Brief Fact Summary. Grace Ortelere, wife of Plaintiff Mr. Ortelere, elected to take the maximum retirement benefits during her lifetime, leaving Plaintiff, who quit his job to care for Mrs. Ortelere until her death, with no benefits beyond her death. Plaintiff sought to have his wife’s election voided on the ground of mental incompetence.
Synopsis of Rule of Law. A person entering into a contract by reason of mental illness incurs only voidable contractual duties provided he cannot act in a reasonable manner and the other party had reason to know of his condition.
Contracts of a mentally incompetent person who has not been adjudicated insane are voidable.View Full Point of Law
Issue. Was Grace Ortelere mentally incompetent, rendering her unable to legally make the election she did?
Held. Yes. The general rule is that a person who enters into a contract by reason of mental illness incurs only voidable contractual duties provided that she is unable to act reasonably, and the other party had reason to know of the condition. Here, Mrs. Ortelere’s psychiatrist testified that a victim of involutional melancholia cannot think rationally and make decisions. Defendant either knew or should have known about Mrs. Ortelere’s condition. Hence, her election is voidable.
Dissent. The record indicates that Grace Ortelere indeed could think rationally and had the capacity to contract.
Discussion. The mental incompetence of a contracting party renders the contract voidable for that party, provided the other party knew or should have known of the incompetence.