Contract - 1.4 - Capacity Flashcards
If a person does not have capacity to enter a contract….
… then a contract with will be unlikely to bind them.
Persons over the age of 18….
have full contractual capacity, if they are of sound mind and not suffering from a factor ruling out capacity (drunkeness)
Minors
Persons under 18 are not bound by contract, even if the other party does not know they are underage. There are two exceptions:
1) Necessaries
2) Contracts of employment
Minors - Necessaries
Minors are bound by contract to supply necessaries, if the contract is for their benefit.
Minor must pay a reasonable price rather than the actual costs.
Necessaries - Sale of Goods Act 1979
Necessaries
Means goods suitable to the condition in life of the minor or other person concerned, and to their actual requirements at the time of the sale and delivery.
Nash v Inman 1908
11 Waistcoats supplied to an undergraduate minor at Cam Uni. were suitable according to the minor’s station in life, but not necessary as he had sufficent clothing.
Contract was not enforceable
Contracts of employment, apprenticship or education
A minor is bound by these contracts, but only if it is for their benefit
Aylsbury Football Club v Watford Association Football Club
Aylsbury Football Club v Watford Association Football Club
A young footabller’s contract with the club was not beneficial and could not be enforced because the player received no extra training, or experience and the terms were onerous for him - they restricted is freedom and payment was at the will of his employer
The effect of entering into a contract with a minor
Unless one of the exceptions applies, the contract cannot be enforced against a minor, however the minor can enforce it against the other party.
There are small number of contracts that are enforceable against the minor unless the minor specifically repudiates them.
If a minor ratifies a contract once they reach the age of 18…
The contract will be binding on them
Mental Capacity Act 2005
A person lacks capacity if “he is unable to make a decision for himself in relation to the matter”
Capacity is a question that has to be assessed in relation to a particular decision
ie someone with a brain injury may be able to decide where to live, but not how to invest large sums of money
Impairment
(Under s3(1) of the MCA 2005)
Unable to:
- Understand the relevant information
- Retain the relevant Information
- Use the relevant information
….
- Communicate a decision`
Use of relevant information….
to the reasonably forseeable consequences of:
- Deciding one way or another
- Failing to make a decision
Court of Protection
The MCA 2005 gives the Court of Protection the power to make declarations as to the person’s capacity and ability to contract in specified situations
