Chapter 8 - Revised Flashcards
Who has the burden of proving the essential elements of a contract?
The plaintiff must prove that:
> there was an offer
> there was acceptance
> there was consideration for a promise
The court will normally presume that the additional elements are present:
> the defendant had capacity to enter a contract, and
the contract is legal.
What is Capacity to contract?
The competence to bind oneself legally
Must have the wherewithal to enter into a contract. generally speaking capacity is presumed.
Those without capacity to contract examples include:
> minors
> Persons with diminished capacoty (ie. head injury, elderly, insane, drunk)
> bankrupt debtors
What are the guidelines to be considered a minor? What is the general legal concept regarding contracts with minors?
Minors are persons under 18
> contracts are voidable at the option of the minor. ie. enforceable by the minor, unenforceable against.
> The purpose is to protect minors
What are the functions regarding necessaries and contract with minors?
exceptions:
(i) contracts for non-necessaries (essential goods) (as at they repudiate the contract becomes void. ie. they have option to void. then courts will restore to pre-contract position)
(ii) Contracts for necessaries (can be enforceable > and minor will be bound to pay) (minor would not be able to ever enter into contract if not for this)
Minors would not be able to enter into any contract with the expect ion of contracts for necessaries.
What are other functions of beneficial contracts with minors?
(iii) beneficial contracts of service (minors are also bound to this if the contract as a whole is non-exploitative ie. beneficial to minor) (more styled for employment of apprenticeship relationships
What happens upon attaining the age of majority for a minor?
(iv) attaining age of majority (minor could become liable the moment(or within a reasonable time) they reach the age of majority) (ie. minor must void before age of majority)
What are the functions of contracts with diminished capacity? To whom does the burden of proof fall?
The law protects persons of unsound mind or incapacitated through alcohol or drugs in the same way as a minor. The contract is not enforceable if the defendant is proven to not have capacity.
They are bound to pay a reasonable price for necessaries; other contracts are voidable at their option
The burden of proof will fall on the defendant to prove that they were of diminished capacity.
What capacity is a person under during bankruptcy proceedings?
During proceedings the debtor is under certain contractual disabilities (except for necessaries) until after he receives a discharge from court
What is the legal capacity for indigenous persons?
The legal contractual capacity is restricted as it pertains to assets and land on a reserve. Reserve land is not owned by individual occupants.
> this means that it is not available as security for the claims of creditors
What are the differences between Voidable contracts, Void contracts, and Illegal contracts?
Voidable are contracts are contracts still in force, but can be terminated by parties
> during judgement the courts may try to put back into position before contract was made
Void contracts are null from their inception as no legally binding agreement is formed.
> Courts may try to put back into position before contract made if one of the parties attempts to void. As if the contract had not existed
Illegal contracts are void contracts, but courts will not assist parties and are completely unenforceable
> courts will let the losses lie where they fall. IE. you knew it was illegal, courts are not going to assist
What is the capacity of someone deemed to be incompetent?
generally same rules as a minor
> can only enforce contracts for necessaries
if the incompetent has accepted the benefit of a contract thy will not be able to repudiate
> Incompetent person can enforce contract
> contracts are voidable at option of incompetent
> incompetent seeking to repudiate the contract must act promptly upon incapacity or the contract is lost
What is a contract void by statute? Illegal by statute?
Agreements that are contrary to the purpose of legislation. or illegal by law
Any provision in an agreement that contravenes stature is void.
How does the criminal code function regarding bets? What is a wager? Who is a stakeholder? What are examples of wagers that are legal?
The criminal code makes certain betting activities illegal:
1) keeping a gaming house,
2) operating a pool or a lottery
Wager: an agreement between two persons in which each has some probability of winning or losing
Stakeholder: A person or organization that manages a betting arrangement for a fee and redistributes winnings.
Wagers or business ventures of speculation that are legal:
Insurance contracts, stock exchange transactions, futures transactions.
examples:
4) just because something is highly speculative does not mean it is illegal
5) insurance contracts are examples of “bets” but are not illegal
What is illegality with respect to contracts?
Contracts must be legal.
contracts that are illegal by statute have 2 sub-categories:
(i) Illegal when formed (purpose of the contract is to break the law)
(ii) Illegal when performed (when formed is legal, but in carrying out terms a law is broken) (example: have to be licensed as a cab company. speedy cabs weren’t licensed. in general its not illegal to enter contract, but illegal upon performance)
If there are illegal aspects of a contract then these can be severed from the original contract as a portion
What are contracts that violate common law and public policy?
Contracts that violate common law and public policy
fall into recognized categories:
> contracts that perpetuate fraud
contracts that pervert justice
contracts that injure the public service
contracts contrary to good morals
