Chp 3 Validity of Contracts and Agreements Flashcards
Valid Contract
An agreement enforceable by law is a contract
Voidable Contract
An agreement that is enforceable by law at the option of one or more of the parties to that, but not at the option
of the other or others, is a voidable contract.
Voidable at the option of an aggrieved party
VOID CONTRACT
A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.
Notice that the void contract was a valid contract at the time of formation but subsequently, it ceases to be enforceable.
Void Agreement
An agreement not enforceable by law is said to be void.
Notice that a void agreement is void ab initio i.e. void from the beginning.
Essentials of a Valid Contract
- Free consent
- competent to contract
- made for a lawful consideration
- lawful object.
- not expressly declared to be void by law
Person Competent to contract
a) who is of the age of majority according to the law to which he is subject; and
b) who is of sound mind; and
c) who is not disqualified from contracting by any law to which he is subject
Additional points of age of majority
- Rule of estoppel does not apply.
- No Ratification
- Can’t be declared Insolvent.
- Adult will be liable in Joint Contract.
Person Disqualified by Law
- Alien Enemy
- Foreign Sovereigns and ambassadors
- Convicted (Imprisoned/Found guilty)
- Insolvent
Sound mind
Person who can understand the terms of contract and their effects on his interest.
Examples of unsound mind
- Specific Person | permanant unsound mind.
- Lunatic | Usually unsound.
- Drunken/delirious from fever | Usually sound.
Legal status of Specific person
> can never make a contract
If contracted, position will be same as minor
- If necessities are supplied, a Reasonable price may be reimbursed from property.
Legal status of Lunatic
If sound | Valid
However party enforcing contract will prove this
If unsound | void
Legal status of Drunken/ delirious
sound | Valid
unsound | Void
however, party avoiding contract will prove this
Consideration
When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does
or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise
is called a “consideration” for the promise.
Essentials of Consideration
- Must move at the desire of promise
- may move from promisor to any other person
- may be Past, Present, or Future.
- Must be something in value
- Must be REAL
- Must be lawful
- Must be something which a promisor is not already bound to do.
