Podcast
Questions and Answers
What must the principal have at the time the contract is made for it to be valid?
What must the principal have at the time the contract is made for it to be valid?
- A written agreement
- Competent capacity (correct)
- Legal representation
- Sufficient funds
If a principal is of unsound mind at the time a contract is made, what is the status of that contract?
If a principal is of unsound mind at the time a contract is made, what is the status of that contract?
- It automatically becomes invalid after ratification.
- It may not be ratified later. (correct)
- It can be ratified at any time.
- It is valid and enforceable.
What effect does the Companies Act, 1963 have on pre-incorporation contracts?
What effect does the Companies Act, 1963 have on pre-incorporation contracts?
- They are valid if ratified after incorporation. (correct)
- They can only be ratified if signed by all members.
- They must be renegotiated after incorporation.
- All pre-incorporation contracts are void.
Under what condition can an agent be held personally liable in a contract?
Under what condition can an agent be held personally liable in a contract?
Which of the following individuals would likely not be able to ratify a contract?
Which of the following individuals would likely not be able to ratify a contract?
Flashcards
Agent
Agent
An individual or entity authorized to act on behalf of another (the principal) in legal matters.
Principal
Principal
The person or entity being represented by an agent.
Principal's Capacity
Principal's Capacity
A principal must have the legal capacity to enter a contract at the time it's made, meaning they must be of legal age, sound mind and not an enemy alien.
Ratification
Ratification
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Agent's Personal Liability
Agent's Personal Liability
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Study Notes
Contract Formation and Capacity
- A contract requires a competent principal.
- The principal must have capacity to contract at the time the contract is formed.
Ratification by Incapacitated Principals
- If a principal lacks capacity (e.g., minor, unsound mind, enemy alien) at the time of contract formation, they cannot later ratify the deal, even if they gain capacity.
Pre-Incorporation Contracts
- Historically, a newly formed company could not ratify contracts made on its behalf before incorporation.
- This has changed; the Companies Act of 1963 allows pre-incorporation contracts ratified after incorporation to be valid.
Agent Liability
- Agents can be held personally liable for contracts, depending on the specifics.
- If an agent acts in a way which suggests they are a party to the contract, the contract is binding on them.
- This is illustrated by the case Kelner v Baxter (1866).
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Description
Explore essential concepts of contract law, including the formation of contracts and the capacity required by the principal. Learn about the ratification process for incapacitated principals and the implications of pre-incorporation contracts. This quiz also covers agent liability, shedding light on important case law.
