The Courts use two tests to determine whether a party has the required mental capacity to the enter into a valid and enforceable contract. The first test is known as the cognitive test. [1] The cognitive test espouses a strict standard for the avoidance of a contract. [2] That standard requires that to be able to avoid a contract based on a lack of mental capacity, a party must not have been able to understand the nature and consequences of the transaction”. [3] In essence, the party must have been non-compos mentis, or in other words, in such an incapacitating mental state that he did not know what he was doing. [4]
The second test used by the Courts is the affective test. [5] The affective test is also called the motivational, or volitional test. [6] The affective test is broader in respect to the scope of mental behaviors or characteristics it takes into account when determining a party’s mental capacity to enter into a contract. The expanded parameters of affective test mean that not only is a party’s cognitive ability subject to scrutiny, but this test also reaches further to examine whether a party’s actions were so unreasonable as to deem the person as not being mentally capable to contract. [7] In addition, in this test, the Court also requires that the other party must have had reason to know of the incapacitating condition.
There are a multitude of conditions which would render a party incapable of contracting. These conditions include Schizophrenia, Senility, Alzheimer's disease, Retardation, Chronic drug or alcohol dependency. Because these conditions both affect a party’s ability to understand what he is doing and or to act in a reasonable manner, a person, depending on the severity of the these conditions, would likely fail both the cognitive and affective tests. There are other conditions such as Post traumatic stress disorder, and Postpartum depression which will adversely affect a person’s ability to contract. For instance, in considering the effects of postpartum depression of a person’s ability to not only contract, but to function, we can look at the Andrea Yates case. [7] In Yates, Yates was suffering from postpartum depression which eventually lead to her killing her children. [8] Yates was described by a doctor as “seeing visions and hearing voices.” [9] The doctor also stated that Yates was one of the “five sickest patients” she has ever seen. [10] Surely, the mental state of Yates was severely and negatively impacted by the onset of the postpartum depression. The condition, coupled with other behaviors cited in the case, would have been cause to deem her to be void of the mental capacity to contract. [11]
[1] Brian A. Blum, Examples & Explanations: Contracts 508 (6 ed. 2013).
[2] Id.
[3] Id.
[4] Robert W. Lee, Mental Illness and the Right to Contract, LXXII Florida Bar Journal 48, 48 (1998), http://www.floridabar.org/divcom/jn/jnjournal01.nsf/Author/7519F243A30F12AA85256ADB005D6226 (last visited Apr 13, 2017).
[4] Blum, at 509.
[5] Id.
[6] Id.
[7] Attorney Richard Stim, Who Lacks the Capacity to Contract? www.nolo.com, http://www.nolo.com/legal-encyclopedia/lack-capacity-to-contract-32647.html (last visited Apr 13, 2017).
[7] Yates v. State, 171 S.W.3d 217 (Tex. App. 2005).
[8] Id.
[9] Id.
[10] Id.
[11] Id.
Tags: mental incapacity, unenforceable agreement, Yates v. State