In re Marriage of Davis

Court of Appeals of Oregon · 2004 · Contracts

ContractsMental CompetencyStipulated Judgmentsmental competencycognitive testaffective teststipulated dissolution judgmentcontract capacity

Facts

Wife sought to set aside a stipulated dissolution judgment on the ground that she was not mentally competent when she agreed to it. The trial court identified two possible standards for competency in similar circumstances: the cognitive test and the affective test. The court applied the cognitive test and found wife competent. Wife appealed, contending that Oregon should adopt the broader affective test instead.

Issue

Did the trial court err by applying the cognitive test rather than the affective test to determine wife's mental competency to enter the stipulated dissolution judgment? If the cognitive test applies, was the finding of competency erroneous?

Rule

In Oregon, the test for mental competency in this context is the cognitive test: a person is competent if he or she has the capacity to understand the nature of the act and to apprehend its consequences. Although the affective test has been recognized elsewhere and may have appeared in some Oregon cases, the cognitive test appears to be the law of Oregon and lower courts are bound to follow it.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Portland, Elena Ruiz signed a settlement agreement resolving a business dispute with her former partner. She had been diagnosed with severe anxiety, and witnesses said she was trembling and crying during negotiations, but her lawyer testified that she correctly explained that the agreement transferred her ownership interest and would permanently end her claims.

If Elena later seeks to avoid the settlement on the ground of mental incompetence, which is the strongest basis for enforcing the agreement under Oregon law as described here?

Explanation. The governing Oregon test is the cognitive test, not the affective test. The relevant question is whether the person had the capacity to understand the nature of the act and to apprehend its consequences. Emotional distress, inability to act reasonably, or the other party's knowledge of that condition are not the controlling standard under the majority opinion.