Chapter 10 Contractual Defects Flashcards
Capacity
Legal power to give consent
Age of majority
Age when person is held fully accountable by law
In Alberta: 18 years old
Voidable (contracts)
Minor is entitled to avoid legal obligations that would’ve otherwise been created
Exceptions to voidable contracts
- minor carries out contract
- substantial delay in voiding contract
Mental incapacity
Lack capacity due to challenges with comprehension
When is contract with intoxicated person voidable
- person was be intoxicated to the extent that they could not have known what they were doing
- other party must have been alerted to fact of persons intoxication
Business corporations
Treated as legal persons under law
Chartered corporation
Treated as persons who have reached the age of majority
Statutory corporation
Have limited contractual capacity imposed by legislation
Association
Unincorporated business organization-private club, charities, and religious societies
- incapable of forming a contract (unless legislation says otherwise)
- > individuals in association cannot form contracts on behalf of association
Indian bands
Body of aboriginal people whose land and money are help by the crown
-possess contractual capacity
Exception: land cannot be used (as security or transferred) without crown’s consent
Public authorities
Individual who has contractual capacity on behalf of the government
Exception: must be consistent with division of powers
Guarantees
Contractual promise made by a third party (known as the guarantor)
Indemnity
Unconditional promise to assume another debtor’s debt completely
Statue of frauds
Meant to avoid fraud via fabricated oral contracts
Memorandum
Needed to provide evidence that contract exists if contract is not in writing
Requirements:
- provide evidence essential to contract (parties names, subject matter of agreement, price)
- signed by party against whom the agreement is being enforced
Doctrine of frustration. Frustrated (contract)
Some event makes performance impossible/ radically undermines contracts very purpose
Instances when contract is not frustrated
- contract has become more expensive
- contract has become more difficult to perform
Non est factum
“This is not my deed”
A mistaken party may avoid obligations under the contract is there is a fundamental/total difference between what a person signed and what they thought they were signing
Cannot invoke if party did not take steps to understand contract
Unfair bargaining
Disadvantaged party is pressured into agreement/placed in an unfair position during bargain process
Duress of person
Physical violence/ threat of violence against a persons loved one
Duress of goods
One person seizes/threatens to seize another’s goods to coerce them into contract
Economic duress
Person enters contractual agreement after being threatened with financial harm
Factors to determine economic duress
Economic pressure made in bad faith
Proof innocent party could not resist
Prompt start of legal proceedings
Victim protested when pressure started
Victim succumbed to pressure without legal advice
Undue duress-undue influence
Abuse of a relationship in order to influence/induce someone into an agreement
Fiduciary relationship
One person in position of power over another
Unconscionable transaction
Agreement that no right minded person would ever make and no fair minded person would ever accept
Improvident bargain
Bargain that was made without proper regard to the future
