CHAPTER 9 - LEGAL CAPACITY
Learn generally about contracts for necessaries and contract for non-
B: Drunken and Insane Persons:
Same as for Minors
C: Corporations, Labour Unions, Bankrupt persons:
D: Illegal Agreements:
E. Licenced persons:
F. Contracts void for public policy:
See my posting on Void, Voidable and unenforceable contracts.
CHAPTER 10 – THE REQUIREMENTS OF FORM AND WRITING ETC…
For your purposes there is no distinction between a formal contract
and a simple contract. For exam purposes simply consider that a contract
can be oral, written or implied.
A: The Statute of Frauds:
Note: This statute imposes a stringent requirement that the contract be in
writing for certain types of contracts. If the contract is not in writing,
although a contract exists, it will not be enforceable by the courts unless an
exception to the written requirement can be found.
For your purposes, please learn the sections on the Guarantee and
Contracts Concerning Land. Review generally the other sections. 2
B: Requirements for a written agreement:
Generally speaking the important requirements of any written
(a) a description of the parties (they must be identified);
(b) the subject matter of the contract or agreement (which should
also be set out with clarity); and
(c) the consideration or price to be paid by one or both parties,
whether it be money or an act to be performed.
(d) that it be signed by each of the parties.
C: The Parole Evidence Rule:
This is a rule that is usually applicable to a written agreement which is
said to contain all of the terms of the contract. The rule states that parol
evidence (evidence outside of, but relating to the agreement) will
not be admitted to add to, vary or contradict the terms of a written
However, the rule will not apply and parole evidence will be allowed:
(i) if there is an alleged problem with the formation of the contract,
for example, where one party alleges fraud or asserts that there
has been a mistake; (see under Mistake and Misrepresentation)
(ii) if the contract is intended to be partly oral and partly in
Example 1: A, a person, was negotiating to rent a flat in B's
house. During their negotiations A told B that if he
took the flat, he was to have use of two basement
rooms for the storage of his surplus furniture and
also use of the garden. Subsequently, a written
agreement was drawn up for the lease of the flat
which made no reference to either the storage rooms
or the garden.
The court held that the oral agreement (negotiations)
should be read with the written contract so as to
form one comprehensive contract.
Example 2: The plaintiffs were growers of oranges in Spain and 3
the defendants were shipowners. The Plaintiffs
wished to export their oranges to England and
shipped them to the defendants' vessel relying on
the oral promise by the defendants' agent that the
vessel would sail straight to London. In fact the
vessel went first to Antwerp, so that the oranges
arrived late in London and the plaintiff's lost a
favourable market. When the plaintiff's claimed
damages for breach of contract, the defendant
owners relied on the bill of lading which expressly
allowed them to proceed "by any route and whether
directly or indirectly" to London.
The court held that while the bill of lading was
evidence of the contract between shipper and
shipowner, was not exclusive evidence. The oral
promise by the defendants' agent on behalf of the
defendants was equally part of the contract and was
binding on them.
(iii) Evidence may be admitted to prove previous dealings
between the parties, or a custom or trade usage and thus
to "add" terms which do not appear on the face of the
document and which alone give it the meaning that the
parties wished it to have.
Example 1: A and B enter into an agreement whereby A is to
supply steel ingots to B. Unfortunately the quality of
the steel is not set out in the contract. However, A
has been selling steel ingots to B for 10 years now.
Based on previous dealing between the parties the
court would imply a term as to the quality of the
steel that A normally supplies to B and Is acceptable
Example 2: Same example as Example 1, but this time the price
is not set out in the contract. The court may imply a
price based on custom or trade usage.
(iv) Evidence of a Condition Precedent is admissible to
show that there is a requirement before the cont