Re: Personal responsibility [was Re: Genderless societies]
Sun, 19 Sep 1999 12:02:36 EDT

In a message dated 99-09-16 19:09:17 EDT, (Brian Manning Delaney) wrote:

> A contract is a contract, or so it

> should be. The only grounds for nullification of a contract of
> this sort that I'm aware of are: 1) one of the parties to the
> contract was a) compelled to sign, or b) not in his/her right
> mind; and 2) a lawyer wasn't present during the signing, and
> thus one of the parties signed something "not knowing what it
> meant/how to interpret it." (These basically all amount to the
> same general thing: someone signed something not knowing what
> s/he was doing.)

This isn't exactly right, although it's generally got the gist of things correct. Your first example is certainly correct: Parties to a contract have to be "competent" to make the contract. Thus, infants and the insane can't generally be bound by contracts. (But as we've discussed, they can be "represented" by a guardian ad litem or other trustee such that a binding contract can be made that bears on their interests.)

The second example is wrong, but it's a common misconception. Sane adults are generally presumed to be able to read and understand contracts. The fact that one party has a lawyer involved in the process and the other doesn't is not a basis for abrogating a contract under the general common law of contract. Unfortunately, there's been a steady legislative erosion of this principle during this century, with a tangled web of "consumer protection" statutes that make special exceptions for one kind of contract or another. Insurance contracts are a typical example these days: You have to know a whole host of special legislative rules to know when the plain language of an insurance contract will be enforceable against the insured because of the many special rules that have been passed to "protect the little guy". Of course, this lack of predictability just makes it more expensive (or impossible in some cases) to buy insurance, defeating the avowed purpose of these laws in the first place to protect the interests of consumers. Furthermore, such rules steadily erode the principle of personal responsibility, undermining the seriousness with which people consider the contracts into which they enter: "I don't have to read that - there's no way they can enforce a tough contract against me!"

The other major exceptions to the enforceability of contracts are "illegality" (identified by Lee Crocker in a subsequent post) and fraud. "Illegality" is just a general term to describe things the state won't let you agree to, such as many wagering contracts, a contract for prostitution, etc. Fraud is the most important (and complex) common law exception to contractual enforceability (and also one about which there are a lot of common misconceptions). The elements of common law fraud are an intentional factual misrepresentation made with the intent of detrimental reliance and subsequent actual detrimental reliance. A contract that embodies fraud is unenforceable.

Greg Burch     <>----<>
     Attorney  :::  Vice President, Extropy Institute  :::  Wilderness Guide   -or-
                         "Civilization is protest against nature; 
                  progress requires us to take control of evolution."
                                           Thomas Huxley