ch. 7: contracts Flashcards
What is the capacity of minors in contracts?
Minors (infants) can only enter contracts for necessaries or beneficial service contracts.
How do insanity and drunkenness affect contract capacity?
A contract is voidable if a person was insane or drunk, had no understanding, and the other party knew or should have known.
What other groups have limited contract capacity?
Corporations, unions, enemy aliens, bankrupts, and Indigenous persons under the Indian Act.
What is the difference between an illegal contract and an illegal performance?
A contract performed illegally may still be enforced, while a contract formed illegally is void.
What is the role of intention in contracts?
Intention is required for a contract to be legally binding and is presumed in commercial agreements.
Who is considered a minor (infant) in contracts?
Anyone under the age of majority (varies by jurisdiction).
When is a minor bound by a contract?
Only for necessaries (e.g., food, clothing) and beneficial service contracts (e.g., apprenticeships).
Can a minor cancel a contract?
Yes, contracts are voidable by the minor but binding on the adult.
When can a minor ratify a contract?
Upon reaching the age of majority, either explicitly or by continuing to benefit from the contract.
Are parents liable for a minor’s contract?
Generally, no—unless they guaranteed the contract or it involved necessaries.
What must a person claiming insanity prove to void a contract?
they didn’t understand the transaction, and the other party knew or should have known.
How is drunkenness treated in contracts?
Like insanity—if a contract is made while intoxicated and the other party knew, it can be voided.
What contract limits apply to corporations?
Some corporations have restricted contracting powers based on their governing documents.
What contract restrictions apply to enemy aliens?
Contracts may be void or suspended during wartime if detrimental to Canada.
What are unions’ contract limitations?
They can only contract in relation to union activities.
How do contracts affect bankrupt individuals?
Their assets are controlled by a trustee, and they cannot serve as corporate directors.
What makes a contract illegal?
If it involves criminal activities (e.g., drug deals) or violates public policy (e.g., price-fixing).
What happens if a contract is performed illegally?
The court may void it, restore parties to their original position, or sever the illegal part.
Can an illegal contract be enforced?
Generally, no—except in cases where one party is innocent.
What are restrictive covenants?
Agreements that limit competition, often in employment or business sales.
What makes a restrictive covenant enforceable?
It must be reasonable in time and geographic scope; otherwise, it may be void.
When is intention presumed in contracts?
In commercial relationships, but not in social or domestic agreements.
What contracts must be in writing under the Statute of Frauds?
Contracts:
- Over one year
- For land transactions
- For guarantees
- In consideration of marriage
- By executors to pay a deceased’s debt from personal assets
How can writing be evidenced?
Through agreements, receipts, notes, or emails, even if created after the fact.
What is part performance in contract law?
When a party has partially performed a land contract, courts may waive the writing requirement.
