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Lecture

Capacity and Legality.docx


Department
Accounting
Course Code
ACTG 2P40
Professor
P.Maloney

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Capacity and Legality
Voidable contracts still in force, but can be terminated by parties
Void contract nullity from their inception
o Courts try to put back into position before contract is made
Illegal Contracts void contracts, but Courts will not assist
Those without capacity to contract include:
o minors
o persons with diminished capacity
o Aboriginals living on a reserve
o Bankrupt debtors
Legality of Contracts
Illegality with Respect to Parties: Capacity
(a) Burden of Proof
(b) Minors Contracts are voidable at the option of the minor
o contracts for non-necessaries
o contracts for necessaries
o beneficial contracts of service
(c) Mental Incompetence
(d) Incompetence Due to Other Factors
Main Rules for Minors / Incompetents
can only enforce contracts for necessaries
contracts are voidable at the option of the incompetent
incompetent person can enforce contract
incompetent seeking to repudiate the contract must act promptly upon capacity or the privilege
is lost
if incompetent has accepted the benefit og the contract they will not be able to repudiate
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