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BU231 (317)
Chapter 7

BU231 Textbook Notes Chapter 7.docx

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Shelley Mc Gill

Chapter 7 The meaning of capacity to contract  Legal capacity = competence to bind oneself legally  Repudiate = reject or declare an intention not to be bound by Minors (or infants) Contractual liability of minors  Minor/ infant = a person who has not attained the age of majority according to the law of their province  General rule: contract made by a minor is not binding on them but binding on the other side (whether or not they were aware that they were dealing with a minor) o Except for necessaries = essential goods and services (like food) Necessaries and beneficial contracts of service  Not required to pay the contract price, but a reasonable price based  Bound by 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 back out of a contract for non-necessaries Contracts indirectly affecting a minor  A minor who as benefited from a contract for non-necessaries will not be able to recover money already paid, though able to repudiate/ back out of their remaining liability  An adult can recover money lent to a minor only if the minor used the sum to purchase necessary goods The contractual liability of minors upon attaining majority  Voidable contracts = a contract that may be rendered non-binding at the option of one of the parties o Minor acquires “an interest of a permanent, continuous nature”  Ie. gym memberships, cell phone services  Must repudiate promptly upon reaching the age of majority or they will be liable just as if they had entered into the contract after coming of age  Minor loses the right to repudiate by not doing so promptly after coming of age or by accepting the benefits of the contract after that time o Second type does not create an interest of continuing nature and is not binding upon a minor unless she expressly ratifies and confirms the contract after attaining majority  Acknowledge and promise to perform Other persons of diminished contractual capacity  A person of unsound mind or incapacitated through alcohol or drugs are treated in the same way as minors o Bound to pay a reasonable price for necessaries  Must show that they were not only incapable of making a rational decision at the time of the agreement, but also that the other party was aware of his condition o But the person’s observations about the other party are unlikely to be reliable, so the necessary evidence must be adduced from all the surrounding evidences Corporations  Can make contracts or enter into any obligations that a natural person possess  But restricted to the limited power by the statutes creating them  Must make all its contracts through agents  it. Corporation officers or the signature of an authorized officer Labour unions, associations, and other organizations  Only after a group has applied to the appropriate govt agency and has been recognized as a separate legal person will it be capable of entering into contracts  Legal status of unions remains limited  Business management has the capacity to make an offer in the course of negotiating a collective agreement, but any acceptance of that offer by the union must be subsequently ratified by a majority of the union members before its binding  Representative action = an action brought by one or more persons on behalf of a group having the same interest o A union may authorize one or more persons to represent it in a court Enemy aliens  Alien = non-citizen  The 2 countries are at war  Any evidence that a contract made to an enemy alien is detrimental t
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