Disaffirmance

To create a contract, offer acceptance, mutual consent, and consideration should be satisfied.

If the parties involved in a contract lack the maturity and experience to protect their interest, the law grants them the right to protect themselves from cheating.

Disaffirmance is used for contractual capacity, which states that any person or party involved in an agreement should understand the meaning of the terms. 

Such platforms provide capacity rights to people who are underage or minors or mentally incapacitated or intoxicated. 

People who lack capacity are offered necessaries and non-necessaries protection where they need to pay only the fair market value rather than the contracted price of any product in the market.

• Disaffirmance allows a minor to forgo a contract at any point unless ratified, or in some cases, the minor has to pay the damages or depreciation or need to restore the product and pay back the losses.  

• It provides consideration to both parties. Minors can disaffirm a contract for non-necessaries and disaffirm for a reasonable length of time until they reach the majority.

• But once they achieve the majority, the power to disaffirm is immediately cut off.  

• To avoid a contract, one should manifest the intention of not being bound by it. 

• The intent should be to avoid the contract, which words or actions can manifest. 

• Disaffirmance should be done on time, and when a minor disaffirms a contract, the property they have transferred can be recovered, even if it is transferred to a 3rd party.

For example – If a minor opened a stock account with a broker firm and transferred it to defendants, who accepted it by paying the debt amount to the firm.

The defendants keep these shares as a security for the unpaid balance from the minor, who continued to buy and sell stocks until the account was closed.

The minor can also disaffirm the entire transaction, claiming the interest gained on his transactions.  

Its regulations differ from ratification, where a contract is confirmed after the minor turns 18 and is no longer an infant.

The contract can be created through words or actions, and if the minor purchases, he has to pay the reasonable value.