Chapter Seven-Contracts

Question 1

Contracting with Minors Capacity

Answer 1

Minors are not bound by their contracts, but adults who contract with minors are

Question 2

What is the test for capacity? (Especially in terms of minors)

Answer 2

It is objective, only matters if they were underage at the time the contract was made

Question 3

Are minors bound by necessities? And what are necessities defined as?

Answer 3

Yes (everywhere but BC), necessities are dependent on the minor and what they need/don’t have. Minor also has to repay money loaned for necessities if actually used for necessity.

Question 4

Ratifying a minor contract

Answer 4

If a minor validates a contract by ratifying it after turning the legal age they are then bound by it

Question 5

Executory minor contract

Answer 5

When parties have entered into contract but the minor has not yet obtained any benefit or paid and therefore is not bound

Question 6

Partially executed minor contract

Answer 6

When minor has received goods but has not paid for them (usually will have to return, except if they are in the hands of a third party or destroyed the merchant will not be entitled to payment or return of the goods)

Question 7

Executed minor contract

Answer 7

If a minor has obtained the benefit under a contract but the contract really gave no benefit to the minor they can escape the contract

Question 8

Parents liability for children’s contracts

Answer 8

Non-existence, some jurisdictions have made parents liable for their children’s actions but usually parents are only liable when the minor is acting of an agent or guarantee the minor’s obligation at the time the contract is entered into

Question 9

Can one sue an infant in tort instead of contract?

Answer 9

Courts will not allow adults to bring an action against a child just to get around the incapacity (unless minor used the subject matter of the contract in a way that was not contemplated in the contract)

Question 10

To qualify for incapacity for drunkness and insanity….

Answer 10

It must be shown that the person could not understand the nature of the act being performed,
and that the person they were dealing with knew they were incapacitated,
and with drunkness that once they sobered up they repudiated the contract

Question 11

Who does the burden of the proof rely on to prove incapacity of insanity and drunkness?

Answer 11

The person claiming to be incapacitated

Question 12

Others of limited capacity

Answer 12

Corporations (can limit capacity in incorporating documents, otherwise regular capacity)
Undischarged bankrupt
Enemy aliens 
“Indians”
Trade Unions

Question 13

Illegal performance of a lawful contract treatment by court

Answer 13

• contract may become void (breach of leg)
• can be treated as void but not illegal and restore parties to original positions
• if violation is more of procedure than of substance the court may enforce the contract

Question 14

Contracts formed illegally is a reference to an illegal contract meaning the contract was illegal at the time it was formed result

Answer 14

• is void
• in dealing with an illegal contract the court will not help assist the parties to their original positions unlike a void contract (unless one of them is innocent)
• contract may be partially enforceable

Question 15

Examples of illegal contracts

Answer 15

• contracts to commit a crime or tort
• contracts that promote litigation
• contracts that obstruct justice
• contracts between business to fix prices
• contracts that unduly restrain trade

Question 16

How do courts determine intention to be bound in contract?

Answer 16

• they look at the reasonable expectations of the promises
• test is objective
• “would a reasonable person have thought that the person making the promise was serious and that the agreement was legally binding?”

Question 17

When is writing required for a contract to be enforceable?

Answer 17

• when contract is not performed in one year
• land dealings
• guarantees (not indemnitities)
• other statute of frauds

Question 18

Part performance in terms of writing requirement for contracts

Answer 18

-courts will waive the requirement of writing if the parties can produce evidence to show that a contract dealing with an interest in land has been partially performed (payment of money doesn’t count)