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Questions and Answers
What was the primary reason L argued that he was not bound by the contract?
What was the primary reason L argued that he was not bound by the contract?
What determined that the contract was legally binding despite being made by a minor?
What determined that the contract was legally binding despite being made by a minor?
Which element of the contract was particularly contested by L?
Which element of the contract was particularly contested by L?
What is one condition under which a contract made by a minor can be deemed void?
What is one condition under which a contract made by a minor can be deemed void?
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In the Hamilton v Lethbridge case, what type of employment was L engaged in?
In the Hamilton v Lethbridge case, what type of employment was L engaged in?
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What age is typically considered the minimum to have full capacity to contract?
What age is typically considered the minimum to have full capacity to contract?
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Under what conditions can persons with a cognitive disability be bound by agreements?
Under what conditions can persons with a cognitive disability be bound by agreements?
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Which type of contract can be enforced against a minor?
Which type of contract can be enforced against a minor?
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What was the primary legal issue in the case of Scarborough v Sturzaker?
What was the primary legal issue in the case of Scarborough v Sturzaker?
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In the Scarborough v Sturzaker case, what was determined about the new bicycle?
In the Scarborough v Sturzaker case, what was determined about the new bicycle?
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Who has the same legal capacity to contract as an adult person?
Who has the same legal capacity to contract as an adult person?
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What is an example of a necessity that a minor may be bound to pay for?
What is an example of a necessity that a minor may be bound to pay for?
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Which of the following is NOT correct regarding minors' capacity to contract?
Which of the following is NOT correct regarding minors' capacity to contract?
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A minor can legally bind themselves to a contract regardless of its content.
A minor can legally bind themselves to a contract regardless of its content.
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The restraint of trade clause in L's contract with H was deemed to benefit L substantially.
The restraint of trade clause in L's contract with H was deemed to benefit L substantially.
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In Hamilton v Lethbridge, the contract was deemed void because of its unfair provisions.
In Hamilton v Lethbridge, the contract was deemed void because of its unfair provisions.
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A minor can argue against a contract if it does not serve their interests at all.
A minor can argue against a contract if it does not serve their interests at all.
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Contracts made by minors can always be enforced in all situations.
Contracts made by minors can always be enforced in all situations.
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A contract can be made by persons with a cognitive disability if they fully understand the agreement at the time it is made.
A contract can be made by persons with a cognitive disability if they fully understand the agreement at the time it is made.
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Minors are never bound by any contract they enter into.
Minors are never bound by any contract they enter into.
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A new bicycle was deemed a necessity in the Scarborough v Sturzaker case.
A new bicycle was deemed a necessity in the Scarborough v Sturzaker case.
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Adult persons who are of sound mind have full contractual capacity.
Adult persons who are of sound mind have full contractual capacity.
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Contracts with minors can only be enforced if they are beneficial contracts of sales.
Contracts with minors can only be enforced if they are beneficial contracts of sales.
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Corporations have the same legal capacity to contract as individuals over the age of 18.
Corporations have the same legal capacity to contract as individuals over the age of 18.
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The case of Hamilton v Lethbridge involved a minor’s contract for a non-beneficial employment.
The case of Hamilton v Lethbridge involved a minor’s contract for a non-beneficial employment.
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A minor can only enter into contracts if the other party is fully aware of their age.
A minor can only enter into contracts if the other party is fully aware of their age.
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What was the significance of the restraint of trade clause in L's contract with H?
What was the significance of the restraint of trade clause in L's contract with H?
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How did the court determine that L's contract was beneficial despite his age?
How did the court determine that L's contract was beneficial despite his age?
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What could have made the contract between L and H void according to the court's reasoning?
What could have made the contract between L and H void according to the court's reasoning?
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What legal capacity did the court affirm in the case of Hamilton v Lethbridge?
What legal capacity did the court affirm in the case of Hamilton v Lethbridge?
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Why was L's argument about his minority status insufficient to render the contract void?
Why was L's argument about his minority status insufficient to render the contract void?
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What is the definition of a 'necessity' in the context of a minor's contract?
What is the definition of a 'necessity' in the context of a minor's contract?
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How does the Corporations Act 2001 (Cth) define the contractual capacity of corporations?
How does the Corporations Act 2001 (Cth) define the contractual capacity of corporations?
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Under what circumstances can a minor be bound by a contract involving a bicycle?
Under what circumstances can a minor be bound by a contract involving a bicycle?
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What must be proven for a contract with a person who has a cognitive disability to be binding?
What must be proven for a contract with a person who has a cognitive disability to be binding?
