LLB202 Study Guide - Final Guide: General Position
CAPACITY
Lack of capacity in contract law does not refer to ‘lack of understanding’ but to particular
people who in certain circumstances invoke the protection of the law.
6.1 Minors
In Australia, a minor is a person under the age of 18 years (Law Reform Act 1995 (Qld) s17).
The general position is that contracts are not binding on the minor unless they are ratified
(approved) upon them becoming of age. However, contracts for necessaries and contracts
relating to employment or apprenticeship are binding unless repudiated (rejected).
At common law a contract entered into by a minor may be categorised as follows:
1. Contracts that are binding
(a) Necessary goods or services
(b) Beneficial contracts of service
2. Contracts that are binding unless repudiated
3. Contracts that are not binding unless ratified
6.1.1 Contracts that are binding
6.1.1.1 Contracts for necessary goods and services
Contracts for necessaries will be binding on both parties and the normal remedies for breach
of contract will apply.
In order for the contract to be binding, the goods or services must be considered as
‘necessaries’. The common law has developed a two-tier test to determine what constitutes a
necessary:
1. Whether the goods concerned are capable of being necessaries is a question of law. This
question is determined according to the minor’s social and economic circumstances and will
vary from person to person (Nash v Inman) eg food, clothing (suit)(swimwear), services
2. Whether the goods are necessary to the actual circumstances is a question of fact (Nash v
Inman)
If the contract is concerning a ‘good’ the Sales of Goods Act 1896 (Qld) s5 will come into
force. Under that section a minor is obliged to pay a reasonable price for necessaries, which
are goods that are both:
(1) suitable to the ‘condition’ (that is station) in life of the minor and
(2) suitable to his or her actual requirements at the time of sale and delivery.
In Nash v Inman [1908] 2 KB 1 it was held that 11 fancy waistcoats purchased by
an undergraduate student at Cambridge from a Saville Row tailor were (1) as a
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Document Summary
Lack of capacity in contract law does not refer to lack of understanding" but to particular people who in certain circumstances invoke the protection of the law. In australia, a minor is a person under the age of 18 years (law reform act 1995 (qld) s17). The general position is that contracts are not binding on the minor unless they are ratified (approved) upon them becoming of age. However, contracts for necessaries and contracts relating to employment or apprenticeship are binding unless repudiated (rejected). At common law a contract entered into by a minor may be categorised as follows: Contracts that are binding (a) necessary goods or services (b) beneficial contracts of service. Contracts for necessaries will be binding on both parties and the normal remedies for breach of contract will apply. In order for the contract to be binding, the goods or services must be considered as.
