Capacity Flashcards
General rule on capacity?
If a person (Person A) does not have capacity to enter into a contract, then a contract with Person A is unlikely to bind them.
Who can give capacity?
- over 18
- have sound mind
- not suffering from a factor ruling out capacity (eg drunkness)
What is the general rule to under 18s?
Not bound - even if other party doesn’t know this/ minor lied about age
What are the 2 exceptions to minors?
1) necessaries
2) contracts of employment, apprenticeship or education
Is a minor bound by a contract to supply necessaries to them if the contract is for their benefit ?
Yes - minor must pay a ‘reasonable price’ for these rather than the actual cost of the ‘necessaries’ supplied.
‘necessaries’ = goods suitable to the condition in life of the minor + to their actual requirements at the time of the sale and delivery.
What was held in Nash v Inman?
waistcoats supplied to a minor who was an undergraduate at Cambridge University at the time were suitable according to the minor’s station in life (!) but not necessary as he already had sufficient clothing.
contract = not enforceable.
When is a minor bound by a contract of employment, apprenticeship or education (or analogous contract)?
When it is for their benefit
Can a minor enforce it against the other party (even without an exception)?
Yes
If a minor ratifies a contract once they reach the age of 18, will the contract be binding on them?
Yes
Does a person without capacity still remain liable to pay a reasonable price for ‘necessaries’?
Yes
What will the person need to establish in order to rebut a binding contract on the case of incapacity?
1) they did not understand what they were doing and,
2) that the other party knew that to be the case
What does capacity to contract mean?
The ability of a person to enter a binding contract.
