Contract Validity

Question 1

5 main features of a Valid Contract

Answer 1

1) Consensus in idem (both parties are talking about the same thing & have the same understanding of the contract)
2) Consent (not being forced)
3) Capacity (age, mental status)
4) Formal requirements where they apply (Where applicable it must be in writing eg Selling property)
5) Not prohibited by law (pacta illicita) (not illegal)

Question 2

Consensus in idem – a meeting of minds…we are both talking about the same thing

Question 3

Consent

Answer 3

The parties to a contract must consent to contract with one another.

Consent must be full, free and voluntary.

- Undue influence
- Facility and circumvention
- Force and fear

Question 4

Capacity (Crossan, p.119)

Answer 4

Capable of assuming legally binding obligations, in terms of age, insanity or intoxication

Young persons
Age of Legal Capacity (Scotland) Act 1991
-Children aged under 16 – may be void
-Young people aged 16 – 18 – may be voidable

Question 5

Capacity

Under age of 16

Answer 5

Children aged under 16 – may be void
To be enforceable the contract must be:
Of a kind usually entered into by persons of that age
On terms that are not unreasonable

Question 6

Capacity

Young people 16-18

Answer 6

Young people aged 16 – 18 – may be voidable
To be voidable the young person must prove:
It is highly unlikely that a reasonable adult would have entered the contract under the same circumstances
The contract is likely to cause harm to the young person

Question 7

Formality (Crossan p123)

Requirements

Answer 7

Verbal – not all contracts need to be in writing
(exception Land and buildings/heritable property/wills)

The Requirements of Writing (Scotland) Act 1995

Electronic Communications Act 2000 – electronic signatures are now admissible as evidence

Question 8

Pacta illicita (Crossan, p.136)

Not Prohibited by Law

Answer 8

Unlawful agreements are unenforceable. Must make sure all contracts are legal.

The loss lies where it falls - if a party suffers loss due to an illegal contract, that party cannot sue the other to recover such losses

Question 9

Pacta illicita (Crossan, p.136)

Not Prohibited by Law

Restrictive covenants

Answer 9

Restrictive covenants – used by one party to protect business interests from unjustified exploitation (trade secrets, designs, restraint on trade etc)
RCs cannot be imposed using unduly excessive terms on a weaker party and they should do no more than is absolutely necessary to protect business interests