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Department
Philosophy
Course
Philosophy 2080
Professor
James Hildebrand
Semester
Fall

Description
Week 4 - Contracts: Capacity and Writing Chapters 8 and 9 (7th edition) Chapters 9 and 10 (8th edition) Chapter 8 (7th edition)/Chapter 9 (8th edition) - Legal Capacity and Requirement of Legality minors or infants, presumed at law no capacity to contract - common law 21, lowered by statute to 18 or 19 - voidable at infant's option - exception, contracts for necessaries enforceable against a minor contract for non-necessaries: - fully performed = enforceable, bound unless taken advantage of by merchant - to repudiate when fully performed -- minor proves unfair advantage, and must return goods - contract not fully performed, voidable at minor's option - adult who contracts with minor is bound, repudiation is only available to minor - adult runs risk of minor repudiating contract for necessaries: - minor liable on contracts for necessaries, extent of liability limited to reasonable price - questions of fact, what are necessaries, and are they necessary to minor in question, varies with social standing, standard of living accustomed to - historically apprenticeships were the way the young entered the workforce, these contracts often enforceable against the minor 1 Repudiation by minor: - in general, contract not fully performed for non-necessary goods, minor can repudiate at any time, even if terms are fair - entitled to return of deposit - must return goods before merchant returns money - minor only liable for damage to goods caused by willful act Long-term contract, for repudiation to take effect, must occur within a reasonable time after obtaining age of majority, or right to repudiate is gone - if a contract is made while a minor, minor must expressly ratify (acknowledge and agree to perform) to be bound once minor reaches age of legal capacity Noble's Ltd v Bellefleur, page 130 (7th edition), page 151 (8th edition) - infant bought car, wrecked it, merchant sued in tort for balance of purchase price, Held: for the defendant, not liable under contract law as a minor, cannot have tort liability for contract avoidable at law (can’t get indirectly what you are expressly prohibited from getting directly) Fraudulent misrepresentation re age: - law will not permit a minor to perpetrate a fraud on a merchant - in a contract for non-necessaries law does not allow merchant to enforce contract against minor who lies about age - still -- merchant may be able to recover the goods, also criminal sanctions for fraud, contract becomes voidable at adult merchant’s option Statutory protection: provincial legislation codifies contractual protection for minors, requiring ratification of a contract to be in writing Engaged in business: - employment contracts usually binding, if terms not onerous, minor can terminate on reasonable notice, regardless of any other express provisions regarding termination 2 Sole proprietorship or partnership: - usually voidable at option of the minor - partnership, minor in partnership with adults, can avoid or repudiate, adult partners still bound - in continuing contract if minor continues to accept benefits of contract after reaching age of majority, implied ratification Parental liability: - general rule, at common law not liable for debts of children - by family law statute parent's obligations for support under 16 yrs, parents jointly and severally liable for debts incurred for necessaries, "agent of necessity" - also parents may appoint child as agent (liability on principal) - if child continued purchases, parents kept paying, implied consent to be bound - parents have to inform merchant no intention to be bound Drunk or Insane - in contracts for necessaries, same as for infant - (those without capacity still need necessaries, merchants would never sell to them if could never enforce re payment) Non-necessaries - where person incapacitated when contracting, and other party knew of incapacity, once regains capacity, voidable at person's option - prompt repudiation, otherwise implied acceptance 3 Corporations: - creature of statute, powers, rights and obligations, capacity defined by statute - under provincial and / or federal statute "natural person" - special-purpose corporations may have limited abilities to contract bound by statute, acting outside of limitations is ultra vires, and the contract is void Labour Unions: - powers to contract specific to statute, collective agreements usually outside of court system, administrative law, mandatory dispute resolution procedures, Bankruptcy: - until bankrupt is discharged, no capacity to contract beyond contracts for necessaries - contracts preceding assignment in bankruptcy will be enforced by trustee in bankruptcy - Bankruptcy and Insolvency Act (federal statute) requires bankrupt to notify anyone of bankruptcy prior to contracting, if over $500.00 Gregson v Law and Barry page 145 (7th edition), page 152 (8th edition) Facts: infant contracted for sale of land, gave affidavit misrepresenting her as being of legal age - obtained purchase price, transferred land, later brought an action to recover land and avoid contract arguing she was an infant at the time of the first contract Held: - for the defendant - court will not assist minor to commit fraud, while contract strictly speaking not enforceable against minor, court would not assist, ie., not be active agents to bring about fraud 4 LEGALITY The court will not enforce contract illegal in nature void v illegal void: usually carry no criminal penalties, no enforceable rights are created illegal: subject to criminal sanction as well as void, usually violate a statute such as Criminal Code or Combines Investigation Act both criminal in nature; non-criminal statutes eg., Planning Act, Gaming Act, etc., agreements violating act are void and unenforceable - gambling contracts unenforceable unless specifically allowed by statute, presumption against gambling - public policy supports legitimacy of insurance contracts - where statute requires licensing of tradesperson, non-licensed person performing work cannot enforce contract - likely enforceable in regard to materials supplied - unlicensed tradesperson still liable for damages for work improperly performed At common law: - contracts against public policy, eg., to obstruct justice, to injure public service, in restraint of trade, restrictions on marriage - eg. contract with public servant to use office to gain private advantage, both illegal and unenforceable - in Canada, in some provinces, contingency fee solicitor contracts illegal - unenforceable if agreement to perform a tortious, immoral or dishonest act - exorbitant interest rates, high rates are a question of fact, court either set aside payable interest, make an order for repayment, some Consumer legislation assists, annual rate over 60% violates Criminal Code 5 Restraint of Trade: a) contrary to Competition Act b) contract for sale of business where unreasonable non-competition clause restricting vendor from carrying on similar business after sale c) employment contract, unreasonable restrictions on employee after leaving employment b) and c) presumption at law that all restrictions are unreasonable, onus to prove reasonable on the party relying on the clause Restrictive Covenant re sale of a business: - goodwill is an asset of a business - if vendor has same kind of business, former customers may want to go to vendor, unless promise not to compete, goodwill purchased may not effectively transfer to purchaser - purchaser has onus to show restriction reasonable, - if clause not reasonable, not enforceable - court will not re-write clause to be reasonable - geographical restrictions, time restrictions, question of fact as to reasonableness - court may sever parts that are unreasonable if other parts reasonable Restrictive Covenant between employer / employee: - an even higher onus to establish reasonableness in employment situation - reluctance of courts to limit employee’s ability to use skills acquired and seek new employment - employer must show serious injury to employer to justify restriction - unequal bargaining power of employers - can restrict employee to protect trade secrets - restrict from use of former client or customer list
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