Replacing precedent dating back to 1892, the District of Columbia Court of Appeals ruled [5/2/13] that contracts entered into with mentally incapacitated individuals will no longer be considered automatically void.
Under the new standard, those contracts will be voidable, as opposed to inherently void. According to the ruling, a contract will be binding unless the incapacitated person or someone approved to act on his or her behalf takes steps to cancel it. If an incapacitated person or the representative does want to cancel a contract, they can only do so if it would be fair to the parties involved.
Judge Anna Blackburne-Rigsby, writing for the court, said the new standard, which is used in the majority of jurisdictions in the United States, "better comports with modern contract law and modern understandings of mental illness."
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Court Strikes 1892 Case Law on Contracts with Mentally Ill