Chapter 10 Contractual Defects

Question 1

Capacity

Answer 1

Legal power to give consent

Question 2

Age of majority

Answer 2

Age when person is held fully accountable by law

In Alberta: 18 years old

Question 3

Voidable (contracts)

Answer 3

Minor is entitled to avoid legal obligations that would’ve otherwise been created

Question 4

Exceptions to voidable contracts

Answer 4

• minor carries out contract

- substantial delay in voiding contract

Question 5

Mental incapacity

Answer 5

Lack capacity due to challenges with comprehension

Question 6

When is contract with intoxicated person voidable

Answer 6

• 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

Question 7

Business corporations

Answer 7

Treated as legal persons under law

Question 8

Chartered corporation

Answer 8

Treated as persons who have reached the age of majority

Question 9

Statutory corporation

Answer 9

Have limited contractual capacity imposed by legislation

Question 10

Association

Answer 10

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

Question 11

Indian bands

Answer 11

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

Question 12

Public authorities

Answer 12

Individual who has contractual capacity on behalf of the government

Exception: must be consistent with division of powers

Question 13

Guarantees

Answer 13

Contractual promise made by a third party (known as the guarantor)

Question 14

Indemnity

Answer 14

Unconditional promise to assume another debtor’s debt completely

Question 15

Statue of frauds

Answer 15

Meant to avoid fraud via fabricated oral contracts

Question 16

Memorandum

Answer 16

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

Question 17

Doctrine of frustration. Frustrated (contract)

Answer 17

Some event makes performance impossible/ radically undermines contracts very purpose

Question 18

Instances when contract is not frustrated

Answer 18

• contract has become more expensive

- contract has become more difficult to perform

Question 19

Non est factum

Answer 19

“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

Question 20

Unfair bargaining

Answer 20

Disadvantaged party is pressured into agreement/placed in an unfair position during bargain process

Question 21

Duress of person

Answer 21

Physical violence/ threat of violence against a persons loved one

Question 22

Duress of goods

Answer 22

One person seizes/threatens to seize another’s goods to coerce them into contract

Question 23

Economic duress

Answer 23

Person enters contractual agreement after being threatened with financial harm

Question 24

Factors to determine economic duress

Answer 24

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

Question 25

Undue duress-undue influence

Answer 25

Abuse of a relationship in order to influence/induce someone into an agreement

Question 26

Fiduciary relationship

Answer 26

One person in position of power over another

Question 27

Unconscionable transaction

Answer 27

Agreement that no right minded person would ever make and no fair minded person would ever accept

Question 28

Improvident bargain

Answer 28

Bargain that was made without proper regard to the future