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What type of contracts can a minor enforce under beneficial circumstances?
What type of contracts can a minor enforce under beneficial circumstances?
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In the case of Scarborough v Sturzaker, what was significant about the bicycle purchased by Scarborough?
In the case of Scarborough v Sturzaker, what was significant about the bicycle purchased by Scarborough?
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What is required for an adult to have full capacity to contract?
What is required for an adult to have full capacity to contract?
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Why might a minor argue against the enforceability of a contract?
Why might a minor argue against the enforceability of a contract?
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L argued that he was not bound by the contract because he was a ______ at the time he entered the agreement.
L argued that he was not bound by the contract because he was a ______ at the time he entered the agreement.
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The contract included a ______ of trade clause preventing L from practising law within 50 kilometres of Toowoomba.
The contract included a ______ of trade clause preventing L from practising law within 50 kilometres of Toowoomba.
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Although some stipulations benefitted H, overall the contract was for L’s ______.
Although some stipulations benefitted H, overall the contract was for L’s ______.
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The decision in the case determined that the contract was ______ binding.
The decision in the case determined that the contract was ______ binding.
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The court ruled that unless a provision makes the entire contract ______, the contract will be enforceable.
The court ruled that unless a provision makes the entire contract ______, the contract will be enforceable.
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A contract can only be made by persons with the capacity to acquire legal rights and take on legal __________.
A contract can only be made by persons with the capacity to acquire legal rights and take on legal __________.
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Adult persons who are of sound mind and __________ persons, such as corporations, have full contractual capacity.
Adult persons who are of sound mind and __________ persons, such as corporations, have full contractual capacity.
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Minors may be bound to pay a reasonable price for goods acquired pursuant to contracts for __________.
Minors may be bound to pay a reasonable price for goods acquired pursuant to contracts for __________.
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In certain situations, a contract with a __________ may be binding.
In certain situations, a contract with a __________ may be binding.
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The case of __________ v Sturzaker determined if a new bicycle was a necessity for a minor.
The case of __________ v Sturzaker determined if a new bicycle was a necessity for a minor.
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Corporations have the same legal __________ as an adult person.
Corporations have the same legal __________ as an adult person.
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A cognitive disability can bind a person by agreements unless it prevents them from understanding what they were doing, and the other party was __________.
A cognitive disability can bind a person by agreements unless it prevents them from understanding what they were doing, and the other party was __________.
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The __________ Act 2001 (Cth) outlines the legal capacity of corporations to enter into contracts.
The __________ Act 2001 (Cth) outlines the legal capacity of corporations to enter into contracts.
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Study Notes
Capacity to Contract: Overview
- A contract can only be made by those with the capacity to acquire legal rights and take on legal responsibilities.
- Adults (18 years and older) of sound mind and artificial persons like corporations have full contractual capacity.
- Corporations have the same legal capacity as an adult under the Corporations Act 2001 (Cth).
- Individuals with a cognitive disability are bound by agreements unless their disability prevented them from understanding the agreement at the time it was made, and the other party knew or should have known about the disability.
Capacity to Contract: Minors
- Contracts with minors (under 18) can be binding in certain situations.
- Minors must pay a reasonable price for "necessities" like food, shelter, or transport to work.
- Scarborough v Sturzaker: A minor who traded in an old bike for a new one to commute to work was bound by the contract because the new bike was held to be a necessity.
- "Beneficial" contracts of employment can also be enforced against minors.
- Hamilton v Lethbridge: A five-year employment contract with a restraint of trade clause was held binding on a minor because it was deemed overall beneficial to the minor, despite having clauses benefiting the employer.
What Are ‘Necessities’?
- In Scarborough v Sturzaker, a minor traded in an old bike for a new one to commute to work.
- The court ruled that the new bike was a "necessity" despite the minor already owning a bike, as they were required to travel a long distance to work.
When Are Employment Contracts Beneficial?
- In Hamilton v Lethbridge, a minor entered a five-year employment agreement containing a restrictive clause preventing them from practicing law near their employer's location.
- The court found that although the contract contained clauses that benefitted the employer, it was overall beneficial to the minor.
- The court will only void a contract if it finds a provision that makes the entire contract unfair.
Capacity to Contract: Overview
- Contracts can be made by persons with the capacity to acquire legal rights and take on legal responsibilities.
- Adults (18 years and over) of sound mind have full contractual capacity.
- Corporations have the same legal capacity as an adult person, as defined by the Corporations Act 2001 (Cth).
