Contract Law

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Date Submitted: 11/19/2013 10:52 AM

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Capacity To Make Contracts

This essay will examine the concept/importance of one of the essential ingredients of a contract, Legal capacity is defined as the power provided under law to a natural person or judicial person to enter into a binding contract, the essay will specifically examine the groups of people which have limitations (incapacity) in entering into a binding contract, these are primarily minors, intoxicated persons and people with mental issues, these will be discussed in this essay.

The first category is in relation to minors, a minor is classified as a person under the age of 18; this is outlined in Section 1 of the Family Law Reform Act 1969 where minors in English law as such have limited capacity in entering into a contract. The law was primarily set up to protect minors from unscrupulous business men and enforcing contracts upon a minor. All minors contracts are either deemed to be void (not bound by) or voidable (may be repudiated), however there are two exceptions to this namely contracts of necessaries and beneficial contracts of service and such contracts may be enforceable.

Section 3 (3) of the Sale Of Goods Act 1979 defines liability of a minor in regard to buying necessaries, “Necessaries are deemed to be basic goods suitable for their condition in life and to their actual requirements at time of sale and delivery and a minor shall pay for these goods and services actually supplied to them that are necessaries according to their station in life”

Necessaries can extend beyond the essentials for living; they can be needed for the minor’s lifestyle. The minor is not liable for goods or services that have not been delivered to them. Valuable items could be deemed as necessaries but items of luxury are not considered as necessaries and the minor could be deemed liable to pay for the items. An example of this is,

Nash v Inman [1908]...