Question

I need to determine the legal issue for the following... I am focusing on consideration, capacity and disafiemance but am confused on the termonolgy

Stacey Smith owns a lot in the hills of Pennsylvania and wants to build a house according to a particular set of plans and specifications. She solicits bids from bidding contractors and receives 3 bids: one from Carlton for $260,000 and one from Feldberg for $258,000 and one from Siegel for $253,000. She accepts Siegel’s bid, paying him in advance of his work. One month after beginning construction of the house, Siegel contacts Smith and tells her that because of inflation and a recent price hike for materials, he will not complete the construction unless Smith agrees to pay an extra $13,000. Smith reluctantly agrees to pay the additional sum. 4 months later Smith has an unfortunate accident resulting in her death. Tom, her sole survivor and her very mature and intelligent 17 year old son, who graduated from high school early and is a Senior in College, where he has completed his business law class, wants to continue live in the new home under construction, but wants to turn the property into a horse breeding ranch and build a 16 unit stable. He contacts Siegel who learns that Tom is about to graduate from college. As Siegel prepares the contract for Tom, he asks, “You are old enough to do this right?” Tom agrees he is a senior in college and signs an additional contract for the completion of a 16 unit stable for $65,000. A year later both projects are completed and Siegel asks for his final payment of $78,000. When Tom pays only $2,000, Siegel sues Tom and Stacey’s estate for the remaining $76,000.

Answer 1

The issue in the case is whether

• the contract is valid(capacity)
• tom has breached the contract

Explanation

• The contractor does not know about Tom’s age. But the contractor has made an attempt to ensure his legal age capacity. Tom says he is senior in college.
• As a minor Tom can enter the contract, provided it is not illegal –like buying alcohol
• There is a consideration from both sides (money and ranch)
• Minors cannot void a contract if it is done for a necessity like house, food. Tom has entered into the contract. It is for a luxury -ranch. Hence this contract is voidable

A minor can void his contract when he is minor. Here he tom hasn’t done so. Now he is not a minor. So now the contract is not voidable and is enforceable. (If he had been a minor even if tom has not voided the contract, the contract may not have been enforceable because he is a minor)

• No sign of disaffirmance – Tom did not show any sign- words or actions, that he does not want to be bound by the contract (by actions or words), either during his minor days or after crossing the minor stage. A minor may disaffirm at any time during minority or for a short reasonable time after the minor comes of age.
• By paying $2000, tom shows an implied ratification that he accepts the contract. A person lacking capacity at the time they formed a contract may, after acquiring the necessary capacity, impliedly ratify the contract. This can be done by actions that are not consistent with disaffirmance or avoidance. Also, tom intends to stay in the home. Hence he has to pay for both the projects

Hence Tom is bound by contract and has breached the contract