A contract with an incapacitated person is generally voidable by the incapacitated party.- Voidable means it can be cancelled by a legal representative of the incapacitated person.
- However, a fair and reasonable contract entered into without knowledge of the incapacity of the person will be upheld unless the incapacitated person can refund any economic gain or damages to the innocent party.
In a recent lawsuit, an incapacitated person sought to avoid a mortgage she signed in connection with improvements made on her home. The court held that because the improvements were executed without knowledge of her incapacity, she “may not have the mortgage voided unless she [was] prepared to make the plaintiff whole.”
Generally, the law of NJ is that a contract with an incapacitated person is voidable by the incapacitated party or his/her legal representative, unless it was made on fair terms, without knowledge of the incapacity, and consideration was given to the incapacitated party. In such cases, the incapacitated person must be able to return the other party to their original position to avoid the contract, meaning pay for or refund the economic value received by/from the innocent party.
If you are looking for additional details on this topic or if you require advice about your situation, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Guardianship Attorney