Formation, Capacity And Constitution

Question 1

What is a contract?

Answer 1

An agreement between two parties which the courts will enforce. All contracts are agreements, however, not all agreements are contracts.

Question 2

What must occurs for formation to take place?

Answer 2

Obligations must be seriously intended, the parties must have capacity to contract and rules on constitution must be complied with.

Question 3

What happens if one party does not have capacity to contract?

Answer 3

The contract is void ab initio

Any benefit passed under the void agreement may be recovered via unjustified enrichment

Question 4

Which persons lack capacity to enter into transactions?

Answer 4

Persons under 16 with some exceptions as per the ALCSA 1991
Incapable adults lack capacity
Persons intoxicated beyond ability to reason
Enemy aliens also lack capacity.

Question 5

Who administers the affairs of incapable adults?

Answer 5

By others either exercising power of attorney or as guardian under Adults with Incapacity (Scotland) Act 2000

Question 6

True or false- the Writing (Scotland) Act 1995 states that writing IS required for the constitution of a contract.

Answer 6

FALSE- the act states that writing is NOT required for the constitution of a contract.

Question 7

Writing is not required for the constitution of a contract. What are the 3 exceptions?

Answer 7

• Contracts or unilateral obligations for creation, transfer, variation or extinction of a real right in land
• A gratuitous unilateral obligation except when undertaken in the course of business
• A trust where Person creating is sole trustee of his own property.