lecture 6b- capacity

7/28/2019 Lecture 6B- Capacity

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Lecture 6B

Capacity To

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Minors

Minors

A contract between a minor and anotherparty may be one of three types:

1. Va i contract is binding in the usual way

2. Voidable contract is binding unless and until the minor rescinds the contract

3. Unenforceable contract is unenforceable against the minor unless he ratifies (adopts)

it but the other party is bound

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Minors

Minors

Two types of contract will bind a minor(person under the age of 18, determined by

nors ontracts ct 19 7 :

1. Valid ContractsValid Contracts

Contracts for the supply ofnecessarygoods and services

Service contract for minors benefit

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Minors(1. Valid Contracts)


NecessariesNecessaries

First Test SuitabilitFirst Test Suitabilit

According to s3 Sale of Goods Act 1979,supply of goods or services must be

suitablesuitable to the condition in life of theminor and to his needs at the time of saleand delivery.

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NecessariesNecessaries Second Test (Personal needs)Second Test (Personal needs)

personal needs. Goods required for use in a tradeare not necessaries, nor are goods of any kind ifthe minor is already well supplied with them.

Case example:

Nash v Inman 1908

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Service ContractService Contract

For the minors benefit which contains

an element ofeducation or training.education or training.

Case example:Doyle v White City Stadium 1935

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If the minor sets himself up in business, hewill not be bound by his trading contracts,

v y .minor can, nonetheless, sue on thesecontracts.

Case example:Cowern v Nield 1912

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CowernCowern vv NieldNield (1912)(1912)

.

refused to deliver a quantity which had been paidfor by Cowern. It was held that, provided theinfant had not acted fraudulently, he was not

liable to repay Cowern.

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Minors(2. Voidable Contracts)


Three kinds of contract which arevoidable:

2.Voidable ContractsVoidable Contracts

Leases of Land

Partnerships

Purchase of Shares

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The contract is binding on the minor until hedecides to reject it. He must reject the contractbefore becomin 18. the main effect of

repudiationrepudiation is to relieve the minor of all futureliabilities. The key to liability or recovery of sumspaid may well depend upon whether the minor

received consideration.

Case example:

Steinberg v Scala (Leeds) 192310


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Minors(3. Unenforceable Contracts)


All other contracts entered into

unenforceable the minor isthe minor is

not boundnot bound(though he mayratify it) but the other party is

bound. 11


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Any guarantee of the contract

(adult) is validvalidwhether it is

voidable, repudiated by theminor or unenforceable and is

not ratified by the minor. 12


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A minor is generally liable for his torts (i.ewrongful acts causing loss or damage to others).

However, he will not be liable if he commits a tortwhich the contract is not binding on him. If hewere liable, the other party would effectively beable to enforce such a contract.

Case example:R Leslie Ltd v Sheill 1914

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Minors(Other Contracts)


Any guarantee supporting a loan to a minor isisenforceableenforceable against adult guarantor.

But contract made by the minor can beunenforceable against him for some other reason,

for example misrepresentation or duress (beingforced and threatened) by the adult party. In sucha case the guarantor would not be bound

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A minor may be liable to

certain benefits which he

has received under acontract.15


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a. The minor can be made toreturn goods and money which

he still has in his possession. Soif Sebastian, age 17, acquires acase of champagne on credit andfails to pay he can be required toreturn the goods to the seller.

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b. If the minor has exchanged theoriginal goods for other property the

goods received in exchange. So ifSebastian, in the example above, has

bartered a bottle of champagne for adozen quails eggs, the seller of thechampagne may be able to recover the

quails eggs. 17


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c. If the minor has sold theoriginal goods for cash he can

be ordered to hand over the saleproceeds. So if Sebastian sold

the case of champagne for cashhe could be required to handover the money to the retailer.

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d. If the minor has consumed or disposedof the goods, or the proceeds of any

,compensate the other party. So ifSebastian drank the champagne or

used the proceeds of any sale of thechampagne to pay for an evening at anightclub, he could not be required to

compensate the unpaid seller. 19

lecture 6b- capacity

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