- People with cognitive disabilities are bound by agreements, unless:
- Their disability prevented them from understanding the agreement
- The other party was aware, or should have been aware, of the disability
Capacity to Contract: Minors
- Minors may be bound to pay a reasonable price for "necessities," like food, shelter, and transportation to work.
- This is illustrated in the case of Scarborough v Sturzaker, where a minor was held to be obligated to pay for a bicycle, as it was considered necessary for work.
- Beneficial employment contracts can also be enforced against minors, as shown in the case of Hamilton v Lethbridge, where a minor was held to be bound by a five-year employment contract, despite a restraint of trade clause, as the contract was considered overall beneficial.
Capacity to Contract: Minors - What are necessities?
- Scarborough v Sturzaker involved a minor purchasing a bicycle to travel to work 12 miles away.
- The court held that the bicycle was a "necessity" because the minor already owned a bike, and would not have been able to travel to work without one.
Capacity to Contract: Minors - When are employment contracts beneficial?
- Hamilton v Lethbridge involved a minor entering a five-year contract to serve as an articled clerk for a lawyer, which included a restraint of trade clause.
- The court found that the contract was beneficial for the minor, despite the clause, because it provided valuable experience and future career opportunities.
- The contract was enforceable as long as there were no provisions that rendered the entire contract unfair.
Capacity to Contract: Overview
- A contract can only be made by those who have the capacity to acquire legal rights and take on legal responsibilities.
- Adults (18 years and over) of sound mind, and artificial persons like corporations, have full contractual capacity.
- Corporations have the same legal capacity as an adult person according to the Corporations Act 2001 (Cth).
- Persons with a cognitive disability can be bound by agreements unless their disability prevents them from understanding what they're doing at the time of agreement, and the other party is aware or should be aware of this.
Capacity to Contract: Minors
- Minors may be obligated to pay a reasonable price for goods from ‘necessity’ contracts like food, shelter, or transportation to work.
- Scarborough v Sturzaker established that a minor may be bound to pay for a necessary good, such as a bicycle for work, even if they already own a similar item.
- Beneficial employment contracts can be enforced against a minor, as demonstrated in Hamilton v Lethbridge.
What are necessities? - Scarborough v Sturzaker
- Facts of the case involve a minor, Scarborough, who bought a bicycle from Sturzaker for work, trading his old bicycle.
- Scarborough's refusal to pay for the new bicycle as a minor led to the issue of whether this bicycle was a necessity.
- The court ruled that the contract for the new bicycle was binding because it was a necessity due to the distance to Scarborough's workplace.
- The court determined that it was essential for the new bicycle to be a necessity given the trade-in of the old one.
When are employment contracts beneficial? - Hamilton v Lethbridge
- Facts involve a minor, L, who signed a five-year contract as an articled clerk under a lawyer, H, including a restraint of trade clause.
- L argued that he was not bound by the contract due to being a minor at the time of signing.
- The court ruled that the contract was legally binding and beneficial for L.
- While some clauses potentially benefited H, the overall contract was deemed beneficial for the minor.
- The court found that the contract was enforceable unless a clause made the entire contract unfair, which was not the case in this instance.
Capacity to Contract: Overview
- Only those with capacity can acquire legal rights and responsibilities.
- Adults of sound mind (18+) and corporations have full contractual capacity.
- Corporations hold the same legal capacity as individuals under the Corporations Act 2001.
- People with cognitive disabilities are bound by agreements unless their disability prevented them from understanding at the time of agreement, and the other party was aware (or should have been).
- Contracts with minors (under 18) may be binding under certain circumstances.
Capacity to Contract: Minors
- Contracts for ‘necessities’ (food, shelter, transport to work) are legally binding.
- "Beneficial" employment contracts can also be legally enforced against a minor.
Minors: What are necessities?
- Scarborough v Sturzaker case: A minor traded his old bicycle for a new one to commute to work.
- Court found the new bicycle was a necessity given the long distance he lived from work, despite already owning a bicycle.
- The trade-in of the old bicycle was deemed crucial in determining this.
Minors: When are employment contracts beneficial?
- Hamilton v Lethbridge case: A minor entered into a five-year employment contract with a lawyer that included a restraint of trade clause.
- The court ruled the contract was legally binding despite some clauses benefiting the lawyer, as the overall agreement was beneficial for the minor.
- The minor could not be released from the contract unless it was deemed unfair or exploitative.
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Description
This quiz covers the concept of capacity to contract, focusing on who can legally enter into contracts. It explores the contractual capacity of adults, minors, and individuals with cognitive disabilities, along with key legal precedents. Test your understanding of contractual obligations and rights in various scenarios.
