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FACTS On June 11, 1964, Chagnon bought a 1959 Edsel from Keser for $995. Chagnon, who was then a twenty-year-old minor, obtained the contract by falsely advising to Keser that he was over twenty-one years old, the age of majority. On September 25, 1964, two months and four days after his twenty-first birthday, Chagnon disaffirmed the contract and, ten days later, returned the Edsel to Keser. He then brought suit to recover the money he had paid for the automobile. Keser counterclaimed that he suffered damages as the direct result of Chagnon’s false representation of his age. A trial was had to the court, sitting without a jury, all of which culminated in a judgment in favor of Chagnon against Keser in the sum of $655.78. This particular sum was arrived at by the trial court in the following manner: the trial court found that Chagnon initially purchased the Edsel for the sum of $995 and that he was entitled to the return of his $995; and then, by way of setoff, the trial court subtracted from the $995 the sum of $339.22, apparently representing the difference between the purchase price paid for the vehicle and the reasonable value of the Edsel on October 5, 1964, the date when the Edsel was returned to Keser.
DECISION Judgment affirmed except as to the calculation of damages for misrepresentation.
OPINION McWilliams, J. Before considering each of these several matters, it is deemed helpful to allude briefly to some of the general principles pertaining to the longstanding policy of the law to protect a minor from at least some of his childish foibles by affording him the right, under certain circumstances, to avoid his contract, not only during his minority but also within a reasonable time after reaching his majority. In [citation] we held that when a minor elects to disaffirm and avoid his contract, the ”contract” becomes invalid ab initio and that the parties thereto then revert to the same position as if the contract had never been made. In that case we went on to declare that when a minor thus sought to avoid his contract and had in his possession the specific property received by him in the transaction, he was in such circumstance required to return the same as a prerequisite to any avoidance.
In [citation] it is said that a minor failing to disaffirm within a ”reasonable time” after reaching his majority loses the right to do so and that just what constitutes a ”reasonable time” is ordinarily a question of fact. As regards the necessity for restoration of consideration, in [citation] it is stated that the minor after disaffirming is ”usually required *** to return the consideration, if he can, or the part remaining in his possession or control.”
Keser’s *** contention that Chagnon upon attaining his majority ratified the contract by his failure to disaffirm within a reasonable time after becoming twentyone and by his retention and use of the Edsel prior to its return to the seller is equally untenable. In this connection it is pointed out that Chagnon did not notify Keser of his desire to disaffirm until sixty-six days after he became twenty-one and that he did not return the Edsel until ten days after his notice to disaffirm, during all of which time Chagnon had the possession and use of the vehicle in question. As already noted, when an infant attains his majority he has a reasonable time within which he may thereafter disaffirm a contract entered into during his minority. And this rule is not as strict where, as here, we are dealing with an executed contract. There is no hard and fast rule as to just what constitutes a ”reasonable” time within which the infant may disaffirm. *** Suffice it to say, that under the circumstances disclosed by the record we are not prepared to hold that as a matter of law Chagnon ratified the contract either by his actions or by his alleged failure to disaffirm within a reasonable time after reaching his majority. ***
Finally, error is predicated upon the trial court’s finding in connection with Keser’s setoff for the damage occasioned him by Chagnon’s admitted false representation of his age. In this regard the trial court apparently found that the reasonable value of the Edsel when it was returned to Keser by Chagnon was $655.78, and accordingly went on to allow Keser a setoff in the amount of $339.22, this latter sum representing the difference between the purchase price, $995, and the value of the vehicle on the date it was returned. Finding, then, that Chagnon was entitled to the return of the $995 which he had theretofore paid Keser for the Edsel, the trial court then subtracted therefrom Keser’s setoff in the amount of $339.22, and accordingly entered judgment for Chagnon against Keser in the sum of $655.78. Whether it was by accident or design we know not, but $655.78 is apparently the exact amount which Chagnon ”owed” the Public Finance Corporation on his note with that company.
INTERPRETATION States vary on the rights of a minor and a defrauded party when a minor fraudulently misrepresents her age when entering into a contract.
ETHICAL QUESTION If a minor misrepresents his age, should he forfeit the right to avoid the contract? Explain.
