Contract Law

Chapter 5 Lecture Notes

Legality of Subject Matter and Contractual Capacity

            Chapter 5 is a short chapter concerning two fairly straightforward areas of contract law:  legality of the subject matter and contractual capacity.
            The Chapter Overview provides a short introduction to the material to be covered and indicates the most important points that will be discussed thereby focusing the student’s attention to the most crucial areas.
            Section — differentiates between those acts that are malum in se and those that are malum prohibitum.  For the most part, few students have any difficulty with these situations and it can be covered fairly quickly.
            Section C discusses contractual capacity and, again, this area generally provides few problems for the students.
            As with all of the chapters in the book, Chapter 5 includes a Chapter Summary and a section of Key Terms that correspond to the similar sections of the earlier chapters.
            The chapter provides five Exercise problems.  Question 1 requires the student to do come state-specific research into what his or her jurisdiction considers to be malum in se and malum prohibitum.   Question 2 is a thought question, asking the student to determine whether a person may be entitled to some remedy, even if the contract is deemed to be malum prohibitum.  Questions 3 and 4 present an opportunity for the student to discuss proving facts that are external to the written contract.  Question 5, based on a true factual situation, asks the student to argue for and against a particular proposition, highlighting questions of legality and morality as well as statutory regulation of certain areas of life.  This question could be used to create a “moot court” classroom exercise, with some students arguing each side and other students rendering the decision.
            The key area of interest in this chapter is the section of Cases for Analysis. Because the text material is fairly straightforward, the cases provide most of the real interest in this section.          
            The first case, First Colony Insurance Company v Alfred Kreppein, involves a person’s mental capacity with respect to his ability to change the beneficiary of his life insurance policy. The second case, Achee Holdings, LLC v. Silver Hill Financial, LLC, discusses usury.             
            The Suggested Case References introduce questions with respect to capacity and morality.  These cases can be read outside of class.
            The last section of the chapter, Ethical Considerations, discusses the problems associated with an attorney representing a client under a disability.