Is There Legal Liability When an Incapacitated Person Signs a Contract?

HNWContract Law, Elder Care Law

signing a contract• A contract signed by an incapacitated person is generally voidable by the incapacitated party, meaning they can terminate it at any reasonable time and not be in breach of contract.
• However, a fair and reasonable contract entered without actual knowledge or reasonable signs of the incapacity will be upheld unless the incapacitated party returns the competent party to their original position, meaning reimbursing them for actual economic loss, defeats the right of the incapacitated person to void the contract.

Discussion About Contractual Liability of a Disabled Person

In one case I read, 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 made, the amount paid for the improvements was fair, and the documents were executed without knowledge of the incapacity to the contractor, she “may not have the mortgage voided unless she [was] prepared to make the plaintiff whole by paying off the debt.”

Therefore, a contract with an incapacitated person is voidable by the incapacitated party, unless it was made on fair terms, without knowledge of the incapacitated, and consideration was given to the incapacitated party.

To discuss your NJ contract, 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 Contract Law Attorney

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