2009 Contract Law
Q1) Explain the law on capacity to contract. Provide full authority for your answer
In order to enter into a valid contract, both parties must have capacity. Capacity is effected by a person’s age and mental capacity. The formalities are prescribed in certain contracts set out in the Requirements of Writing (scot) Act 1995.
Capacity of legal age in Scotland is 16. There are special provisions for those under 16. Anyone over 16 and in full command of their faculties can make contracts. Age of legal capacity (Scotland) Act 1991. This separates a person’s capacity into 3 periods. In general, anyone under 16 is deemed to have no capacity to enter into transactions (parents usual legal representatives) . Children are able to enter a transaction provided two conditions are met; 1) transaction must be of a kind commonly entered into by persons of that age and circumstances. 2) The terms of the transaction must be reasonable. Cumulative. If one is breached transaction is void.
A person of unsound mind has no contractual capacity. Most “contracts” made by an insane person are void. If a curator bonis has been appointed to manage the insane person’s affairs, the latter has no contractual capacity at all. If a curator has not been appointed and the person’s mental state is fluctuating then his contracts will only be valid if made during a lucid interval. An on-going contract does not necessarily lapse in the event of the supervising insanity of one party
Louden v Elders CB 1923
Dundee meat retailer ordered supply from Liverpool firm while insane, unknown to supplier , certified insane after order but before delivery, CB appointed and cancelled order, supplier sought damages for breach. Held, No liability as contract void.
Contrast with English Law – Hart v Connor 1985
For a breakdown of the laws in America, Florida abogados de accidentes
Mentally unsound P bound to sell land as the other P did not know of incapacity when bargain was made.
Wink v Mortimer 1849 ( find cases)
When a person’s capacity is affected by drugs or alcohol, in order to set aside a contract on grounds of intoxication is it is necessary to establish that the intoxicated person has completely lost the capacity to consent to an obligation.
Taylor v Provan 1864
Provan offered to buy cattle from Taylor at various prices, all of which Taylor refused. Taylor refused to sell for less than £15 per beast. After a few drinks Provan offered to buy the cattle for £15 per head. Taylor accepted that offer. Provan tried to have this contract set aside on the basis of his own intoxication. The court held that the contract was binding. The court held that he was not too intoxicated to consent.
If a person’s intoxication does reach a level that prevents him from forming the requsite intent, any contract he makeswhile his condition persists will be voidable. A contract can only be avoided if the intoxicated party takes steps to repudiate it as soon as he recover his senses and realises what he has done.
Pollock v Burns 1875
P was a habitual drunkard and entered into a contract while drunk but did not challenge validity for 6 months. Rejected as habitual drunkenness was not a sufficient degree of intoxication to invalidate and adverse comment on delay in challenging.
Law is unclear
Total drunk = void other = voidable only
Citizens of countries UK at war with wherever they live, British citizens who reside in or do business in enemy countries in wartime. Businesses controlled by EA are EA’s too. EA have no contractual capacity. Contract will be void
Explain the law governing legal remedies for breach of contract. Provide full authority for your answer.
Breach of contract
Where either party fails to fulfil his side of the bargain without justification a breach of contract occurs. This entitles the innocent party to sue for damages or obtain some other remedy to compensate him for the loss he has suffered as a consequence of the breach.
Remedies for breach
Where a breach is established it is always open to the innocent party to seek monetary compensation by way of a claim for damages. Given the damages. Given that damages are intended to make restitution between the parties, to compensate for the loss sustained as a consequence of breach of contract, it must be shown that some form of loss has actually been caused. However if no direct loss is suffered the court may still be moved to award nominal damages in recognition of any consequent inconvenience or other disturbance.
Webster & co v crammond iron co 1875
Damages can normally be claimed for pecuniary loss, personal injury and property damage. As a general rule damages are not available in contract law for anxiety and distress.
Farley v Skinner 2001
A surveyor advised the ultimate purchaser that a house intended to be used primarily for the purpose of relaxation was not affected by serious levels of aircraft noise when in fact it was. Given that peacefulness was of the essence the House of Lords took the unusual step of awarding damages on the basis of the disappointment caused.
Whereas the remedy of damages provides compensation within the framework of the contract, the remedy of recission allows the party to withdraw, or resile from the contract completely without having to perform any obligations under it. Available where the other party has wrongly induced, repudiated or committed a material breach of the contract, recission terminates or cancels the contract. Recission is only justified where the breach is material.
Wade v Wakdin 1909
The parties entered into an agreement which by which, march 1908 wade was to perform at the palace theatre in Glasgow. One term of the agreement required artistes to give 14 days notice prior to their performance and to supply bill matter ( publicity material) at the same time. In the event waldon refused to allow him to perfom purporting to recind the contract. The court held that wades breach of contract was not sufficiently material to entitle Waldon to rescind the contract, and walden to contract.
The remedy of a SI – allows the innocent party to apply to court for an order directing the party in breach to carry out the contract. An order compelling the performance of an act is sought e.g. to enforce compliance with restrictive covenant – an interdict is appropriate. Failure to comply with a court order the subject is liable to fine or imprisonment for contempt of court. ..