Contracts
by: Texas RioGrande Legal Aid - Austin
Q) Am I responsible for a contract signed by my underage child?
A) A minor can not legally make contracts. A contract made by a minor will not be enforced against that minor while the minor is under 18 years old Once a minor turns 18, he or she can either reject the contract or keep the contract. If the 18 year old agrees to keep the contract, it becomes valid. In most cases, contracts made by minors will not be enforceable against the minor's parents. A parent will only be responsible for the contract of a minor if the contract is made for necessities, for example, food or medical treatment.
Q) When is an oral contract legally binding?
A) An oral contract is usually as valid and enforceable as a written contract, unless there is a separate legal requirement that the contract be in writing. For example, the law requires that a contract for the sale of land be in writing to be enforceable. Another example is any contract that takes more than a year to complete, which also must be in writing. So, if you orally agree with your friend that you will sell him your car for $2,000, payable in four monthly installments, then you have made a legally binding contract. But if you orally agree with your friend to sell your farm to him for $10,000, then the agreement is not a legally enforceable contract because it is not in writing.
If you intend to make a contract, you should always put it in writing! Oral contracts are very hard to prove to a judge and are, therefore, very hard to enforce.
Q) What does it mean for me if I co-sign on a loan for a friend or relative?
A) Do not co-sign on a loan unless you can afford the loan payment! When you co-sign on a loan, you are just as responsible for the debt as the primary borrower. If the primary borrower does not make the required payments, then the lender will look to you to make the payments. If you do not make payments, then the lender may report bad credit information about you to the credit reporting agencies, refer the debt to a collection agency to attempt to collect from you, and even sue you to collect the debt.
Q) What can I do if I've changed my mind about a contract that I've signed?
A) If you have agreed to buy something that costs $25 or more, you can get out of the contract if it was made with a salesperson in your home or at any place other than the salesperson's normal place of business. To cancel, you must give a written notice of cancellation within 3 business days of when the contract was signed. The salesperson must return your money within 10 days. You must be willing to turn the product over to the salesperson if the contract was for the sale of goods. If the salesperson does not pick up the product within 20 days of the date of cancellation, you may either keep it or throw it away. You can also cancel a mortgage or home equity loan within three days of signing the contract. You must cancel this contract in writing also.
Q) What should I do if a salesperson wants me to sign a contract that has blank spaces that he or she says will be filled in later?
A) Never, ever, sign a contract that contains blanks! If the spaces in the money sections aren't filled in before you sign, you have no way of knowing the total amount you will really have to pay. If the seller fills those spaces in later with numbers that are higher than what you agreed to, then you may be stuck with an expensive contract. Read the contract carefully and don't sign if it contains any blanks.
Q) What should I do if the salesperson tells me something different that what the contract he or she is asking me to sign says?
A) You should insist that the salesperson include all of his or her promises in the written contract, or don't sign the contract! Spoken promises made by a salesperson when you are signing a contract are generally not enforced, and are very difficult to prove in court. For example, a salesperson may tell you that the interest rate will go down after you have made twelve on-time payments. If the written contract doesn't say this, then it is not part of the contract and is not enforced in court.
When you have a dispute about a contract, the written contract will be the best proof of what you agreed to. The promises of a salesperson that don't agree with what the written contract says will generally not be admissible in court. Never rely on spoken promises when you are signing a written contract!
Q) If my father passes away and his will designates me as an independent executor, am I personally responsible for paying his car loan?
A) No. Generally you are not responsible for the contractual obligation of another. If you accept the appointment as executor, your responsibility is to fulfill the terms of the will and you are not personally responsible for the debts of the estate.
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