On May 2, 2013, the D.C. Court of Appeals issued an en banc decision holding that a contract executed by a mentally incapacitated person is not inherently void, but rather only voidable at the election of the incapacitated person or her representatives. The ruling, which overturned an 1892 precedent, brings the District of Columbia in line with 40 other states in expanding the contracting rights of persons with mental disabilities. The Court recognized that archaic legal notions of mental incompetence – the view that, in the words of a 1901 Supreme Court decision, “a lunatic has no mind” – “have given way to a more nuanced understanding of mental capacity,” which recognizes that a person with diminished capacity still may be able to execute beneficial and enforceable contracts. The Court also noted that applying the modern rule would prevent others from taking advantage of a person’s mental disability by refusing to perform an otherwise fair deal; for example, an insurer could not refuse to provide coverage on the ground that the insured lacked capacity when she purchased the insurance. In short, as the Court held, the modern rule “better ‘protects’ mentally incapacitated persons by facilitating meaningful participation in society.”
The case arose out of a landlord-tenant dispute, in which an investor who purchased property at a tax sale sought to evict the tenants living there on the ground that the prior owner was incapacitated when she leased the property as a rental. Legal Aid submitted an amicus brief on behalf of Bread for the City, AARP Legal Counsel for the Elderly, University Legal Services, and the Washington Legal Clinic for the Homeless. The Blog of the Legal Times reported on the decision late last week.