Ch5 FORMALITIES Flashcards
What is capacity?
Capacity is the ability for parties to enter into a contract without it being annulled (as affected by age, mental incapacity, or temporary incapacity)
What is the rule(s) regarding persons under 16 years of age in Scotland?
Age of Legal Capacity (Scotland) Act 1991.
-Persons under 16 are unable to contract.
-Two exceptions to this include:
1. When the contract entered into is a common, everyday transaction
2. When the terms of the contract are reasonable
Ie. a child buying candy in a candy shop for a pound (standard price for a piece of candy).
What is the rule regarding persons aged 16-17 years?
General rule: qualified acceptance.
Persons aged 16 acquire full capacity, unless the transaction entered into is a “prejudiced transaction”.
-This is only possible when:
(a) an adult would not have entered into the contract having exercised reasonable cautiousness
(b) there was substantial prejudice to the applicant
At what age does an individual acquire full legal capacity?
18 years of age.
To what extent does mental capacity influence legal capacity of persons?
Persons lacking mental capacity cannot enter into legally binding contracts.
Temporary lacking capacity (ie. psychosis) also unable to contract -> post episode are able to
In what other situations is capacity to contract restricted?
Inebriation. This is a high threshold where persons either drunk or under influence of drugs must be completely intoxicated to lose their ability to contract.
What is a formality?
The position wherein more requirements are needed for a contract to be brought into existence.
General principle states no special formalities needed for a valid contract, a contract formed w offer, consensus ad idem, acceptance.
Reasons for requiring formalities (and contradicting the general principle)?
Reasons requiring writing
- Illustrating the transaction is authentic. Did the person intend to be bound + create a contract?
- Establishing the identity of the parties. Clears up vagueness and uncertainty on identity of persons.
- Establishing importance of the transaction. This ensures persons do not enter contracts “on a whim”.
- Produces certainty. Written agreement can always be checked w unclear understanding of contractual terms + corresponding obligations.
5.Protects the parties. Protection of party should there be possibility of exploitation by “stronger” party.
What does the “Requirements of Writing Scotland Act 1995” aim to do?
It sets out general rules as to why formalities are needed.
-Is comprised of two main components: formal validity and evidential validity.
-FORMAL: contract has been concluded/executed w/i legal requirements.
-EVIDENTIAL: contract witnessed in its authentication and relied upon in court.
What are the requirements when there IS writing required under the 1995 Act?
- WRITING.
-Must be a written document
-May also be electronic if both parties agree to this - SIGNATURE
-May be full name, or forename, or abbreviation of name
-Offer + acceptance will not conventionally be on same page because of offer + amendment process. Only necessary to sign the final “clean acceptance” by both parties to have a contract - COUNTERPARTS
-xxx
The Requirements of Writing (Scotland) Act 1995 states writing is not needed for a contract (ie. can be oral). What are exceptions to this?
- When there are agreements on land and buildings-due to price of money relating to land that spend + commonality of transaction-.
- Obligations arising from gratuitous promises (ie. I will donate x to charity w/o expecting anything in return)
What are the effects when there is an absence of a written contract?
Biggest problem is action, or failure to act by one of the parties. This is under assumption that they are fulfilling their contractual obligations.
What criteria does a person relying formality (that is lacking) need to meet to satisfy their claim to enforce the agreement?
- Contract must fall w/i s.1(2)(a) of the 1995 Act and relate to the interest in land VS creation, transfer, extinction of interest in land itself.
- Party must showcase that they acted or refrained from acting due to the assumption they were contractually bound.
- The other party should have known the previous party was acting/failing to act due to presumption of contractual obligations
- Position of persons upholding contract should have been affected MATERIALLY + effect should also have been to a material extent…
What is evidential validity?
Evidential validity is when parties can have the contract validated through witnesses and relied upon in court. Contracts do not require to be witnessed for formal validity (when writing is required), but do require to be witnessed for evidential validity.
What is the presumption noted under evidential validity?
Persons signing the contract are parties to the contract, have ability to contract and are not limited by age or other extenuating circumstances like mental incapacity or temporary incapacity.
