Quiz 13: Consideration

Business

Intoxication: This question relates to the capacity to enter into a contract. If Kira can prove that she was sufficiently intoxicated to remove her capacity to enter into a contract, the contract may be voidable at the option of the intoxicated person even if the intoxication was voluntary. Additionally in order for Kira to prove her lack of capacity, she must show that her ability to reason was so severely compromised that she did not comprehend the legal consequences of the contract. Hence Kira was right in her assertion that the contract was voidable at her option due to intoxication.

In light of the case, Ms. B could enter into a contract with an exculpatory clause but since she is a minor, she has the right to disaffirm it anytime. If a contract is not prohibited by law for the minor, they can enter into the contract. The primary requirement for a contract to be enforceable is having a capacity to contract. This means a contract can be questionable when dealing with minor because a minor has less capacity to understand or question about the contractual rights. Also, the minor has the right to avoid the contract by showing the intention not to be bound by it and disaffirming it. In the case, even if Ms. B enters into a contract with an exculpatory clause, she has the right to avoid it by disaffirming it.

Covenants not to compete: Contracts that restrain trade are usually illegal and unenforceable. The exception to this rule includes an agreement not to compete that is standard in certain business contracts where some fair protection is appropriate. This covenant must meet the criteria of reasonableness in terms of time and areas to be legally enforceable. Unless the covenant meets the criteria it will be deemed excessive and thereby unenforceable. This covenant for non-competition is completely separate from any additional contract between Lux and the Chef, so any decisions regarding the enforceability will not impact alternate contracts. The area restriction may be reasonable for an international chef, however because it is specific to the tri-state area it may be found unreasonable if the chef's employability is limited to that area for specific reasons. Hence the enforceability of the covenant relies on its reasonableness. If it is found to be unreasonable the court may reform the covenant, making its terms reasonable for protecting Hotel Lux's normal customer market area. Or, the court may determine the covenant completely enforceable or unenforceable depending upon the arguments for reasonableness.

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