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BU231 (312)

Contract Law

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Wilfrid Laurier University
Shelley Mc Gill

BU 231: Contract 2- Capacity and Legality CONTRACT How could the Farmer have changed his conduct to benefit from s. 16 of the Mercantile Law Amendment Act a. Record the telephone conversation b. Get the promise in writing under seal c. Get someone else to promise to pay on his behalf d. Actually pay the $1200.00 Void or Voidable ◦ Getting out of a contract that has offer, acceptance, consideration and intention depends on a Court declaring the contract void or voidable. ◦ If this happens the court will grant the remedy of rescission to try to place the parties back into the position they were in before the contract was entered into. o Pulls back from both of you what you put into the deal  Example: signing a lease while drunk • If you hadn’t lived there yet then you have a possibility of making it void o If you had lived there that is harder to get rid of Capacity ◦ It is presumed that the parties have capacity to contract o Do you have the legal power to contract o Sometimes is the meaning if you have the mental intent o Others are limitations that are imposed on this particular type of entity  Example: Enemy Alien • State of fact, whether you are an enemy alien • An illegal citizen of a foreign country within the borders of another country • You become an enemy when the country in which you are in declares war with the country to which you are a citizen of • This makes all their past contracts void • Example: Japanese in Canada during WWII ◦ The burden of proof is on the party alleging a lack of capacity o If you are arguing that you do not have the capacity you have to prove it o Making it harder for those who are drunk, mentally unstable, etc. to prove their point if they do not remember what happened Diminished Capacity Issues *reformate to make it into 2 columns* ◦ Corporations o The closest thing that we have to a legal entity  They can contract in the same way  They are created to replace the personal promise of humans o They have a birth date  A creation date  The date in which the government stamps the form and issues the corporation number • NOT the date that you start the form • ONLY when the Government stamps the form ◦ Labour Union o NOT A CORPORATION o Like a class action  A set of similar like people based on their work o ◦ Enemy Alien o Time specific  During the time when their native nation is at war with the nation to which they are now living in ◦ Aboriginal o This is more politically popular, but not legally correct  The Indian Act o Aboriginal  Is a wider term that includes the Métis, First Nations, etc. o Indian Act  All are connected to the reserve • Not only land (Indian Reserves) • Certain amount of money that is set aside o For the betterment of Indians  Designed in the 1800s • At this time it was felt to be a good thing for those who it covered • It was focused on long term preservation of land, where culture could be practiced and preserved • A trustee had to oversee it o The government (federal), they own the land, and it is dedicated to the use of whatever people choose to live on it o This is seen as quite paternal and condescending  The courts see it as a fiduciary relationship o There are limits to what an Indian on a reserve can own  They cannot own land • You can’t mortgage or use the land as any kind of security o Therefore you can’t will the house to anyone else (because it can’t leave the Indian community) o If you can’t mortgage, finance or get security then it’s harder to get a loan  This is why there is a hostility and disconnect between Indians living on the reserve and the success of those that do not live on the reserve • However Indians can hold land outside of the reserves o Living off of the reserve lets you have a land contract capacity that the reserve cannot offer ◦ Bankrupt o This is tied to successful financial relationships o The theory is that it wipes out your debts  Takes a moment in time where it takes all your assets, sells them to the benefit of those creditors • Even if the amount given is less than the amount owed your debt is wiped clean o Bankruptcy does not wipe out taxes though  You have to wait longer to file for bankruptcy on a student loan o The reality is that it is a 9 month to a year process  Where you have to ensure that you can’t keep up running the debts  You can make an assignment into bankruptcy • A tranfers of your assets to a trustee  Petition you into bankruptcy • You are pushed into bankruptcy o Your assets being turned into money and sent to creditors  This process is assigned to a trustee  The trustee will go to a judge who can wipe the debt clean • Beforehand you are dubbed a discharged ba o Those in bankruptcy process  Are allowed to make contracts for necessities • They won’t take your assets that are necessities o Such as a stove, or your clothes ◦ Insane/ Drugs/ Alcohol ◦ Minors… ◦ Void/ Ultra Vires o Beyond the power (Latin) o Looks at the documentation before incorporation  There are paragraphs where you describe the activities that the business will carry on  ◦ Ratification ◦ Void ◦ On Reserve Issues ◦ Undischarged ◦ Parallel to a Minor o States of incapacity (drunkenness, etc.) have similar rights to minors  Do you want a drunk to be able to make contracts? • Hiring a taxi to take them home o Therefore they HAVE to be able to make a contract o Necessaries of life will flow into this category o Look at them as a vulnerable group  So that those initiating in a contract will them will be able to recognize them as such • And make some of these contracts void or voidable o They can be let of out the contract if they wish Minors ◦ Age of majority is set Provincially o In Ontario it is 18 o Age of majority have been moved multiple times, as low as 18 and the highest of 26  May be based on how long secondary school is ◦ People under the age of 18 are minors o There is no variation between aged, if you are under 18 then you are considered a minor  Doesn’t matter if you 1 or 14, they’re all the same ◦ They have limited capacity to contract ◦ Necessaries are beneficial contracts of service are binding no matter what the age o If minors were able to back out of contracts even for necessities then businesses would be less likely to make contracts with minors o Beneficial contracts  Contracts of employment 
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