PowerPoint 7 Flashcards
Most minors’ contracts are ___.
Voidable.
What is the process of avoidance for minors?
- Minor has option to accept or avoid contract.
- Must choose soon after reaching majority.
- Must return benefits if avoid contract.
Voidable
Means that one party (that did not have the capacity) can choose whether to continue the contract or not.
If contract is for ___ ___ ___, there is no violability.
Necessities of life.
What types of minors’ contracts are enforceable?
Policy of ensuring minors basic needs of life.
What are the categories of enforceable contracts?
- Contracts for necessities of life.
- Employment contracts.
Mentally Disabled Persons
Judicially declared mentally incompetent.
Mentally disabled persons have ___ ___ to contract.
Total incapacity.
Contracts with mentally incompetent but not judicial declared persons are mostly voidable if…
The other party knew of the disability.
For those with mental disabilities, there are ___ ___ that allow various degrees of guardianship.
Court orders.
Can you contract for the necessities of life for mentally disabled persons?
Yes.
Guardianship Order
Guardian is responsible for all decisions (taking away autonomy).
Trustee Order
Guardian is responsible for only financial decisions.
Can intoxication render contracts voidable?
Possibly.
How can intoxication render a contract voidable?
Too drunk to understand circumstances and other party aware of extent of intoxication.
A business corporation is different from a person. True or false?
False. They are the same.
If a contract is created in breach of company charter, the contract is ___ and ___.
Valid, enforceable.
Only ___ ___ can have capacity.
Legal persons.
What are the two types of legal persons?
- Human beings.
- Corporations.
Associations are usually ___.
Unincorporated.
What types of organizations are associations?
Clubs, charities, societies.
Associations usually lack ___, unless specified by statute.
Capacity.
Aboriginal people have full capacity if they are living…
Away from band area.
Aboriginal people have limited capacity if ___ on band land.
Indian.
Indian defined under the Indian Act generally lack…
Contractual capacity.
Can property on band land be used as security for debt?
No.
Can property on band land be transferred to an outsider?
Only with Crown consent.
Band Land
Property located on Indian reserve.
Statute of Frauds is generally in force except in…
BC and Manitoba.
Statute of Frauds
An ancient English statute that stipulates a contract may need evidence in writing.
What is covered under the statute of frauds?
- Guarantee for repayment of debt.
- Sale of interest in land.
- Contracts not to be performed within one year.
How can mistaken identity prevent the creation of a contract?
- Mistake of identity was material (important).
- Other party knew of mistake at time of contract.
How can mutual mistake about subject matter prevent the creation of a contract?
If no agreement on subject then no consensus. No contract because no true agreement. Better to argue there was no contract.
Frustration
Contract becomes impossible. The entire benefit of the contract has been destroyed.
Can the purchaser recover the price if they received some benefit?
No, it is all or nothing. The purchaser can recover price only if no benefit received.
Non est factum
“This is not my deed,” for example, if someone delivering flowers and they say sign here, but you were actually signing a prenup. Exception to the rule that if you don’t read a contract it is still binding.
Duress
Illegitimate threat of harm. Can be duress of person, duress of goods, economic duress.
Economic duress can be claimed if:
- Threat made in bad faith.
- Victim could not reasonably resist.
- Victim acted promptly once pressure removed.
- Victim protested at the time.
- Victim did not have legal advice before succumbing.
Undue Influence
Overpowering will. Rule depends on parties’ relationship. Two types.
What are the two types of undue influence?
- Pre-existing fiduciary relationship.
- No pre-existing fiduciary relationship.
Difference between fiduciary and beneficiary.
Fiduciary owes something to the beneficiary, but the beneficiary owes nothing to the fiduciary.
Example of fiduciary relationship:
Doctor-patient relationship.
Improvident
Unfair.
Unconscionable Transaction
One that no fair-minded person would offer, and no right-minded person would accept.
Who is responsible for rebutting presumption in undue influence, the fiduciary or the beneficiary?
The fiduciary party.
How would a fiduciary party rebut the presumption in undue influence?
- Show the transaction was fair.
- Independent advice.
If there is no fiduciary relationship in undue influence, what has to be proven, and by whom?
The party alleging undue influence must prove that the contract was unfair.
Unconscionable transaction presumed if…
- Contract was improvident.
- Inequality in bargaining power.
Is a contract void if it is illegal?
Yes.
What are examples of illegality?
- Statutory.
- Common law.
- Public policy.
Mr. Bundy Case
Mr. Bundy is old and doesn’t have the right state of mind. Has a son who is criminal and needs money. Son convinced bank manager to lend them money, but says they need collateral. Get Mr. Bundy to sign a cosigning agreement that if he doesn’t pay back the loan, they can take his farm. Looks sketchy, bank manager drives out to their farm. Someone who has a right state of mind wouldn’t think it is a good agreement. Son has bad criminal record so it is obvious the farm would be taken away. Didn’t pass the “smell” test, seems unfair.
Prohibition on carrying on business may be limited ___ or ___.
Temporally or geographically.
Can you limit employee’s ability to work unreasonably?
No, limiting temporally or geographically has to be reasonable.
Why would restraint of trade be used?
- To keep ex-employee from competitor.
- To keep store vendor from new establishment.
What is the burden to prove that a restraint of trade is reasonable?
Restraint tested against total circumstances.
