Capacity Flashcards
What is capacity?
Law states parties who enter contracts must have legal capacity.
Parties must have ability to enter freely and make decisions.
If lack capacity, issue for person entering contract with that person as may not be able to enforce it.
What are the three examples of lacking capacity?
Contracts involving:
1. Those who lack mental capacity
2. Minors
3. Companies
Specific rules in place to govern the ability of persons who lack capacity.
The aim is not to restrict but to protect both parties.
What is s2(1) Mental Capacity Act 2005?
A person lacks capacity if at the material time, he is unable to make decision for himself in relation to matter because of impairment of, or disturbance in function of the mind or brain
What is S3(1) Mental Capacity Act 2005?
A person is unable to make decision if unable to understand information relevant to decision.
How does mental capacity affect validity?
S2(1) and S3(1) of the MCA 2005.
The broad scope of definition of MCA means impairment through drink and drugs - only if intoxication is evident to the other party at the time of making agreement.
If lack of mental capacity then contract is voidable.
Who are minors?
Anyone below the age of 18 in England and Wales.
All minors treated equally regarding issue of capacity.
Anyone to lack legal capacity to enter contract and is therefore subject to special rules.
Contracts of beneficial service (apprenticeships and employment) are enforceable against minors - considered to benefit the minors.
However if the benefit outweighs the benefit then it is not enforceable.
Contracts can be enforced against a minor when they turn 18 - unless they reflect the agreement within a reasonable time.
