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Unformatted text preview: Elements of Law - Part One Part III Contract Law
Unit 8 Legal Capacity To Contract And Contract Legality © 2007 Captus Press Inc. Capacity to contract and contract legality
Contract capacity-protection of weaker parties
Minors Mentally disabled parties Contract Capacity-public policy
corporations labour unions bankrupts Contract Illegality
illegal agreements generally and under common law and statute contracts in restraint of trade. © 2007 Captus Press Inc. 1 Elements of Law - Part One Module 1 The Capacity of Minors to Contract © 2007 Captus Press Inc. Enforceability of minor contracts
Minor contracts for necessaries are enforceable against the minor Minors can repudiate other contracts the sale of goods act in most provinces provides that a minor must pay a reasonable price for goods that are necessaries that are sold and delivered to the minor © 2007 Captus Press Inc. 2 Elements of Law - Part One Enforceability of minor contracts
If the contract is an executory contract for necessaries, the minor may be able to repudiate the contract if he or she does so before delivery is made. Contracts for necessary services, including executory contracts, are also binding on minors An employment contract is open to repudiation if it is objectively disadvantageous to the minor Void and voidable contracts
Where a contract is voidable it contains a potential unfairness or invalidity but it is enforceable until one party exercises an equitable right to repudiate the terms. Where a contract is void its defects and unfairness are manifest and obvious and the contract is deemed to be unenforceable from the very beginning. © 2007 Captus Press Inc. 3 Elements of Law - Part One Ratification or repudiation of beneficial contracts for non necessaries
Some minor contracts are valid unless the minor repudiates the contract
Applies to contracts where a minor acquires permanent property that imposes obligations on the minor. Most minor contracts are void unless ratified. They are valid until they must be ratified but if the minor does not ratify then the contract becomes void.
Applies to most other beneficial minor contracts for non necessaries. Consequences of repudiation
The contract is in force and effective until it has been repudiated. The minor on repudiating the contract is relieved of future obligations, and accrued but undischarged obligations Money paid by the minor before repudiation may not be recovered if the adult party performed his or her obligations to the minor prior to repudiation. The minor may also recover property such as goods after repudiation if the goods have not bee consumed and can be restored to the minor. © 2007 Captus Press Inc. 4 Elements of Law - Part One Consequences of invalidation from failure to ratify
Prior to invalidation the minor can enforce the contract and so can the adult A third party cannot rely on the invalidity of a contract to escape liability If the minor does not ratify, she or he is not liable for future accrued liabilities under the contract If the minor does not ratify, the minor can recover money, provided the minor can restore the adult to his or her pre contract position. Minor’s contracts in British Columbia
In B.C. a minor’s contract is unenforceable against the minor unless one of these conditions is met: • The contract is enforceable under some statute • The minor validates the contract on attaining the age of majority • The minor wholly or party performs the contract shortly after attaining the age of majority, • The minor does not repudiate it within a year of the minor having attained the age of majority. © 2007 Captus Press Inc. 5 Elements of Law - Part One Module 2 Mentally Disabled Parties and Drunkards © 2007 Captus Press Inc. Intoxication and capacity to contract
A contract is void from the beginning if: the intoxicated party because of the intoxication, did not know what he or she was doing the sober party was aware of the intoxicated state of the other party after sobering up, the intoxicated party moved promptly to repudiate the contract A defence to contract enforcement may arise if:
the sober party was aware that the other was intoxicated the contract is manifestly unfair to the intoxicated person © 2007 Captus Press Inc. 6 Elements of Law - Part One Mental disability and the capacity to contract
If a person has been found by a court to be incompetent to handle his or her affairs, contracts entered into after the finding are void from the time they are made. If there is no judicial finding, the contracts are valid unless the mentally disabled person seeks to repudiate them as being unfair to the mentally disabled party The mentally disabled are liable on contracts for necessaries. Module 3 Corporations © 2007 Captus Press Inc. © 2007 Captus Press Inc. 7 Elements of Law - Part One Contractual capacity of corporations
Corporations are artificial persons Their powers to contract may be limited by the legislation under which they are created, or by their own articles of incorporation If a corporation enters into a contract that it has no power to make, the contract is void from the beginning. Module 4 Labour Unions © 2007 Captus Press Inc. © 2007 Captus Press Inc. 8 Elements of Law - Part One Contractual Capacity of Labour Unions
Labour unions are associations of individuals They are not corporate bodies Unions are given certain powers by legislation The union has the power to enter into and enforce collective agreements with employers on behalf of its members. The union may enter into other types of contracts, but a law suit against the union must be brought against the individuals who comprise it—usually an action is brought against the individuals who make up the executive. Module 5 Bankrupts © 2007 Captus Press Inc. © 2007 Captus Press Inc. 9 Elements of Law - Part One Contractual capacity of bankrupts
All contracts entered into prior to bankruptcy are handled by the trustee in bankruptcy Once the bankrupt is discharged, previous contracts are no longer enforceable against the discharged bankrupt unless honouring those contracts is a condition of discharge. On going bankrupt, and until discharge, a bankrupt may only enter into contracts for necessaries and must give notice of bankruptcy to those he or she contracts with if the value of the contract is more than $500. Module 6 Contract Legality © 2007 Captus Press Inc. © 2007 Captus Press Inc. 10 Elements of Law - Part One Consequences of unlawful and illegal contracts
A contract must not offend public policy nor violate any statute If the purpose is unlawful the contract is void If the purpose is unlawful, the contract may also be illegal If the purpose is unlawful, and the act of entering the contract is illegal, the contract is both void and illegal Module 7 Contracts in Restraint of Trade © 2007 Captus Press Inc. © 2007 Captus Press Inc. 11 Elements of Law - Part One Contracts in restraint of trade
Contracts contrary to the Competition Act Contracts for the sale of a business restricting the seller from competing with the purchaser Employment contracts that restrict the employee from competing with the employer after the employee leaves the job © 2007 Captus Press Inc. 12 ...
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This note was uploaded on 01/16/2011 for the course ADMS 2610 taught by Professor Joshuasera during the Spring '10 term at York University.
- Spring '10