Liability of Third Person for Minor's Contract.

The question arises whether parents are bound by the contract of their minor child. The question also arises whether a person cosigning a minor's contract is bound after the contract is avoided.

(a) Liability of Parent. Ordinarily a parent is not liable on a contract made by a minor child. The parent may be liable, however, if the child is acting as the agent of the parent in making the contract. Also, the parent is liable to a seller of necessaries for the reasonable value of the necessaries sup­plied by the seller to the child if the parent had deserted the child.

b) Liability of Cosigner. When the minor makes a contract, another person, such as a parent or a friend, may sign the contract along with the minor for the purpose of accommodating the minor by making the contract more attractive to the third person.

With respect to the other contracting party, the cosigner is bound independently of the minor. Consequently, when the minor avoids the con­tract the cosigner remains bound by the contract, if the debt to the creditor is actually paid, the obligation of the cosigner is discharged.

If the minor avoids a sales contract but does not return the goods, the cosigner remains liable for the purchase price.

Incompetents.

A person who is mentally deranged is generally called an incom­petent and lacks capacity to make a contract. The cause of the incapacity is immaterial. It may be the result of insanity, senile dementia, imbecility, the result of excessive use of drugs or alcohol, or it may be the result of a stroke.1 If the person is so mentally deranged as to be unable to understand that a contract is being made or the general nature of the contract, the person lacks contractual capacity.

An incompetent may have lucid intervals. If a contract is made dur­ing such an interval and is not affected by any delusion the contract is valid and binding.

(a) Effect of Incompetence. An incompetent person may ordinarily avoid a contract in the same manner as a minor. Upon the removal of the dis­ability, that is, upon becoming normal, the former incompetent person either can ratify or disaffirm the contract.

FACTS:

Chiara in Texas purchased furniture from Ellard. He sold some to a third person and moved the balance of it to New York. Chiara, who was of unsound mind, later brought an action to set aside the purchase from Ellard. The lattet claimed that Chiara must first return all of the property.

DECISON:

Judgment for Chiara. As to the property resold by him, he was only required to return so much of the proceeds of the sale as he still held. As to the furniture that he still owned, he was required to account for it. This would not re­quire the actual return of the property as it did not have any unique value and its return from New York would be expensive. It was sufficient that he pay the seller the value of the property that he had moved to New York as of the date of the sale. [Ellard v Chiara (Tex Civ App) 252 SW2d 991(1952)]

As in the case of minors, the other party to the contract has no right to disaffirm the contract merely because the incompetent has the right to do so.

(b) Appointment of Guardian. If a proper court appoints a guardian for the incompetent person, a contract made before that appointment may be ratified or disaffirmed by the guardian. If the incompetent person makes a contract after a guardian has been appointed, the contract is void and not merely voidable.