Chapter 8

Question 1

Capacity

Answer 1

some parties lack legal capacity to enter contracts or holding diminished capacity

ex. 
minors
mentally incompetent persons
corporations
labour unions
enemy aliens
aboriginal peoples
bankrupts

Question 2

Void Vs. Voidable Contracts

Answer 2

void contracts - never existed; failed formation = no contract

voidable contracts - exists, but can be made void at the option of one of the parties

Question 3

Minors

Answer 3

-contract with minor is voidable at the option of the minor for non necessaries

Necessaries: essential goods and services

RoT: if minor is living with parent or guardian, then nothing is necessary as they are being taken care of

-contracts would be enforceable by minor, but not against minor

Question 4

Mentally incompetent persons

Answer 4

• people who are insane, drunk or drugged

- must act immediately when sober

Question 5

Corporations

Answer 5

Corporation = person in law

Question 6

Labor Unions

Answer 6

• not a person in law

- need one person in union to be representative

Question 7

Bankrupts

Answer 7

• state of being, state of protection
• when someone becomes insolvent, they cannot make their payments
• can apply for protection under bankruptcy and insolvency act

Question 8

Legality

Answer 8

• object of the contract cannot be illegal
• if illegal, then contract is unenforceable

Unenforceable: no court assistance or remedy available to parties of the contact

Illegal contracts are deemed void

Question 9

Contracts illegal by statute

Answer 9

criminal code
income tax act
competitions act

can also be illegal if they breach other acts or regulations

Question 10

Restraint on trade

Answer 10

illegal to restrain others from engaging in a business, contracts of employment

Question 11

Certainty of terms

Answer 11

-vague or incomplete agreements be deemed “void” by a court, no contract was ever formed