Capacity to Contract Flashcards
What are the persons that can rise capacity issues?
Minors
Intoxicated people
Married Women
People who lack mental capacity
Companies
Contracts with minors can be divided into what categories?
a) Contracts for necessary goods and services;
b) Beneficial contracts of service;
c) Contracts which are voidable by the minor;
d) Contracts which are subject to the INFANTS RELIEF ACT, 1874.
Current age of majority? Statute!
Section 2 of the “Age of Majority Act, 1985” reduced the age of majority from 21 years to 18 years old.
CATEGORIES OF CONTRACTS WITH MINORS
a) Contracts for necessary goods and services:
- It is binding on both seller and minor. Court recognizes everyone has necessities which need to be met!
- Section 2 of the “Sale of Goods Act, 1893” defines necessities as “goods necessity to the condition in life of such infant”
- Issues arise when it comes to distinguishing of a real necessity and a mere luxury for the infant/minor.
- Nash v. Inman (11 fancy waistcoats were deemed to be a luxury, not necessary goods. Therefore, contract was not enforceable against the minor)
- Nash v. Inman: In this particular case the High Court of England and Wales concluded that the seller must know if the good is actually necessary to the minor… But how can one know for sure? Decision was criticized.
- LAW REFORM COMMISSION IN ITS REPORT ON CONTRACTS WITH MINORS 1985 noted that certain categories have generally been considered to be contracts necessaries:
- Contracts for food and drink, medical aid, transport, clothes and the like*
- Law Reform Commision also noted in its report that a contract for necessary goods and services will depend on particular circumstances of the minor, including:
• His financial position;
• The use to which the goods will be put.
- Soon v. Wilson (books for school was deemed a necessity)
CATEGORIES OF CONTRACTS WITH MINORS
a) Contracts for necessary goods and services:
- Soon v. Wilson
b) Beneficial Contract of Service:
- A contract which objectively benefits the minor will be enforceable by him and against him.
- CHAPLIN v LESLIE FREWEN (positive)
- Profom Sports Management v. Proactive Sports Management (negative)
CATEGORIES OF CONTRACTS WITH MINORS
3) Contracts which are voidable by the minor/infant:
- On reaching the majority age, he must take reasonable and positive steps to communicate to the other party his desire to not be bound by the contract if that’s the case!
CATEGORIES OF CONTRACTS WITH MINORS
The infants relief act, 1874.
- If a contract does not fall within one of the categories mentioned before, it is not enforceable according to Section 2 of the Act.
PERSONS WHO LACK MENTAL CAPACITY
- Old age, mental illness or some form of intellectual disability.
- Imperial Loan Co v. Stone
(it must only be established that the person should have known of the vulnerability of the other party)
MARRIED WOMEN:
Section 2 of the Married Women’s Status Act 1957 deemed women capable of contracting.
- Not regarded as distinct people before.
COMPANIES
Companies were not deemed to be distinct people before.
INTOXICATED PEOPLE
- Contract for necessities: deemed enforceable even if the seller knew of the intoxicated state of the other party.
- Contract for non-necessaries: deemed enforceable UNLESS the intoxicated party can prove that the seller was fully aware of his state at the time of entrance into the contract!