CRITICAL THINKING QUESTION What rule would you apply in this case? Explain.
How does the body’s “fight-or-flight” response work?
FACTS During the spring of 1996, Kobe Bryant (Bryant), then a seventeen-year old star high school basketball player, declared his intention to forgo college and enter the 1996 National Basketball Association (NBA) lottery draft. The Score Board Inc., a company in the business of licensing, manufacturing, and distributing sports and entertainment-related memorabilia, entered into negotiations with Bryant’s agent, Arn Tellem (Agent) and Bryant’s father, former NBA star Joe ”Jelly Bean” Bryant, to sign Bryant to a contract. In early July 1996, Score Board sent Bryant a signed written licensing agreement (agreement). The agreement granted Score Board the right to produce licensed products, such as trading cards, with Bryant’s image. Bryant was obligated to make two personal appearances on behalf of Score Board and provide between a minimum of 15,000 and a maximum of 32,500 autographs. Bryant was to receive a $2 stipend for each autograph, after the first 7,500. Under the agreement, Bryant could receive a maximum of $75,000 for the autographs. In addition to being compensated for the autographs, Bryant was entitled to receive a base compensation of $10,000.
Bryant rejected this proposed agreement, and on July 11, 1996, while still a minor, made a counteroffer (counteroffer), signed it, and returned it to Score Board. The counteroffer made several changes to Score Board’s agreement, including the number of autographs. Score Board claimed that they signed the counteroffer and placed it into its files. The copy signed by Score Board was subsequently misplaced and has never been produced by Score Board during these proceedings. Rather, Score Board has produced a copy signed only by Bryant.
On August 23, 1996, Bryant turned eighteen. Three days later, Bryant deposited the check for $10,000 into his account. Bryant subsequently performed his contractual duties for about a year and a half. By late 1997, Bryant grew reluctant to sign any more autographs under the agreement and his Agent came to the conclusion that a fully executed contract did not exist. By this time, Agent became concerned with Score Board’s financial condition because it failed to make certain payments to several other players. Score Board claims that the true motivation for Bryant’s reluctance stems from his perception that he was becoming a ”star” player, and that his autograph was ”worth” more than $2.
On March 17, 1998, Score Board mistakenly sent Bryant a check for $1,130 as compensation for unpaid autographs. Bryant was actually entitled to $10,130 and the check for $1,130 was based on a miscalculation.
On March 18, 1998, Score Board filed a voluntary Chapter 11 bankruptcy petition. On March 23, 1998, Agent returned the $1,130 check. Included with the check was a letter that directed Score Board to ”immediately cease and desist from any use of” Kobe Bryant’s name, likeness, or other publicity rights. Subsequently, Score Board began to sell its assets, including numerous executory contracts with major athletes, including Bryant. Bryant argued that Score Board could not do this, because he believed that a contract never existed. In the alternative, if a contract had been created, Bryant contended that it was voidable because it had been entered into while he was a minor. The Bankruptcy Court ruled in favor of Score Board. Bryant appealed.
DECISION Judgment affirmed.
OPINION Irenas, J. Bryant challenges the Bankruptcy Court’s finding that he ratified the agreement upon attaining majority. Contracts made during minority are voidable at the minor’s election within a reasonable time after the minor attains the age of majority. [Citations]
The right to disaffirm a contract is subject to the infant’s conduct which, upon reaching the age of majority, may amount to ratification. [Citation.] ”Any conduct on the part of the former infant which evidences his decision that the transaction shall not be impeached is sufficient for this purpose.” [Citation.]
On August 23, 1996, Bryant reached the age of majority, approximately six weeks after the execution of the agreement. On August 26, 1996, Bryant deposited the $10,000 check sent to him from Debtor (Score Board). Bryant also performed his contractual duties by signing autographs.
The Bankruptcy Court did not presume ratification from inaction as Bryant asserts. It is clear that Bryant ratified the contract from the facts, because Bryant consciously performed his contractual duties.
