What is capacity?
Legal power to give consent.
What are 7 groups of persons who have no capacity or limited capacity to create a contract?
Minors
Mentally disabled persons
Intoxicated persons
Corportions
Associations
Indian bands and Aboriginal persons
Public authorities
What is the age of majority?
The age at which a person is held fully accountable in law. (Different ages in different provinces)
Who are minors?
People who have not reached the age of majority.
What happens if a minor is entitled to avoid the legal obligations hat it created?
The contract is voidable.
A 15 year old boy enters a cell phone contract for 1 year. After 2 months he elects to avoid it. Does he have to pay for those 2 months? Does he have to pay for those 10 months?
Yes to the 2 months. No to the 10 months.
If minors elect to avoid contracts do they have to give back their benefits?
Of course.
What are some contracts that minors can not avoid?
Food, clothing, education, medical treatment and legal advice.
If a court has declared a person to lack mental capacity what happens?
Contract is void and cannot be enforced at all.
If there is no court declaration can a person still be considered to be mentally incompetent?
Yes, if he/she lacks mental capacity to contract at the time the contract is formed.
Is a minor's contract voidable if the other party didn't know that they were a minor?
Yes.
Is a mental person(Jess...) contract voidable if the other part didnt know that they were mental?
Only if the other party should have recognized the problem.
Are the rules of drunkness(Brandon) similar to those for mental incapacity(Jess)?
Yes.
What 2 condidtions for drunkness must be met?
1. Been so drunk, that they could not know/appreciate what they were doing.
2. The other party must have been alerted of that fact. (vomit on shoes)
When can the intoxicated party able to avoid a contract?
As soon as they are sober.
How are corporations treated?
As legal persons.
How are statutory corporations limited in their contractual capacity?
Capacity to contract is limited by the powers given to them through legislation.
How are chartered corporations treated?
Same as individuals who have reached age of maturity.
What does ultra vires mean?
"Beyond the authority." (In a manner that exceeds its statutory powers.
What are associations?
Unincorporated business organizations that lack contractual capacity.
Can a member of an association enter into a contract for its benefit?
Yes, but it is that specific member who becomes liable under the agreement.
What is an Indian band?
A body of Aboriginal people whose land and money are held by the Crown.
Do Indian bands have the same contractual capacity as associations?
No, they have the same as corporations, they can sue or be sued.
What are some restrictions on their capacity to contract?
They cannot use reserve land in any way, shape or form. (Cannot be used as security for a credit transaction.)
Can the land in a reserve be transfered to another member of the band?
No. Any deed, lease contract, instrument, document, or agreement is void unless approved by the crown.
Other than reserve land, do Aboriginal persons have the same contractual capacity as everyone else?
Of course.
What requirement arose from an old piece of english legislation - The Statute of Frauds?
That certain types of contracts must be evident in writing.
Why did the Statute of Frauds require some contracts to be evidenced in writing?
Reducing the risk of perjury, or lying in legal proceedings.
Is it still as important today to have a written document under the Statute of Frauds?
No, electronic and paper documents can now be produced, altered and reproduced with a few clicks of a mouse.
Does the Statute of Frauds apply to guarantees?
Yes.
What is a guarntee?
Contractual promise by a third party (guarantor) to satisfy a debtor's obligation if that debtor fails to do so.
Does the guarantor promise to pay not mattet what?
No, they give a conditional promise. (Only if the debtor cannot pay.)
What is an indemnity?
An unconditional promise to assume another's debt completely.
Are contracts for the sale of land enforceable if they do not have evidence in writing?
Nope, only enforceable with writing.
If a contract is not going to be preformed within a year, do they have to be evidenced in writing?
Yes, otherwise they are unenforceable.
Are there writing requirements for the Statute of frauds?
Yes, the court must decide if the writing requirement was satisfied.
Does a Statute of Fraud have to take any particular form?
Nope, it just has to:
1. provide evidence of the essential elements of the contract (party names, subject matter, price)
2. Be signed by the party against whom the agreement is being forced.
If the Statute of frauds renders a contract unenforceable because of unsufficient evidence in writting, is the contract void?
Nope, just unenforceable.
What is consensus ad idem?
A shared mutual agreement to enter into an enforceable transaction on a particular basis. Similar to a meeting of the minds.
When will a mistaken identity render a contract defective?
1. The mistake was known to the other contractual party.
2. The mistake was material.
What is a material mistake?
One that matters to the mistaken party in an important way.
What mistake puts the parties at cross-purposed and therefore prevent the formation of a contract?
When the parties are mutually mistaken about the subject matter of an agreement. (Mistake about subject matter)
What happens in a mistake about existence of the subject matter?
Both parties make the same mistake based upon a false assumption.
What is a force majeure/irrestible force clause?
States which party bears the hardship if the subject of the contract is destroyed/unexpected event occurs. Affected party should then get insurance.
What is it called when the parties make an erroneous assumption about the future.
The contract is frustrated.
When does a frustrating event take place?
Sometime after the contract is already in place.
When is a contract frustrated?
When some event make performance impossible or radically undermines its very purpose.
Common law jurisdictions use and all-or-nothing rule which means?
A purchaser can recover all of its contractual payments if it has NOT recieved any benefit from the seller. If the purchaser recieved SOME benefit, it cannot recover any payments.
What is non est factum?
Means "this is not my deed." Allows mistaken party to avoid obligations under the contract.
When can non est factum be used?
When there is a fundamntal, total or radical difference between what a person signed and what they thought they were signing.
Does non est factum apply when a mistaken party signs an agreement without carefully reading it?
Nopers.
What are 3 types of unfair barganining?
Duress
Undue influence
Unconscionable transactions
What is duress of person?
Refers to physical violence or the threat of violence against a person or that person's loved one.
What happens if a contract is the product of duress?
It is voidable.
What is duress of goods?
When one person siezes or threatens to seize another person's goods to force that person to create a contract.
What is economic duress?
When a person enters into a contractual arrangememnt after being threatened with finanical harm.
Is a contract more likely to be considered voidable if the victim succumbed to the pressure without legal advice?
Yes, otherwise argeement tends to look more like a sounds business decision.
When should the victim of duress start legal proceedings for the courts to be more sympathetic?
Promptly after the effect of the pressure has passed.
Does it affect the courts decision if the victim of duress protested when presented with the pressure?
Yuppers.
What must a victim of duress show?
That they could not have reasonably resisted.
What is undue influence?
Abuse of a relationship inorder to influence someone and induce an agreement.
What are the two types of undue influence?
Where parties are in a fiduciary relationship.
Where there is no special relationship between the two parties.
What is a fiduciary relationship?
When one person is in a position of dominance over the other.
What happens if the fiduciary proves that the transaction was fair?
The contract will stand.
What is an unconscionable transaction?
An agreement that no right-minded person would ever make and no fair-minded person would ever accept.
Characterized by its one-sidedness.
What must the weaker party prove in unconscionable transaction?
1. there was an improvident bargain.
2. there was an inequality in the bargaining position of the two parties.
What is an improvident bargain?
Bargain made without regard to the future.
What are illegal agreements?
Expressly or implicitly prohibited by statute.
What is a regulatory statute?
The purpose is to not punish individuals for wrongdoing, but rather to regulate their conduct through an administrative regime.
Are some agreements illegal even if they do not contravene a particular statute?
Yes.
What is a covenant in restraint of trade?
A contractual tern that unreasonably restricts one party's liberty to carry on a trade, business, or profession in a particular way.
What are some examples of a covenant in restraint of trade?
Trade or not trade with someone in particular.
Work for some in particular, or at least not work for anyone else besides said person.