AFM231 Chapter Notes - Chapter 8: Perjury, Unconscionability, Karen People
18 May 2018
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Chapter 8- Non-enforcement of contracts
The Importance of Enforcing Contracts
• Parties reach consensus → contract formed → law enforces it
• At the same time, the Canadian legal system recognizes the injustice of enforcing contracts without
any provision for exceptional circumstances
• Find a balance between the two points
• Legal doctrines that are exceptions to the general rule of a contract
• Unequal relationship between the two parties
• Misrepresentation or important mistakes concerning the contract
• A defect within the contract itself
• Two outcomes from these legal doctrines:
• Voidable contract is a contract that, in certain circumstances, an aggrieved party can choose
to keep in force or end.
• The court declares the contract to be null and void. Void contract involving a defect so
substantial that it is of no force of effect.
Contracts based on unequal relationship
Legal Capacity
• Legal capacity is the ability to make binding contracts.
• Contract law emphasizes the important of consent and voluntariness
• Children, minors, mentally disabled people are given the benefit of special legal protection
Minors
• The general rule is that minors are not obligated by the contracts they make
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• Minors have the option to fulfill their contractual commitments and can enforce a contract against
the other party should that party be in breach.
• These contracts are voidable at the option of the minor alone
• Exceptions to the general common law rule of immunity from liability. Minors are obligated by
contracts for essentials a.k.a. eessaies ad ae euied to pa a easoale pie fo the.
What amounts to necessary is legally determined to:
• Is the item being acquired necessary to this minor?
• Does this minor already have an adequate supply of the item?
• Suppliers may be face with the presumption that a minor who lives with a parent or guardian is
already adequate provided for and has no outstanding needs
• Contracts known as beneficial contracts of service are also biding if they are considered largely for
the benefit of the minor
• E.g. an employment contract with a minor is enforceable if the employer can show the
contract will bring good training benefits to the minor. Employer can be awarded damages
for breach of contract
• Common law states even when a minor reaches the age of majority, the contract still holds as if the
person is still a minor. They remain unenforceable against the minor unless they involve necessaries
or beneficial service contracts.
• Only if the person now of age expressly adopts or ratifies the agreement does it become
enforceable.
• One exception to this rule is where the agreement is of a permanent nature such as a
partnership. Minor upon turning major must reject (repudiate) this obligation. Failure =
liability will be imposed from the time the minor becomes of age
Mental incapacity
• If people were mentally impaired or intoxicated by alcohol, they may be able to avoid the contract
at their option.
• Attacking the validity of the contract with duress, undue influence, and unconscionability
Duress
• Being threatened are not enforceable
• Duress is now a broader concept and includes economic duress – the threat of economic harm that
coerces the will of the other party and results in a contract
• Couts oe eetl suggested that a pat’s lak of patial o ealisti alteaties a out
as evidence of economic duress in the proper case
• Matha’s paets aot el o this dotie of duess eause the ak did’t theate the to
borrow the additional $40,000.
Undue influence
• Undue influence is the ufai aipulatio that opoises soeoe’s fee ill of hoie. This
operates in two circumstances:
• Actual pressure: one party exerted unfair influence on the other and resulted in the
agreement in question.
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find more resources at oneclass.com
