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Law 122 - Chapter 10 - My Notes.docx

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Law and Business
LAW 122
Theresa Miedema

Chapter 10 Contractual Defects Capacity – is the legal power to give consent Groups of persons who may have no capacity or only limited capacity to create a contact: o Minors o Mentally disabled persons o Intoxicated Persons o Corporations o Associations o Indian Bands and Aboriginal persons o Public Authorities Age of majority – is the age at which a person is held fully accountable in law Minors – are people who have not reached the age of majority Contract is Voidable – if a minor is entitled to avoid the legal obligations that it created Some contracts that contracts that minors cannot avoid – contracts for necessary goods and service such as food, clothing, educations, medicals treatment and legal benefit, which are to their benefit. Mental Incapacity - First, if a court has declared a person to lack mental capacity, their contracts re void and cannot be enforced at all - Second, even if there is no court declaration, a person may still be considered mentally incompetent if he or she lacks the mental capacity to contract at the time the contract is formed - A contract of a person with mental incapacity is voidable only if the other party should have recognized the problem Intoxication The agreement is voidable if two conditions are met o First, the person must have been so drunk that they could not know or appreciate what they were doing o Second, the other contractual party must have been alerted to that fact Chartered Corporations – are treated the same as individuals who have reached the age of majority Statutory Corporations – have limited contractual capacity Associations – are usually unincorporated business organizations that lack contractual capacity Indian Band – is a body of Aboriginal people whose land and money are held by the crown Managing Risk in Associating with Incapacity  Train employees to identify potential capacity problems in the contracts that your business enters into  Be aware of the rules governing contracts with minors, particularly if your business is likely to enter into contracts with minors  In potential cases of contracts involving minors, mental incapacity, or intoxication, take steps that will help to show that the other party has affirmed the contract. For example, you might attempt to have the other party commence performance of their obligations under the contract or pay them money under the contract. IF they being performance or accept the payment, then these may be taken as signs of affirmation of the contract. These steps should be taken at a time when you know they are no longer a minor, mentally incapacitated , or intoxicated  Be aware of whether your company may contract with statutory corporations, associations, Indian bands, individual First nations’ people and public authorities, and act according  Where you are not certain about the other party’s capacity, you might consider requiring a written representation from the other party in the contract which states that they have the capacity to enter and fulfill the contract, If it alter turns out that they did not have capacity, then you may have an action against them in tort for misrepresentation Statute of Frauds The Statute of Frauds required some contracts to be evidenced in writing as a way of reducing the risk of perjury, or lying in legal proceedings. Types of Contracts that Must be Evidenced in Writing Guarantee – is a contractual promise by a third party, called a guarantor, to satisfy a debtor’s obligation if that debtor fails to do so. Indemnity – is an unconditional promise to assume another’s debt completely Contacts for Sale of an Interest in Land Contracts not to be performed within a Year Form and Content of the Note or Memorandum The document does not have to take any particular form, but has to: 1) Provide evidence of the essential elements of the contract( such as the parties’ names, the subject matter of the agreement, and the price) 2) Be signed by the party against whom the agreement is being enforced Consumer Protection and Writing Requirements  All personal development services contracts must be made in writing in cases where the consumer’s payment in advance is required under the contract.  Personal development services contracts are service contracts in the area of : heath, fitness, diet, modeling, talent, martial arts, sports and dance  If such contract arte not made in writing, then the business is not permitted to require or accept payment from the consumer Managing Risk in Association with Writing Requirements  Ensure the guarantees, contracts for the sale of an interest in land, and contracts not to be performed within a year are always made in writing  To meet the writing requirement, you should, as a minimum (i) provide evidence of the essential elements of the contract (such as the parties names, the subject matter of the agreement, and the price), and (ii) ensure that the party against whom the agreement is being enforced has signed the written document  To avoid the uncertainty and debate the oral agreements can create, all contracts should be written whenever possible  Businesses should ensure that they understand the requirements that may exist under provincial consumer protection laws to put certain agreements in writing and to
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