Concepts of Contract law + Legal Capacity (L2) Flashcards
Sanctity of contract.
“If there is one thing more than another that public policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held to be sacred and shall be enforced by courts of justice.”
— Printing and Numerical Registering Co v Sampson (1875).
Good faith.
“…the decision in Rodgers (Builders) Ltd v Fawdry rested upon the broad principle in the field of contract law of fair dealing in good faith”.
— Smith v Bank of Scotland 1997.
Legal capacity of persons under the age of 16:
Age of Legal Capacity (Scotland) Act 1991.
s1(1)(a): No legal capacity to enter into any transaction (s2 exceptions).
s9: Defines ‘transaction’. Includes contract and promise.
Under 16 legal capacity exceptions:
1991 Act.
s2(1)(a): A kind of transaction commonly entered into by a person of that age. (b): Of which terms are not unreasonable.
s2(2): 12+ = Testamentary capacity.
s2(2): 12+ = Consent to own adoption.
s2(4): Consent to medical treatment where capable of understanding.
s2(4A): Instruct a solicitor, where understanding of what it means.
s2(4B): Capacity to be involved in litigation.
Legal capacity of 16-17 year olds:
1991 Act.
s1(1)(b): Legal capacity to enter into any transaction.
16-17 year old legal capacity exceptions:
1991 Act.
s3(1): Under 21 may make application to court to set aside any transaction:
– Which entered between 16 and 18.
– Which is a prejudicial transaction.
s3(2): “…A transaction which… (a) An adult, exercising reasonable prudence, would not have entered into the transaction, AND (b) Has caused, or is likely to cause, substantial prejudice to the applicant.”
16-17 year old legal capacity exception to the exception:
1991 Act.
s3(3)(h): If ratified after age 18 which would have set aside but didn’t.
s3(3)(j): Ratified under s4.
s4: Conditions for ratification.
s4(2): Court shall not grant application if:
—- It appears that an adult, exercising reasonable prudence, AND in the circumstances of the applicant, would not enter into the transaction.
Induced by fraud about age or another material fact (Wilkie v Dunlop (1834)).
Legal capacity – Impairment of reason (drunkenness):
Taylor v Proven (1864):
— Court stated that pursuer must prove that through drunkenness, reason was lost.
Couston v Miller (1862):
— Court made distinction between absolute state of drunkenness, and one which only darkens reason.
Legal capacity – Lack of mental capacity:
Loudon & Co v Elder’s Curator Bonis 1923.
— “The effect to be given to a contract entered into by an insane person depends upon whether the insane person is at the time when the contract is entered into of mind and capacity to understand and transact the business in question”.
Adults with Incapacity (Scotland) Act 2000, Part 6.
— An intervention order authorising a person to take action or make a decision of which the adult is incapable.
— An order appointing a person or office holder as guardian in relation to the adult’s property, financial affairs and personal welfare.
Legal capacity of non-human legal persons:
Company: capacity derives from constituent documents, altered by Companies Act 2006 for protection of third parties.
Some bodies act under statutory authority.
If acting beyond the powers (ultra vires), acting without capacity.
