Practice Quiz

CLEP Business Law

Category - Contracts

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What two conditions must be present for a contract that is entered into with a person who is mentally ill to be voidable?
  1. The person with the mental illness must be committed to a mental health facility and must be unable to act in a reasonable manner.
  2. The person with the mental illness must be unable to act in a reasonable manner and a physician must have certified that the person is unable to act in a reasonable manner.
  3. The person with the mental illness must be under the care of a mental health professional and the other party must have intended to take advantage of the mentally ill person.
  4. The other party to the contract must have known that the person was mentally ill and intended to take advantage of the mentally ill person.
  5. The person with the mental illness must be unable to act in a reasonable manner and the other party must have reason to know of the mentally ill person's condition.
Explanation
Answer: E. For a contract entered into with a person who is mentally ill to be voidable, the person with the mental illness must be unable to act in a reasonable manner and the other party must have reason to know of the mentally ill's person's condition. The burden is on the person claiming mental incapacity to show that he or she is incapably of acting reasonably. A court will seek to determine if the person was able to understand the nature of the transaction and if the person was able to act reasonably given the nature of the transaction.
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