CH 7 - Legality, Capacity & Intention

Question 1

Capacity

Answer 1

Contracting parties must have the capacity to
contract
* Lawmakers recognize that some people are more
vulnerable and receive special protection
* Protections include having the ability to contract
limited or eliminated completely in some cases

Question 2

Minors/Infants

Answer 2

Minors (or infants): under age of majority, are not
bound by their agreements
– Age of majority varies with provinces
* Adults bound when contracting with minors
– Voidable by minor
* Online jurisdictional issues regarding age
– Online contracts should include restrictions

Question 3

Necessaries and Beneficial Contracts of
Service

Answer 3

Minors are bound by contracts (except in BC)
– For the acquisition of necessaries
– Contracts of employment
* There is an obligation to repay a loan used for
necessaries
– Only if the funds advanced are actually used for
necessaries
* Contracts of employment for service are binding

Question 4

Insanity and Drunkenness

Answer 4

nsanity:
– No understanding of the nature of the transaction
– Person claiming insanity has onus to prove it
– Other person knew or ought to have known of insanity
* Drunk
– Treated like insanity
* Weakened intellect
– Unconscionable transaction

Question 5

Contracts Performed Illegally

Answer 5

Agreements must be legal and not contrary to
public interest
* Distinguish between illegality as to formation of
the contract (the contract itself is illegal) and
illegality as to performance (the contract is
performed in an illegal way)

Question 6

Contracts Performed Illegally pt 2

Answer 6

• If contract is performed illegally or against public
  policy, the Court may order
  – Contract is void and restore parties to their original
  positions
  – Enforcement, if violation is procedural and not
  substantive