lecture three Flashcards
(24 cards)
capacity
mental ability to enter into legally binding obligations
Under the Age of Legal Capacity (Scotland) Act 1991:
- Under 16: No legal capacity to enter into transactions, with exceptions (s.1(a)).
- 16 and over: Full legal capacity to enter transactions (s.1(b)).
- Exceptions: Under 16 can enter certain transactions common for their age and reasonable (s.2).
- ‘Young person’: A person aged 16 or 17.
insanity
John Loudon & Co v Elder’s Curator Bonis 1923 S.L.T. 226; per Lord Blackburn at 227,
intoxication
Taylor v Provan
what happens in the absence of capacity?
Where at least one of the parties to the purported contract lacked capacity to enter into it at the time it was purportedly entered into, the contract will be void.
McBryde on Contract, Ch 3
four criteria
The court assesses this intention using Lord Hodge’s four criteria from Morgan Utilities v Scottish Water Solutions [2011]:
* Did the parties intend to be bound immediately?
* What would reasonable parties understand from their actions and words?
* Consider post-agreement behavior for context.
* Take a neutral approach in the assessment.
family arrangements
Family arrangements: Presumed no intention to create legally binding obligations (Balfour v Balfour 1919, Atkin LJ).
social arrangements
Social arrangements: Presumed no intention to create binding obligations (Robertson v Anderson 2003).
commercial arrangements
Commercial arrangements: Presumed intention to create binding obligations, whether both parties are acting in business or only one is (Carlyle v Royal Bank of Scotland 2015).
why do the terms need to be clear?
“Vague general understandings cannot be enforced”. (Gloag, Contract, p11).
Pre requisites to contracts
- Impossible
- Illegal
- Capacity
- Intention to create legal obligations
- obligations not indeterminate
general rules
General rule: no particular formalities required for creation of a contract
s1(1) of the Requirements of Writing (Scotland) Act 1995.
which contracts must be written?
Under the Requirements of Writing (Scotland) Act 1995, certain contracts (concluded after 1 August 1995) must be in writing and signed by the parties, including:
* Contracts or unilateral obligations involving land (creation, transfer, variation, or extinction of an interest).
* Gratuitous unilateral obligations.
- What is personal bar under ROWSA 1995?
Personal bar can prevent a party from denying a contract’s validity if certain conditions are met, even if it should be in writing.
What conditions must be met for personal bar?
- Party A relied on the contract (s1(3)).
- Party A was materially affected by this reliance (s1(4)(a)).
- Party A would suffer if Party B withdraws (s1(4)(b)).
- Party B knew of Party A’s reliance (s1(3)).
What are the consequences of personal bar?
- Party B cannot withdraw.
- The contract remains valid despite missing written formalities.
Does personal bar apply to all contracts?
It only applies to valid agreements, where the only issue is lack of written formalities.
who does personal bar apply to?
The Advice Centre for Mortgages v McNicoll 2006 S.L.T. 591 – personal bar only applies to original parties, not to successors
when does personal bar not apply?
Gray v MacNeil’s Executor [2017] SAC (Civ) 9 – no personal bar, but personal rights granted
Aisling Developments Ltd v Persimmon Homes Ltd 2009 S.L.T. 494 – key terms not finalised, so no personal bar even though acting in reliance on “contract”
What is execution in counterpart?
Execution in counterpart, recognized in Smith v Duke of Gordon (1701), is formalized by the Legal Writings (Counterparts and Delivery) (Scotland) Act 2015.
What does s1(1) of the Act say?
A document may be executed in counterpart.
When does a counterpart document become effective?
It becomes effective once delivered and all legal steps are completed (s1(5)).
How can traditional documents be delivered?
Delivery can be by electronic means (e.g., email, fax), if agreed by the parties or reasonable in the circumstances (s4).
Does this apply only to counterpart documents?
No, it applies to all traditional documents, not just counterparts.
