[Anonymous]

If a person is mentally not competent is the contract void or voidable? I have multiple sets of notes that say different things. Ninja says if a person is not competent to enter into a contract it is voidable.

Also a contract is voidable due to insanity a Holder in due course wins but if the maker is not competent to enter into a contract it is a real defense and wins vs. a HDC. Aren’t this basically the same thing?

[zombiecpa]

I think VOID means “contract cant be performed”. Voidable means “contract may be cancelled at party's choice” (undue influence and duress, the “victim” can decide to perform even she/he was forced into that contract)

FAR 85
AUD 83
BEC 76
REG 90

[Topsya]

If there is a court order that the person is mentally unstable, then the contract is void. Otherwise -its voidable

Im not sure I understand a second part of the question…..

AUD - 90
FAR - 83
BEC - 81
REG - 80
ETHICS - 100

[Anonymous]

So Topsy if the person was drunk it is voidable but if a court declared them mentally incompetent the contract is void.

[Topsya]

yes. there is HAS TO BE some kind of a court order. It will be mention in the question

About the drunks:

if person who signed the contract was drunk to an extent he did not realize what he was doing – the contract is voidable (meaning its up to him to either cancel or not)

of person was drunk but was able to realize what he was doing – it's a valid contract. No getting out of it

AUD - 90
FAR - 83
BEC - 81
REG - 80
ETHICS - 100

[Author]

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