Bryant asserts that he acted at the insistence of his Agent, who believed that he was obligated to perform by contract. Yet, neither Bryant nor his Agent disputed the existence of a contract until the March 23, 1998, letter by Tellem (Agent). That Bryant may have relied on his Agent is irrelevant to this Court’s inquiry and is proper evidence only in a suit against the Agent. To the contrary, by admitting that he acted because he was under the belief that a contract existed, Bryant confirms the existence of the contract. Moreover, it was Bryant who deposited the check, signed the autographs, and made personal appearances.
INTERPRETATION Ratification of a contract may be implied from a person’s conduct after the person attains his majority.
CRITICAL THINKING QUESTION What criteria should a court employ in determining what is a reasonable period of time for disaffirmance by a person who has attained majority?
Why is ithaglucose levels be regulated, and how is this accomplished?
FACTS Randy Hyland, unable to pay two promissory notes due September 19, 1981, negotiated with The First State Bank of Sinai (Bank) for an extension. The Bank agreed on the condition that Randy’s father, Mervin, act as cosigner. Mervin, a good customer of the Bank, had executed and paid on time over sixty promissory notes within a seven-year period. Accordingly, the Bank drafted a new promissory note with an April 20, 1982, due date, which Randy took home for Mervin to sign. On April 20, 1982, the new note was unpaid. Randy, on May 5, 1982, brought the Bank a check signed by Mervin to cover the interest owed on the unpaid note and asked for another extension. The Bank agreed to a second extension, again on the condition that Mervin act as cosigner. Mervin, however, refused to sign the last note; and Randy subsequently declared bankruptcy. The Bank sued Mervin on December 19, 1982. Mervin responded that he was not liable since he had been incapacitated by liquor at the time he signed the note. He had been drinking heavily throughout this period, and in fact had been involuntarily committed to an alcoholism treatment hospital twice during the time of these events. In between commitments, however, Mervin had executed and paid his own promissory note with the Bank and had transacted business in connection with his farm. The trial court held that Mervin’s contract as cosigner was void due to alcohol-related incapacity, and the Bank appealed.
DECISION Judgment for the Bank.
OPINION Henderson, J. Historically, the void contract concept has been applied to nullify agreements made by mental incompetents who have contracted *** after a judicial determination of incapacity had been entered. [Citations.] ***
Mervin had numerous and prolonged problems stemming from his inability to handle alcohol. However, he was not judicially declared incompetent during the note’s signing.
Contractual obligations incurred by intoxicated persons may be voidable. [Citation.] Voidable contracts (contracts other than those entered into following a judicial determination of incapacity) *** may be rescinded by the previously disabled party. [Citation.] However, disaffirmance must be prompt, upon the recovery of the intoxicated party’s mental abilities, and upon his notice of the agreement, if he had forgotten it. [Citation.] ***
A voidable contract may also be ratified by the party who had contracted while disabled. Upon ratification, the contract becomes a fully valid legal obligation. [Citation.] Ratification can either be express or implied by conduct. [Citations.] In addition, failure of a party to disaffirm a contract over a period of time may, by itself, ripen into a ratification, especially if rescission will result in prejudice to the other party. [Citations.]
Mervin received both verbal notice from Randy and written notice from Bank on or about April 27, 1982, that the note was overdue. On May 5, 1982, Mervin paid the interest owing with a check which Randy delivered to Bank. This by itself could amount to ratification through conduct. If Mervin wished to avoid the contract, he should have then exercised his right of rescission. We find it impossible to believe that Mervin paid almost $900 in interest without, in his own mind, accepting responsibility for the note. His assertion that paying interest on the note relieved his obligation is equally untenable in light of his numerous past experiences with promissory notes.
We conclude that Mervin’s obligation to Bank was not void. *** Mervin’s obligation on the note was voidable and his subsequent failure to disaffirm (lack of rescission) and his payment of interest (ratification) then transformed the voidable contract into one that is fully binding upon him.
INTERPRETATION An intoxicated party ratifies a contract by not disaffirming it when she is not intoxicated and learns of its existence and by making interest payments on it when she is not intoxicated.
CRITICAL THINKING QUESTION When should a person be allowed to invalidate an agreement because of intoxication? Explain.
The hormone __________ is secreted by the pancreatic alpha-cells in response to decreased blood glucose.