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Contractual defects
To avoid, not to enforce ? (Incapacity to contract
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Contractual defects
To avoid, not to enforce ?
Incapacity to contract
- Capacity: is the legal power to give consent
- Person who may have no/limited capacity to create contract
Mental incapacity
- Judicially declared mentally incompetent: K is void
- Mentally incompetent but NOT judicially declared: K is voidable only if other pt knew of the problem, but enforceable for basic needs of life
Business corporation
- Chartered corporation: same capacity as person of full age and sound mind. If K created in breach of charter, K is valid and enforceable
- Statutory corporation: capacity to K is limited to powers listed in statue, if it act "ultra vires" i.e beyond the authority, K is invalid and unenforceable
Associations
- Often are unincorporated business org. (club, charities, religious, societies) that lack capacity. Some province have legislation to give contractual capability to association within limit (same as statutory corp)
- K with member of association: full burden and risk falls upon individuals. K not enforceable against other members
Indian band, Natives
- Iband: G of aboriginal Canadians living on land held for them by Crown. Have similar contractual capacity to corp: full capacity to create K, to sue or be sued
- Native persons (individual native Canadians) Full contractual capacity if living away from band area
Public authorities
- P.a act on behalf of a government has contractual capability
Intoxication
- K is voidable if: 1.too drunk to understand circumstance 2.pt B aware of extent of intoxication
- K must be avoided promptly once sober or will be considered affirmed
Minors
- ppl under the age of majority (18 or 19)
- K with minors is voidable if it is NOT for basic needs of life and it is avoided b4 reaching majority; must return the bnf if avoid K; voidable even if minor misre. their ages
- Minor's K is enforceable if: basic needs of life (edu, medicine), employment K (if beneficial to minor)
- Minor must choose soon after reaching majority e.g rent tv for 10 months, avoid after 2 months, can be sued for those 2 months, not 8 months left
- Can't avoid if K affirmed (e.g If there is substantial delay, court may say minor lose the right to avoid)
Type of K must be evidenced in writing
Writing requirement
- essential element e.g pt name, price, subject matter
- signature (interpreted broadly) e.g typing
- [misc] several docs may be pieced together
Guarantee
- A contractual promise by 3rd pt (guarantor) to satisfy debtor's obligation only if debtor fail to do so i.e guarantor does not promise to pay in any case
Sale of an interest in Land (chap 16)
- Land, not building, not repair to land
Contract not to be performed within 1 year
- If contract "could not possibly be performed" within 1 year then it must be in writing
- If contract could be performed within 1 year then no need
-
Effect of non-compliance
- K is unenforceable but not void
- Sufficient to transfer property (provide a defence;?can still keep down pmt)
- Neither pt can take action in court
Mistakes
Mistaken Identity (e.g giả danh famous ppl)
K is voidable if:
- Other pt knew of mistake at time of K, and
- Mistake was material to the mistaken pt
Mutual mistake about subject matter
- Both parties are mutually mistaken about the subject matter, the mistake were different (May vs Sep shipment)
- K is void
Common mistake about subject matter
- Both pt make the same mistake: subject matter ceased to exist before K created (e.g agree on goods that no longer exist)
- K is void
Document mistakenly signed
- Ppl should be bound by their signature unless there is unusual term with no reasonable opportunity to read or "non est factum"
- Non est factum: "this is not my deed", doc executed fundamentally different than expected (inapplicable if signer was careless) (e.g purchase share turn out to sale land)
- NEF is rare and difficult to prove, K is void
Frustration
- Frustrated K: when some external events make performance impossible after K was created (e.g goods destroyed by fire)
- Note that K is NOT frustrated just because it become more expensive / difficult to perform
- Doctrine of Frustration applies only if neither pt is responsible for the frustrating event
- Common Law rule
- Statutory rule: did buyer pay:
- Yes. Did buyer get bnf: a.yes (seller keep $); b.no. Did buyer incur cost: b1.yes (seller get compensations), b2.no (buyer get refund)
- No. Did buyer get bnf: no (seller get nothing, even if expenses incur) yes (seller get compensation
-
Illegal agreement
- Illegal to K for committing crime or tort
- Illegal to induce breaking of previous K
- K may be void
Misre.
- K induced by misre is voidable
-
Void
- Not a K from the start
- Reason: performance illegality / impossibility
- Not enforceable by either pt
- Remedy: court not assist
Voidable
- A valid K that can be rescinded (rescission), title transferred
- Reason: lack of consent in K
- Injured pt has right to rescind
- Plaintiff can claim damage
Common Law rule (all-or-nothing): if B receive no benefit, B can recover full price (if receive some benefit, can recover no price) if A incurred some expenses, A cannot recover cost