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LAW 122 (626)
Chapter 10

Chapter #10.docx

7 Pages
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Department
Law and Business
Course Code
LAW 122
Professor
Avi Weisman

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cc
Six different contractual defects and their legal consequences Incapacity, absence of writing,
mistake, frustration, illegality, and unfairness during bargaining
c
pc is the legal power to give consent
pSometimes the question of capacity depends on a person·s ability to understand the nature
and consequences of their acts
pae will consider 7 groups of person who may have no capacity or only limiyed capacity to
create a contract
1)pMinors
2)pMentally disable persons
3)pintoxicated persons
4)pcorporations
5)passociations
6)pIndian bands and aboriginal persons
7)ppublic authorities
p
GcGc
p¦
[p¦ is the age at which a person is held fully accountable in law
[p¦ people who have not reached the age of majority
[pÑaw says that everyone under that age of majority lacks capacity
[pntario, Alberta, Saskatchewan age of majority is 18 years
[pSome contracts are voidable at the minors option
[poidable a contract is voidable if a minor is entitled to avoid the legal obligations that it
created
[pIf a contract is voidable a minor may elect to avoid liability
[pMinors cannot avoid contracts of employment that are to their benefit
½p¦
[pA court has declared a person to lack mental capacity , there contracts are void and
cannot be enforced at all
[p2nd even if there is no court declaration a person may still be considered mentally
incompetent
[pA minors contract is voidable even if the other party was unaware of the age issue
[pIn contracts the contract of a person with a mental incapacity is voidable only if the other
party should have recognized the problem
Ôp
[pèhat agreement is voidable if tow conditions are met
pèhe person must have been so drunk that they could not know or appreciate what
they were doing
pèhe other contractual party must have been alerted to that fact
ëpåc
[pcorporations are treated as legal persons
[pc are treated the same way as individuals who have reached the
age of majority
pIf a chartered corporation enters into a contract in breach of its charter, its
charter may be forfeited
[pc have limited contractual capacity
[pèheir capacity to contract is limited by the powers given to them through legislation
[pIf statutory powers act Ultra vires ´beyond the authorityµ hewn it attempts to contract into
a manner that exceeds statutory powers
p
[pAssociations are usually unincorporated business organizations that lack contractual
capacity
[p^x private clubs charities, and religious societies
ååG
[pIndian band is a body of aboriginal people whose land and money are held by the
crown
[pèhey can sue or be sued
½
certain types of contracts must be evidenced in writing

[puequired some contracts to be evidences in writing as a way of reducing the risk of perjury or
lying in a legal proceeding
[pIntended to discourage people from falsely claiming the existence of oral contracts
[pÑess persuasive today because to the use of technology which can alter and reproduce
documentation
c !
nly certain types of contracts fall under statue of frauds
Guarantees
[p is a contractual promise by a third party, called a guarantor to satisfy a debtors
obligation if that debtor fails to do so
[pèhe guarantor gives a conditional promise, and is required to discharge the debt only if you
fail to do so
[p is an unconditional promise to assume another·s debt completely
[pAn indemnity is therefore not a promise to answer for another·s debt, it is a promise to assume
another·s debt altogether
[pMany provinces Statute of Frauds applies to contracts of guarantee by not to contracts of
indemnity
contracts for the Sale of an interest in land Interest in land are unenforceable unless they are
evidenced in writing
contracts not to be performed within one yearcontracts that are not to be performed within one
year of their creation are unenforceable unless they are evidenced in writing
"
If a contract falls within the Statue, the court must decide if the writing requirement was satisfied

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Description
Chapter 10 Contractual DefectsSix different contractual defects and their legal consequences Incapacity absence of writingmistake frustration illegality and unfairness during bargaining 1 Incapacity to Contracty Capacity is the legal power to give consent y Sometimes the question of capacity depends on a persons ability to understand the nature and consequences of their acts y We will consider 7 groups of person who may have no capacity or only limiyed capacity to create a contract 1 Minors 2 Mentally disable persons 3 intoxicated persons 4 corporations 5 associations 6 Indian bands and aboriginal persons 7 public authoritiesPERSONAL CAPACITY 1 MinorsAge of Majority is the age at which a person is held fully accountable in lawMinor people who have not reached the age of majorityLaw says that everyone under that age of majority lacks capacityOntario Alberta Saskatchewanage of majority is 18 years Some contracts are voidable at the minors optionVoidable a contract is voidable if a minor is entitled to avoid the legal obligations that it createdIf a contract is voidable a minor may elect to avoid liabilityMinors cannot avoid contracts of employment that are to their benefit 2 Mental IncapacityA court has declared a person to lack mental capacitythere contracts are void and cannot be enforced at all nd 2 even if there is no court declaration a person may still be considered mentally incompetentA minors contract is voidable even if the other party was unaware of the age issueIn contracts the contract of a person with a mental incapacity is voidable only if the other party should have recognized the problem 3 IntoxicationThat agreement is voidable if tow conditions are met o The person must have been so drunk that they could not know or appreciate what they were doing o The other contractual party must have been alerted to that fact 4 Business CorporationsCorporations are treated as legal personsCharted corporations are treated the same way as individuals who have reached the age of majority
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