disaffirm within a reasonable time.

The volitional test for mental incapacity and the intoxication defense both require that the other party had reason to know of the condition, while the cognitive test for mental incapacity does not.

Contracts by a person already adjudicated incompetent with a guardian appointed are void rather than voidable, which is the only capacity doctrine producing a void agreement.

A party who disaffirms still owes the reasonable value, not the contract price, of necessaries actually furnished.

Last updated: September 2026

Capacity to Contract

Content map item 115 sits inside Formation of Contracts — Mutual Assent for a reason. Capacity is not a side issue about sympathetic parties; it is a formation question. Even where offer, acceptance, and consideration are flawless, a contract made by a party who lacked legal capacity is voidable at that party's election . FYLSX fact patterns exploit this by burying an age or a mental condition in the second sentence of an otherwise clean commercial transaction and then asking who prevails.

Three classes of persons lack full contractual capacity at common law: minors , persons under a mental incapacity , and persons who are intoxicated to a degree the other party knows about. Each produces a voidable contract, not a void one — the protected party may disaffirm, but the party with capacity is bound and cannot escape.

1. Infancy: The Minor's Power to Disaffirm

At common law a person is a minor until the eighteenth birthday. A minor's contract is voidable by the minor, and this is the single most heavily tested capacity rule.

The power to disaffirm. A minor may disaffirm at any time during minority and for a reasonable time after reaching majority. Disaffirmance may be express or implied from conduct inconsistent with the contract.

The adult is bound. The adult party has no reciprocal escape. The classic trap answer says "the contract is void" or "neither party is bound." Both are wrong: the contract is voidable at the minor's option only.

Restoration. The majority common-law rule lets a minor disaffirm and recover what was paid even if the minor cannot return the goods in their original condition . A minor who wrecks a purchased car may still generally recover the price, returning the wreck. A substantial minority of states now offset for depreciation or use.

Ratification. Once the minor reaches majority, the contract may be ratified expressly, by conduct manifesting intent to be bound, or by failure to disaffirm within a reasonable time. Ratification cannot occur before majority, and once made it is irrevocable.

The Necessaries Exception

A minor who contracts for necessaries — food, shelter, clothing, basic medical care, and in some circumstances tools of a trade — cannot escape payment altogether. The minor may still disaffirm the express contract, but remains liable in quasi-contract for the reasonable value of what was actually furnished, not the contract price. Note the mechanics: the recovery is restitutionary, so an inflated contract price does not control.

Exam pattern: A seventeen-year-old signs a twenty-four-month gym membership at $80 per month, uses it for five months, then disaffirms. A gym membership is not a necessary, so the minor disaffirms entirely and recovers the payments. Change the facts to an apartment lease for a minor living independently and the necessaries doctrine produces liability for the reasonable rental value of the months actually occupied.

2. Mental Incapacity

Two tests coexist, and a well-drafted question tells you which one is in play.

Test Standard Effect

Cognitive test (traditional) The party was unable to understand the nature and consequences of the transaction Voidable

Volitional test (Restatement (Second) § 15(1)(b)) The party understood, but was unable to act reasonably in relation to the transaction and the other party had reason to know of the condition Voidable

The volitional branch carries a notice requirement that the cognitive branch does not. A party who genuinely could not comprehend the deal may disaffirm even against an innocent counterparty; a party who merely could not control their conduct may disaffirm only if the other side had reason to know.

Adjudicated incompetents. Where a court has already declared a person incompetent and appointed a guardian, contracts made by that person are void , not merely voidable. This is the one capacity situation producing a void agreement, and examiners test the distinction directly.

Lucid intervals. Mental illness is assessed at the moment of contracting. A person with a fluctuating condition who contracts during a lucid interval has capacity.

Necessaries and restitution. As with minors, quasi-contractual liability for the reasonable value of necessaries survives disaffirmance. Where the contract was fair and the other party had no knowledge of the incapacity, courts may condition avoidance on restoring the other party to the status quo.

3. Intoxication

Intoxication is the narrowest of the three doctrines, and the bar is deliberately high. A contract is voidable for intoxication only where the party was so impaired as to be unable to understand the nature and consequences of the transaction and the other party had reason to know of that condition . Voluntary intoxication is not an excuse for a merely improvident bargain; the classic wrong answer treats "the defendant had been drinking" as sufficient.

An intoxicated party who later learns of the transaction must act promptly. Continued acceptance of benefits, or delay after sobering up, ratifies the contract.

4. Comparison Matrix

• Doctrine Standard Void or voidable Counterparty knowledge required Liability for necessaries
• Minority Under 18 at the time of contracting Voidable by the minor No Yes — reasonable value
• Mental incapacity (cognitive) Cannot understand nature and consequences Voidable No Yes — reasonable value
• Mental incapacity (volitional) Cannot act reasonably Voidable Yes Yes — reasonable value
• Adjudicated incompetent Prior judicial declaration and guardianship Void No Yes — reasonable value
• Intoxication Cannot understand nature and consequences Voidable Yes Yes — reasonable value
• 5. Where Capacity Shows Up on the FYLSX

Capacity rarely arrives as the headline issue. It appears as a hidden defect inside a question that otherwise tests offer and acceptance or remedies:

A minor signs, performs, turns eighteen, and keeps performing for months. The call asks whether the contract is enforceable — ratification by conduct defeats disaffirmance.

A party with dementia signs a fair-market contract with a buyer who had no idea. Under the cognitive test the contract is still voidable, but the court is likely to require restoration of the consideration received.

An intoxicated seller signs a deed at a bar while the buyer pours the drinks. Counterparty knowledge is established, so the deed is voidable.

A distractor recites "the contract is void ab initio." Reserve that language for the adjudicated incompetent; everywhere else in this topic the correct word is voidable .