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Chapter 7

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Wilfrid Laurier University
Valerie Irie

BU231 Chapter 7 – Formation of a Contract: Capacity to Contract and Legality of Object Week 3 The Burden of Proving Essential Elements of a Contract -Once a plaintiff shows that there was offer and acceptance and consideration for the promise, the court will ordinarily presume an intention to create legal relations -At that point, the court will also presume that two additional elements are present: (1) the defendant has the capacity to make a contract, and (2) the contract is legal -If the defendant shows that she did not have the capacity to enter into the contract or that the contract was not legal, she will be released from her contractual obligations The Meaning of Capacity to Contract -Legal capacity – competence to bind oneself legally -In addition to age, there are other reasons that contracting parties may lack capacity and, as a result, attempt to repudiate their contracts -Repudiate – reject or declare an intention not to be bound by Minors (or Infants) Contractual Liability of Minors -Minor or infant – a person who has not attained the age of majority according to the law of his or her province -Age of majority – the age at which a person is recognized as an adult according to the law of his or her province -Guardian – a person appointed to manage the affairs of a minor in the place of his or her parents -Necessaries – essential goods and services Necessaries and Beneficial Contracts of Service -A minor is bound by any contract for supply of necessaries, essential goods, and services -However, she is not bound to pay the contract price as such, but rather a reasonable price on the same basis as quantum meruit -The courts have identified the following as necessaries: food, clothing, lodging, megical attention, legal advice, and transportation -Beneficial contracts of service – contracts of employment or apprenticeship found to be for a minor’s benefit Contracts Creating No Liability for a Minor -A minor may always repudiate (back out of) a contract for non-necessaries even where the non- necessaries are clearly beneficial to him -A minor is not liable for necessaries that he has ordered but not yet received -When the minor is a seller rather than a buyer in a contract or the sale of goods, he cannot repudiate the contract to recover the goods delivered unless he returns the money paid -A seller cannot rely on a statement by a minor that his parents will pay for the purchase -A vendor needs express authority from the parents before being able to bind them Contracts Indirectly Affecting a Minor -A minor who has benefited from a contract for non-necessaries will not be able to recover money already paid though he will be able to repudiate his remaining liability -An adult can recover money lent to a minor only if the minor used the sum to purchase necessary BU231 Chapter 7 – Formation of a Contract: Capacity to Contract and Legality of Object Week 3 goods -If the borrowed money was used to pay for a vacation, the lender cannot recover the debt -A minor’s freedom from liability is limited to contract she remains liable for torts such as negligence, assault, defamation, or deceit The Contractual Liability of Minors upon Attaining Majority -Voidable contract – a contract that may be rendering non-binding at the option of one of the parties -Ratify – acknowledge and promise to perform Other Persons of Diminished Contractual Capacity -The law protects a person of unsound mind or incapacitated through alcohol or drugs in the same way as a minor -A person who was drunk or insane at the time of making a contract often has a difficult problem of proof -With an aging population, we face a growing problem of diminished contractual capacity among the elderly Corporations -Since a corporation is a “legal fiction” – it is merely a creature of the law – it has no physical existence: it cannot think or act or sign its name as a natural person can -The law may give corporations the capacity to make any contract or enter into any obligation that a natural person possesses, and business corporations’ statutes now give this capacity -Void – never formed in law Labour Unions, Associations, and Other Organizations -In our legal system, the fact that a group of individuals gets together and forms an organization does not make that group into a legal entity – unless it incorporates -The legal status of labour unions remains limited -Representative action – an action brought by one or more persons on behalf of a group having the same interest Enemy Aliens -An alien has the s
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