Chapter 5 - Vitiating factors (Part 2) - Minor + Misrepresentation Flashcards
What is a minor?
A minor is a natural person who has not attained the age of majority (21 years old)
What are the 3 types of contracts that can be enforce against a minor?
1) Minor is at least 18 years old and contract does not fall under any of the exceptions listed in section 35(4) and (5) of the Civil Law Act (i.e. not a contract involving the sale of land, or the lease of land for more than 3 years)
2) Contracts for the Supply of “Necessaries”
3) Beneficial Contracts for Education, Training and Employment
Explain on “Contracts for the Supply of “Necessaries” What is necessaries?
When a minor enters into a contract to get necessaries goods and services and these necessaries are provided to him, the contract is enforceable against the minor. The minor must pay a reasonable price for the necessaries.
Necessaries are defined as goods suitable to the condition in life of the minor and to his actual requirements at the time of sale and delivery.
Necessaries are not limited to basic goods and services necessary for mere survival but can include goods and services that suit the minor’s position and circumstances and his actual needs at that time.
Explain on “Beneficial Contracts for Education, Training and Employment”
A minor can enter into contracts to receive education, receive training for a career or provide services.
Such contracts can be enforced against the minor (legally binding) if, on the whole, the contract is for the minor’s benefit, even though the contract may contain some terms which are unfavorable to the minor.
Explain on voidable contracts against a minor. When can minor terminate the contract? What happens when voidable contract is terminated?
Voidable contracts are contracts that are valid and enforceable against the minor, unless the minor repudiates or terminates the contract
1) during his infancy (before reaching the age of 21 years old)
2) within a reasonable time after he attains the age of majority.
Once voidable contract is avoided, minor is relieved of all future liabilities under the contract. However, minor may still be responsible for liabilities that have already accrued under the contract, etc. rent.
E.g. contracts involving continuing or recurring obligation. For example, contracts for the lease (rental) of land.
What are the 4 contracts unenforceable against a minor?
1) Contracts entered into by minors who at least 18 years, that do not fall under the exceptions listed in section 35(4) and (5) of the Civil law Act
2) Contracts for the supply of necessaries to minors
3) Contracts under which minors receive education or training or provide services, that are on the whole beneficial to minors
4) Voidable contracts
What about other contracts (e.g. sale of goods that are not necessaries) can it be enforced against the minor?
All other contracts with a minor cannot be enforced against the minor unless the minor chooses to ratify (confirm) those contracts. However, the minor may enforce such contracts against the other party to the contract who is an adult.
What are the two remedies for a person who has transacted with a minor?
1) Restitution
2) Minor Contracts Act
Explain more on “Restitution” as a remedy for a person who has transacted with a minor?
Under the law of restitution if the minor has acted fraudulently and obtained money or property from an adult under a contract, the adult can seek restitution (the return of) the “actual property or money in the minor’s possession”
Explain more on “Minor Contracts Act” as a remedy for a person who has transacted with a minor?
The Minor Contracts Act
1) the minor obtained property under a contract
2) the contract cannot be enforced against the minor or the minor repudiated the contract
The court may order the minor to return the property that he obtained earlier to the other party to the contract.
This remedy is not available ‘as of right’. It is subjected to the court’s discretion. The court will only make an order for restitution if the court thinks that it is just and equitable (fair) to do so.
What is representations and terms of contract? What is the difference?
Terms are statements which are intended to have contractual force. They form part of the contract.
All other statements made in the course of negotiations, prior to the formation of the contract, are referred to as “representations”.
Representations are made prior to a contract while terms of the contract are part of the contract after the contract has been signed.
If representations are untrue, injured party can sue for misrepresentation. If contract terms/duties are breached, injured party can sue for breach of contract.
What is misrepresentation?
Misrepresentation is an untrue statement of fact made by one party to a contract to the other party, at or before the time the contract was made, which induced the other party to enter into the contract.
What are the 5 legal requirements for misrepresentation?
1) There must be a statement concerning some fact, not law, intention, opinion or “sales talk” (mere puff or exaggeration)
2) The statement must be false
3) The statement must be made by one party to the contract to the other party to the contract. The essence is that one party must mislead the other party.
4) At the time of, or before, the contract is entered into.
5) The representation must have induced the other party to enter into the contract. If the other party did not rely on the untrue statement, he has not been induced.
If the person attempts to check on the truth of what has been said, he clearly has not relied on the untrue statement.
Can silence amount to misrepresentation? Under what circumstances could silent amount to misrepresentation?
No. There is no general duty for one party to disclose material facts to the other party before entering a contract with that other party.
However, gestures, smiles and nods can amount to a statement and if the other elements (legal requirements) are provided, such silent modes of communication could amount to a misrepresentation.
Is there situations where there is a duty to speak up? If so, what are the situations?
Yes, the law recognizes certain situations where there is a duty to speak up. In such situations, a person’s failure to disclose information he knows (e.g. silence), would amount to a statement if the relevant state of affairs.
Example :
1) There is good faith relationship between the parties (e.g. partners in a partnership, lawyer-client, doctor-patient relationships)
2) The contract is an “utmost good faith” contract that requires the party to disclose all material facts e.g. proposals for insurance cover.
3) The failure to disclose information distorts the truth
- where half-truths are told
- where there has been a change of circumstances (E.g. during negotiations, the statement made was true. However, later on, when parties are about to enter into or start to perform the contract, the statement is no longer true.)
