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Chapter 7-12

Management and Organizational Studies 2275A/B Chapter Notes - Chapter 7-12: Limited Liability, Reasonable Person, Natural Person


Department
Management and Organizational Studies
Course Code
MOS 2275A/B
Professor
Susan Toth
Chapter
7-12

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Capacity, Legality, & intention 10/24/2015
Capacity
-Some people more vulnerable than others
-Identified as needing more protection
Minors/infants
oNecessaries
Minors bound by contracts for necessaries
Necessaries = things required to function in society
depends on circumstances
Minors must repay money borrowed & used for
necessaries
Gov. student loans = exception
oAge of majority
Minor can ratify contract at age of majority bound by
it
(wasn’t bound during minority)
e.g. 16 year old says 5000$ for car not bound
by it. If @18 makes installment payments
bound by it
oParent’s liability
Parents not responsible for minor’s contracts
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Legislation makes parents liable
Can be responsible of contracts involve necessities
Can be liable if contract contains “guarantee”
= promise they will pay off debt
Insanity & intoxication
oTo qualify for this: have to show person could not understand
nature of act being performed
AND that other party also knew or ought to know
oDrunkenness treated like insanity
Corporations
oAll the power of a natural person
oCan be limited by legislation creating them
Foreign diplomats, trade unions, bankrupt
oForeign diplomats immunity
In our criminal courts
Civil matters: court will not allow lawsuit to proceed
oTrade unions have capacity to contract for union activities
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Governed by legislation
oBankrupts have capacity to contract limited
oIndians act
Property on Indian reserve is not subject to charge,
pledge, mortgage, seizure, etc.
Legality
-An agreement must be legal and not contrary to public interest to
qualify as binding contract
Performed illegally vs. formed illegally
oPerformed
Lawful contracts performed illegally may be enforced
e.g. man who died with drugs in stomach
no public policy reason to void
May treat contract as void (but not illegal)
Can void whole contract or part of it
oFormed
Illegal at the time it was formed
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find more resources at oneclass.com
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