Please enable JavaScript.
Coggle requires JavaScript to display documents.
The Law of Contract (Contractual Capacity (Minors (The law prevents them…
The Law of Contract
Intention
To create legally binding relationship both parties must enter the contract with the intention to do so.
-
-
Contractual Capacity
An agreement can only be valid if the parties to the agreement have the capacity to enter contractual agreement.
Hall v Butterfield (1879) stated that minors, mental incompetents and drunkards are ‘considered devoid of free will, maturity of reason and judgement’. Convicts are a special case.
Minors
-
Exceptions (contract that will bind the minor as it is not considered that the minor is being taken advantage of when entering contract of this nature)
Contracts for necessaries (actual requirements, may be highly subjective and time dependent, Nash v Inman (1908))
Beneficial contracts of service (to gain education or necessary training, or contracts that enable minor to earn a living Chaplin v Leslie Frewin Publishers Ltd (1966))
Contracts considered valid unless repudiated :
• Lease on property
• Offering to buy shares
• Entering into partnership agreement
• Taking out an insurance policy
• A marriage settlement
Types of contracts that are always void for minors
• For the repayment of money lent/to be lent
• For goods supplied/to be supplied to minors other than necessaries
• All accounts stated with minors: bills, invoices, etc.
-
-
Convicts (Historically convicts were considered unable to enter into contracts. Criminal Law Act 1997 gave convicts full contractual rights, subject to limitations imposed by prison rules and regulations.)
Companies
Certain companies (designated activity companies, PLCs) have limited contractual capacity – only authorised to create contracts in accordance with the objectives of the company as stated in the Memorandum of Association. If such company created a contract outside of the objectives, it is classified ultra-vires and may be unenforceable.
-
Persons of unsound mind
Permanent mental incapacity: treated as minors, permitted to enter into contracts for necessaries and beneficial contracts of service
Contracts entered into by persons mentally incapacitated are considered valid unless those persons can demonstrate that
-
-
-