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    Contract Law II

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    Marsha Shiru
    This document discusses the capacity to contract under law. It notes that everyone is presumed to have capacity unless they are mentally disordered, drunk, or a minor. For mentally disordered persons, a contract is still valid if the other party was unaware of the incapacity. The document cites a case from 1892 that established someone claiming insanity must prove they did not understand the contract and the other party was aware of the incapacity. For minors, courts may enforce contracts depending on if terms are fair and beneficial to the minor.

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    Contract Law II

    Uploaded by

    Marsha Shiru
    36 views5 pages
    This document discusses the capacity to contract under law. It notes that everyone is presumed to have capacity unless they are mentally disordered, drunk, or a minor. For mentally disordered persons, a contract is still valid if the other party was unaware of the incapacity. The document cites a case from 1892 that established someone claiming insanity must prove they did not understand the contract and the other party was aware of the incapacity. For minors, courts may enforce contracts depending on if terms are fair and beneficial to the minor.

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    12610867 Contract Law II

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    This document discusses the capacity to contract under law. It notes that everyone is presumed to have capacity unless they are mentally disordered, drunk, or a minor. For mentally disordered persons, a contract is still valid if the other party was unaware of the incapacity. The document cites a case from 1892 that established someone claiming insanity must prove they did not understand the contract and the other party was aware of the incapacity. For minors, courts may enforce contracts depending on if terms are fair and beneficial to the minor.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    36 views5 pages

    Contract Law II

    Uploaded by

    Marsha Shiru
    This document discusses the capacity to contract under law. It notes that everyone is presumed to have capacity unless they are mentally disordered, drunk, or a minor. For mentally disordered persons, a contract is still valid if the other party was unaware of the incapacity. The document cites a case from 1892 that established someone claiming insanity must prove they did not understand the contract and the other party was aware of the incapacity. For minors, courts may enforce contracts depending on if terms are fair and beneficial to the minor.

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    Contract Law II

    Trinidad & Tobago Hospitality & Tourism Institute


    Hospitality Law & Insurance: BC 229
    Lecturer: Ms. V. Maharaj

    Capacity
    The law presumes that everyone has the capacity
    to contract. Three classes of persons are
    subject to some degree of personal contractual
    incapacity:i.
    Mentally disordered persons;
    ii. Drunken persons; and
    iii. Minors.
    It is also essential to examine the capacity of
    corporations, when entering into contractual
    relations.

    Capacity
    Mentally Disordered Persons
    A contract made by a person of unsound mind is not
    voidable at that persons option if the other Party to
    the contract believed at the time he made the
    contract that the person with whom he was dealing
    was of sound mind. In order to avoid a fair contract
    on the ground of insanity, the mental capacity of the
    one must be known to the other contracting Parties.
    The general rule is that a mentally disordered person
    is bound by his contract unless he can show that
    owing to his mental condition he did not understand
    what he was doing and further that the other Party
    was aware of his incapacity.

    Capacity
    This rule was laid down in Imperial Loan Co. Ltd. V
    Stone [1892] 1 Q.B. 599
    When a person enters into a contract, and afterwards alleges
    that he was so insane at the time that he did not know
    what he was doing, and proves the allegation, the contract
    is as binding on him in every respect.as if he had been
    sane when he made it, unless he can prove further that the
    person with whom he contracted knew him to be so insane
    as not to be capable of understanding what he was about.
    The burden of proof in such a case must lie on the defendant.
    A Defendant who seeks to avoid a contract on the ground
    of his insanity, must plead and prove, not merely his
    incapacity, but also the Plaintiffs knowledge of the fact,
    and unless he proves these two things he cannot succeed.

    Capacity
    Minors
    A contract with a minor may be rendered enforceable
    or void by the courts. The basic principle of law is
    that a minor must be protected against his
    immaturity in his dealings with other persons.
    If the entire contract or a particular tem of a contract
    is so unfair as to make the contract disadvantageous
    to he minor t render the contract unfair , the court
    will not enforce the contract. At the same time the
    policy of the law is to mitigate some of the
    hardships that might be imposed on persons dealing
    with a minor , so as to encourage them to enter into
    contracts that are for the minors benefit.

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