Case study: Mental capacity consequences, Contract Scenario Calvin had been an avid coin collector for many years, and the most valuable coin in his collection was an uncirculated, mint condition, 1943 Lincoln penny made of copper (most pennies made during World War II were made of zinc because copper was needed in the war effort). That penny had a value of between $60,000 and $95,000.In August of 2017, Calvin had a serious stroke that left him unable to speak or walk, but his doctor assured his family that Calvin would recover over time with intensive therapy.Calvin was a widower and did not have any children, but he had several nephews who visited him from time to time as he recovered. None of the nephews had any real interest in Calvin’s coin collection. One of Calvin’s nephews, Billy, who visited Calvin more often than the other nephews, sometimes listened to Calvin talk (talking was a part of Calvin’s therapy) about his mounting medical bills and his coin collection, but Billy never showed much interest in the medical bills or the coin collection.In October, as Calvin’s recovery progressed slowly, Billy visited Calvin and told Calvin that he had been reading about coin collecting, and he realized that Calvin’s collection, especially the 1943 Lincoln copper penny, was valuable, and Billy suggested that Calvin should consider selling the 1943 Lincoln copper penny and use the proceeds to pay his medical bills. Calvin resisted the idea at first, but Billy continued to urge Calvin to sell the penny so that he would not have to worry about the medical bills. Finally, when Billy told Calvin that he would arrange the sale of the penny for a commission of just 5% of the sale price of the penny, Calvin began to think that selling the coin might be a good idea. He was still a little confused about how the sale would work and what Billy would do to make sure that the penny would be sold for the best price. Calvin told Billy that he thought that the penny was worth almost $100,000, but Billy assured Calvin that the market had changed recently, and that the penny was now worth $40,000 to $45,000. Eventually, Calvin allowed Billy to sell the penny for the best price he could get and to take a 5% commission for arranging the sale of the penny. Billy then sold the penny to a friend for $40,000, took his 5% commission, and paid the remainder of the sale price to Calvin.A few months later, as Calvin continued to recover, he read a story in a coin collecting magazine about how an uncirculated, mint condition, 1943 Lincoln penny made of copper had just sold at auction for more than $100,000, and Calvin began to wonder if Billy had taken advantage of him. Calvin consulted a lawyer and asked the two questions below. Did he (Calvin) have the mental capacity to enter into the contract when he agreed to let Billy sell the penny? What would he (Calvin) have to prove to show a court that he did not have the necessary mental capacity when he authorized Billy to sell the penny? Did Billy exert undue influence over Calvin to cause Calvin to enter into the contract that allowed Billy to sell the penny? What do you think? Does Calvin have a case to set aside the contract with Billy on either of these theories?
Mental capacity to enter into a contract refers to an individual’s ability to understand and appreciate the consequences of entering into a legal agreement. According to a 2020 article in the Journal of the American Medical Association, factors that may affect an individual’s mental capacity to enter into a contract include “cognitive impairment, emotional distress, and outside pressure or influence.” In Calvin’s case, his stroke may have impaired his cognitive abilities and left him vulnerable to emotional distress, potentially affecting his mental capacity to enter into a contract. To prove that Calvin did not have the necessary mental capacity when he authorized Billy to sell the penny, Calvin would need to provide evidence of his cognitive impairment and emotional distress. This could include medical records or testimony from his doctor or therapist. Calvin may also need to show that Billy exerted undue influence over him, which is defined as the “unfair persuasion of a vulnerable person to act in a way that is not in their own best interest” (Bachman, 2019). Examples of undue influence include coercing or manipulating the victim, taking advantage of the victim’s trust or dependency, and withholding important information. Cont…
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