The Value of Care- Calvins Coin Collection and the Complications of His Medical Recovery

The Value of Care- Calvins Coin Collection and the Complications of His Medical Recovery

People with limited mental capacity can enter into contracts, but the validity of such agreements depends on their level of mental incapacitation. Based on one’s degree of mental incapacitation, associated contracts can be valid, voidable, or void (Kubasek et al., 2021). For instance, a person experiencing delusions that impair their judgment can enter a contractual agreement. Still, the validity of such a contract depends on the extent of their mental incapacitation.  Suppose the delusions do not prevent them from understanding they are in a contract and the obligations thereof, then the contract is valid. However, if the delusions prevent them from understanding a contract or the accompanying obligations, then such a contract is voidable. If a person is ruled insane, any contractual agreements they enter are void.

Based on these factors, Calvin’s contract with Billy was valid. Calvin clearly understood that he agreed to a contract and the resultant obligations. Calvin permitted Billy to sell the coins at $40,000 and $50,000, deduct a 5% commission, and remit the rest. Billy played his part as agreed.

There are three tests used to determine one’s mental capacity to enter a contract in the US. They include cognitive tests, motivational tests, and affective tests (Kubasek et al., 2021). If the person entering a contract passes the three tests when signing the agreement, the deal is valid and cannot be overturned. Calvin passed the cognitive test, having understood that he was entering a contract and the resultant consequences. On the other hand, the affective test concerns one party understanding a contract and acting in a manner that disfranchises another party that cannot reason effectively (Kubasek et al., 2021). The effective test validates the contract since Billy and Calvin understood the contract fully. Finally, the motivational test validates the contact. A motivational test enquires whether the person entering a contract understands the pros and cons of the agreement (Kubasek et al., 2021). Clearly, Calvin understood the potential to sell his coins for a higher price but chose to have them sold at $40,000.

Exerting Undue Influence

Undue influence, coercion, and fraud are distinct factors when considering avoidance of a contract and do not require proof of mental illness. A person with mental illness entering an agreement is vulnerable to misinterpretations based on outside influence (Brucken et al., 1959). Therefore, courts allow an argument for avoiding a contract based on undue influence. Even though one’s degree of mental illness does not warrant avoidance of a contract, one could be mentally weak and may succumb to undue influence.

Billy exerted undue influence over Calvin to have him sell his coins at $40,000. Undue influence refers to relationships where one party in an agreement uses their dominancy to influence another party to make certain decisions unfairly (Brucken et al., 1959). Calvin was initially unwilling to sell his coins for anything less than $100,000. However, Billy took advantage of his access to information to pressure Calvin. Besides, Billy knew Calvin was desperate to settle his hospital bills, hence unduly influenced him.

In conclusion, Calvin has a case to avoid his contract agreement with Billy. The potential grounds for setting aside the deal, in this case, are mental incapacity and undue influence. However, mental illness could not stand since Calvin knew he was entering into a contract and understood his obligations. Nonetheless, the contract can be set aside based on undue influence.

References

Brucken, R. M., Genger, D. L., Rice, D. T., Shaevsky, M., Slye, W. R., & Volpe, R. P. (1959). Mental Illness and the Law of Contracts. Michigan Law Review, 57(7), 1020. https://doi.org/10.2307/1286299

Kubasek, N. K., M Neil Browne, Herron, D. J., Dhooge, L. J., & Barkacs, L. L. (2021). Dynamic business law: the essentials. Mcgraw-Hill Education.

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Instructions
Contract Scenario
Calvin had been an avid coin collector for many years, and the most valuable coin in his collection was an uncirculated, mint condition, 1943 Lincoln penny made of copper (most pennies made during World War II were made of zinc because copper was needed in the war effort). That penny had a value of between $60,000 and $95,000.

The Value of Care- Calvins Coin Collection and the Complications of His Medical Recovery

In August 2017, Calvin had a serious stroke that left him unable to speak or walk, but his doctor assured his family that Calvin would recover over time with intensive therapy.
Calvin was a widower and did not have any children, but he had several nephews who visited him from time to time as he recovered. None of the nephews had any real interest in Calvin’s coin collection. One of Calvin’s nephews, Billy, who visited Calvin more often than the other nephews, sometimes listened to Calvin talk (talking was a part of Calvin’s therapy) about his mounting medical bills and his coin collection, but Billy never showed much interest in the medical bills or the coin collection.
In October, as Calvin’s recovery progressed slowly, Billy visited Calvin and told Calvin that he had been reading about coin collecting, and he realized that Calvin’s collection, especially the 1943 Lincoln copper penny, was valuable, and Billy suggested that Calvin should consider selling the 1943 Lincoln copper penny and use the proceeds to pay his medical bills. Calvin resisted the idea at first, but Billy continued to urge Calvin to sell the penny so that he would not have to worry about the medical bills. Finally, when Billy told Calvin that he would arrange the sale of the penny for a commission of just 5% of the sale price of the penny, Calvin began to think that selling the coin might be a good idea. He was still a little confused about how the sale would work and what Billy would do to make sure that the penny would be sold for the best price. Calvin told Billy that he thought that the penny was worth almost $100,000, but Billy assured Calvin that the market had changed recently, and that the penny was now worth $40,000 to $45,000. Eventually, Calvin allowed Billy to sell the penny for the best price he could get and to take a 5% commission for arranging the sale of the penny. Billy then sold the penny to a friend for $40,000, took his 5% commission, and paid the remainder of the sale price to Calvin.
A few months later, as Calvin continued to recover, he read a story in a coin collecting magazine about how an uncirculated, mint condition, 1943 Lincoln penny made of copper had just sold at auction for more than $100,000, and Calvin began to wonder if Billy had taken advantage of him. Calvin consulted a lawyer and asked the two questions below.
• Did he (Calvin) have the mental capacity to enter into the contract when he agreed to let Billy sell the penny? What would he (Calvin) have to prove to show a court that he did not have the necessary mental capacity when he authorized Billy to sell the penny?
• Did Billy exert undue influence over Calvin to cause Calvin to enter into the contract that allowed Billy to sell the penny?
What do you think? Does Calvin have a case to set aside the contract with Billy on either of these theories?
Your case study should be at least two pages in length and include at least two outside sources. Be sure to use APA formatting for all citations and references.