Chapter 8 – Capacity
8.5 The Sword and Shield Doctrine
Throughout the Chapter, we’ve explored ways a person with limited competency can seek to avoid unwanted contracts. As stated previously, the purpose of allowing disaffirmance in these cases is to protect people with limited competency from being taken advantage of, much like a “shield.”
The sword and shield doctrine is a legal principle that pertains to the use of a contract’s terms as both a sword to enforce the contract and a shield to defend against claims under the contract. The “sword” aspect of the doctrine refers to the use of a contract’s terms by a party seeking to enforce the contract. This means that a party can use the terms of the contract to compel the other party to perform their obligations under the contract. The “shield” aspect of the doctrine, on the other hand, refers to the use of a contract’s terms as a defense against claims under the contract. This means that a party can use the terms of the contract to defend against claims made by the other party under the contract.
In cases of capacity, the sword and shield doctrine can be used to protect the interests of parties who lack contractual capacity, such as minors or individuals with mental disabilities.
The shield aspect of the doctrine can be used to defend against claims under a contract made by a party who lacks contractual capacity. For example, if a minor enters into a contract to purchase a car and the car is defective, the minor can use the shield aspect of the doctrine to defend against the seller’s claim for payment by arguing that they lacked contractual capacity to enter into the contract and are therefore not bound by its terms. This is possible even if the minor would seek to keep the car if it were not defective, thus minority is a shield.
The sword aspect of the doctrine can also be used by a party who lacks contractual capacity to enforce the terms of a contract that are beneficial to them. For example, if a minor enters into a contract to sell their artwork, and the buyer fails to make payment as required by the contract, the minor can use the sword aspect of the doctrine to compel the buyer to make payment as required by the contract.
At the same time, a sword has two sides, and some courts have reviewed attempts to disaffirm contracts through this doctrine, finding in some cases that the person with limited competency is using their right to disaffirm to achieve an unfair advantage over a competent adult in a contract. For example, suppose a 16-year-old minor signs a contract with an adult to buy a car. The minor then decides to disaffirm the contract having already driven the car for several months and causing damage to it. The adult may ask the court to review the circumstance of the disaffirmance to see if the minor is unfairly using this right to avoid paying for the damages they caused to the car while they were using it.
In such cases, the court may review the circumstances surrounding the disaffirmance to determine if the minor is attempting to take advantage of the adult (using disaffirmance as a sword) or if they have a legitimate reason to avoid the contract (a shield). If the court finds that the person with limited competence is unfairly using the ability to disaffirm, the court could rule in favor of the adult and hold the minor responsible for any damages they caused under the contract.
In general, the sword and shield doctrine is meant to balance the interests of parties in contractual dealings and ensure that both parties are held to the same standard of performance. However, in cases where one party lacks contractual capacity, the doctrine must be applied in a way that considers the particular circumstances of that party and their intentions in disaffirming a contract.
Activity 8D
What’s your Verdict?
Video games are popular, as are in-app purchases within them. Should minors be able to disaffirm in-app video game purchases? Does it matter if the funding for the purchase originated from the minor’s own money, or from the parent? Explain your position using the information discussed in this Chapter.
a determination by a court that a person has the capacity to manage some but not all of his activities
to take action to void a voidable contract
a legal principle that pertains to the use of a contract's terms as both a sword to enforce the contract and a shield to defend against claims under the contract
the legal ability of an individual or entity to enter into a binding contract and be held legally responsible for their actions and obligations under that contract
someone under legal age, which is generally 18, except for certain purposes such as drinking alcoholic beverages