Legal Question in Business Law in California

Re: cosignature

A diagnosis of Alzheimer's disease does not, by itself, render a person incompetent to make a contract.

The law, both courts and the legislature, are reluctant to take away a person's independence. It usually requires a clear showing by strong medical evidence that a person is incompetent before that person's power to form contracts will be taken away and/or his or her contracts declared invalid.

For example, Civil Code section 38 says "A person entirely without understanding has no power make a contract of any kind, but the person is liable for the reasonable value of things furnished to the person necessary for the support of the person or the person's family." The important words here are "entirely without understanding...." A person would almost have to be a vegetable to be entirely without understanding.

With respect to a particular contract, a judge will usually also look at whether the contract is beneficial to the possibly-incompetent person, and whether there is evidence of undue influence, fraud or other forms of elder abuse. These are related issues and may bear upon a finding of incompetence or may themselves be independent reasons to invalidate the contract.

Many, probably most, Alzheimer's patients are of sufficiently sound mind to make contracts and wills.

Re: cosignature

A diagnosis of Alzheimer's disease does not, by itself, render a person incompetent to make a contract.

The law, both courts and the legislature, are reluctant to take away a person's independence. It usually requires a clear showing by strong medical evidence that a person is incompetent before that person's power to form contracts will be taken away and/or his or her contracts declared invalid.

For example, Civil Code section 38 says "A person entirely without understanding has no power make a contract of any kind, but the person is liable for the reasonable value of things furnished to the person necessary for the support of the person or the person's family." The important words here are "entirely without understanding...." A person would almost have to be a vegetable to be entirely without understanding.

With respect to a particular contract, a judge will usually also look at whether the contract is beneficial to the possibly-incompetent person, and whether there is evidence of undue influence, fraud or other forms of elder abuse. These are related issues and may bear upon a finding of incompetence or may themselves be independent reasons to invalidate the contract.

Many, probably most, Alzheimer's patients are of sufficiently sound mind to make contracts and wills.

Re: cosignature

To be determined on a case by case, fact by fact basis, if there is a dispute. Common sense says don't enter such contract from either side without proper preparation. The impaired person could easily invalidate the contract after the fact. Someone taking advantage of the impaired person would be subject to penalties.