LEGAL CAPACITY

Question 1

What is not legal capacity:

Answer 1

1. Minors: anyone who has not met age of legality in their province
2. Diminished Capacity: people who are not in the right mindset including usage of drugs or alcohol.

To prove diminished capacity, defendant must show:
1. He/she was unable to make a rational fully informed decision at the time of contract
2. Other contracting party knew this and took advantage of the situation

other forms of capacity/incapacity
-bankrupt debtors
-corporate entities

Question 2

Define Incapacity:

Answer 2

defence to contract formation, law will excuse parties from their contractual obligations because they lacked “competence” to enter into such relations

Question 3

Expand on Illegality:

Answer 3

courts will not enforce an illegal contract, illegality is a legal defence to the formation of a valid and binding contract

A contract can be illegal if:
1. A statute or common law deems that type of contract to be illegal
2. Contract offends public policy

Question 4

Illegality to Public Policy

Answer 4

Public policy is a legal idea created by judges. It asks:
“Would this contract go against the values, morals, or fairness that Canadians expect — or harm the legal system?”

If a contract goes too far, the court can refuse to enforce it, even if both sides agreed to it.

There are things called “Restrictive Covenants” that are rules in a contract that limit what someone can do (goes against public policy)

BUT, courts will allow them if these 3 things are true:

1. There’s a good reason for the restriction
2. The person agreed to it and got something in return
3. The restriction is fair and not too extreme