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Competent Parties

DEFINITION

Party that is legally capable of entering into a contract.

EXPLANATION

An enforceable contract requires all parties entering into a contract to be competent and have the legal capacity to do so. Contracts are enforceable unless a party can prove that he or she was incompetent at the time of the contract’s execution.

With few exceptions, adults are considered competent parties. This includes:

Currently incarcerated individuals

Formerly incarcerated individuals

Alien citizens

Currently and formerly incarcerated individuals maintain real property rights. Those who are incarcerated can even acquire or convey property while in jail.

Examples of legally incompetent parties include:

Minors

Mentally incapacitated

Under the influence

California law assumes that a minor does not have the legal capacity or experience to engage in real estate transactions. In the event that a minor does enter into such a contract, his or her minor status make it unenforceable.

The exception to this rule is an emancipated minor. An emancipated minor is an individual under the age of eighteen who is no longer a dependent of a parent or legal guardian, and thus, has the legal authority to make decisions for themselves.

In the event that a mentally incapacitated person needs to refinance their mortgage or buy or sell property, he or she must do so under the discretion of the courts. A person who executes a contract while under the influence of substances can void that contract.

The components of a valid contract are:

Offer

Acceptance

Consideration

Competent parties

Mutual consent

Goals of contract are legal

A contract must have all of these components in order to be enforceable. If a component is missing, the contract is incomplete and therefore, void.

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