Incapacity and Contracts with Minors

Question 1

Nash v Inman

Answer 1

Nash was a tailor working in Saville Row. Inman was a minor studying at Cambridge University. Nash sold some cloth on credit to Inman for what was approximately £145. Nash sued to recover the money, and Inman pleaded infancy.

After hearing evidence, the trial judge held that Inman was actually a minor and that he already had enough clothing at the time of sale. For this reason, the trial judge found that there was no evidence that the clothing could possibly be considered to be in the class of necessaries, and directed the jury to enter judgment in favour of Nash. Inman appealed, claiming that the judge had decided the issues of fact, instead of letting the jury decide.

Each of the three members of the Court agreed that the trial judge was correct in ordering judgment to be entered for the defendant, but each gave a separate opinion.

Question 2

Ultra vires

Answer 2

meaning “beyond the powers”. An act which requires legal authority but is done without it is characterised in law as ultra vires. Its opposite, an act done under proper authority, is intra vires (“within the powers”). Acts that are intra vires may equivalently be termed “valid” and those that are ultra vires “invalid”.

Question 3

Mental Incapacity

Answer 3

At common law mental incapacity is not a ground for setting aside a contract, unless the incapacity is known to the other party to the contract.

Mental Capacity Act 2005 states that a person is assumed to have capacity unless it is established otherwise, but provides that a person lacks capacity in relation to a matter if at the material time he is unable to make a decision for himself in relation to the matter because of an impairment of, or a disturbance in the functioning of, the mind or brain.

Question 4

Imperial Loan Co v Stone

Answer 4

Ratio: A person of unsound mind was sued on a promissory note. He had signed it as surety. The jury found that he was insane when he signed the note but there was no finding as to the creditor’s knowledge of such insanity. The judge entered a verdict against the creditor, who appealed.

Held: A contract made by a person who lacked the capacity to make it was not void, but could be avoided by that person provided that the other party to the contract knew (or, as is now generally accepted, ought to have known) of his incapacity.
The submission that there was no authority that a man could be sued and made liable on an executory contract which he had made when of unsound mind, except in the case of a contract for necessaries was rejected.

Question 5

Peters v Fleming

Answer 5

in Peters v Fleming, it was found that a gold ring and watch chain were necessaries, for the child of a Member of Parliament.However, a contract may not be for necessaries where a minor’s needs are adequately satisfied, or a purchase can be seen as unnecessary.

Question 6

Roberts v Gray

Answer 6

Ratio: The infant had entered into a contract to go on a tour as a professional billiard player.
Held: The contract could be construed as one for necessaries, because it was for teaching, instruction and employment. Liability continued despite the fact that it was in part executory.

Hamilton LJ was: ‘unable to appreciate why a contract which is in itself binding, because it is a contract for necessaries not qualified by unreasonable terms, can cease to be binding merely because executory . . If the contract is binding at all, it must be binding for all such remedies as are appropriate to the breach of it.

Question 7

Mental Capacity Act