Week 1 - Intro and Capacity Lecture Notes PDF

WEEK 1 LECTURE: INTRODUCTION TO CONTRACT AND CAPACITY  MODULE OUTLINE 1. Intro and Capacity 7. Duress, Undue Influence, and 2. Offer and Acceptance Unconscionable Bargain 3. Consideration and Promissory 8. Misrepresentation and Estoppel...

WEEK 1 LECTURE: INTRODUCTION TO CONTRACT AND CAPACITY  MODULE OUTLINE 1. Intro and Capacity 7. Duress, Undue Influence, and 2. Offer and Acceptance Unconscionable Bargain 3. Consideration and Promissory 8. Misrepresentation and Estoppel Mistake 4. Intention to Create Legal 9. Termination or Discharge of a Relations and Statute of Contract Frauds 5. Express Terms 6. Implied Terms  1. FREEDOM OF CONTRACT Basic idea: contract is voluntary obligation Vehicle through which people assume a (binding) legal obligation towards each other Different from tort: tort law is, in general, about doing things to people; contract law is about doing things for people Traditionally, for a ‘simple’ contract to be enforceable there must be (i) a capacity to contract (ii) an agreement (iii) a bargain and, (iv) where necessary, a record of the agreement in writing  DOING THINGS TO PEOPLE VS DOING THINGS FOR PEOPLE I watch a (blind) man walk off a cliff and do not intervene knowing that he will fall to his death A doctor comes upon an accident on the side of the road, and nonchalantly walks on A 999 call operator negligently fails to redirect a call to the correct police station  DOING THINGS FOR PEOPLE These are general rules in tort In contract, you do have duties to do things for people because you agree to do them pursuant to an agreement That agreement must be in the form of a bargain or else it is treated by the law as a gift (gratuitous promise), and cannot be enforced in contract E.g. I agree to give you €50 if you queue for tickets for a football match I give you €50 because it is your birthday Put person back in position s/he was in before tort committed  FREEDOM OF CONTRACT’S DIMENSIONS Traditionally, it has several aspects Terms freedom Partner freedom Sanctity of contract => Court’s role is to enforce bargains, not to re-write them; the law is not forgiving of the stupid, and will reward knaives  FREEDOM OF CONTRACT’S DIMENSIONS But, a threshold question => does X have sufficient legal capacity to contract? Are they to be treated as an autonomous agent, someone who has full legal capacity to enter contracts? If they lack capacity in some relevant respect, how should a court respond to this lack of capacity? Some say, at bottom, a balance of rights => respect for the vulnerable person vs protect reliance by the other party  2. CAPACITY Traditionally, certain categories of person were assumed to lack full capacity Historically, married women and slaves were not treated as sui iuris; only ‘men of full age and competent understanding’ (Printing and Numerical Registering Co v Sampson (1875) 19 Eq 462) Slavery abolished, women’s coverture abolished Remaining categories treat relevant persons as having a limited capacity to contract (i) Children (ii) Mentally incapacitated (iii) Intoxicated  CHILDREN General rule: contracts with minors are usually voidable This means they are capable of ratification by child when he reaches majority or can be rescinded within a reasonable time Voidable contracts are invalid from the moment they are rescinded so that anything that passes under them before that point cannot be recovered (and must be paid or performed) Except for (i) contracts for necessities (ii) beneficial contracts for services  NECESSITIES, AND BENEFICIAL CONTRACTS FOR SERVICES Necessity has a relative meaning depending on the particular child. S2, Sale of Goods Act1893: ‘goods suitable to the condition in life of such infant or minor or other person, and to his actual requirements at the time of the sale and delivery.’ What is a necessity for a duke is not necessarily a necessity for a pauper, i.e. all Dukes need waistcoats, but Oliver Twist needs gruel Nash v Inman 2 KB) (i) are they capable of being necessities? (ii) are they necessities re this particular minor? But if is classed as a luxury or amusement, not a necessity (Skrine v Gordon (1875) IR 9 CL 479)  NECESSITIES, AND BENEFICIAL CONTRACTS FOR SERVICES Is a car a luxury item? See, LRC Report. S 2, Sale of Goods Act 1893: reasonable price where necessities Beneficial contracts for service, e.g. apprentices => is the minor deriving some benefit from the contract for service, e.g. training, or are its terms exploitative? Test? (i)The financial benefit for the minor, (ii)Whether any terms disadvantageous to the minor are normal in that type of contract. (iii)Whether the minor is receiving any instruction or training. Burden of proof on seller or ‘master’  CASE IN FOCUS Toronto Marlboro Hockey Club v Tonelli (1979) 96 DLR (3d) 135  MENTAL INCAPACITY Not required to fully understand the contract’s meaning, but must have an understanding of its general meaning (Scott v Wise 2 NZLR 484) Case law distinguishes situations where the other party knows of the mental incapacity (voidable), and where s/he does not, enforceable Even so, may be subjected to an undue influence or unconscionable bargain analysis at a later stage Contracts for necessities with people of unsound mind are binding, but fair value, not market price  ASSISTED DECISION-MAKING (CAPACITY) ACT 2015 New test of capacity A. to understand the information relevant to the decision, B. to retain that information long enough to make a voluntary choice, C. to use or weigh that information as part of the process of making the decision, or D. to communicate his or her decision (whether by talking, writing, using sign language, assistive technology, or any other means) or, if the implementation of the decision requires the act of a third party, to communicate by any means with that third party.  ASSISTED DECISION-MAKING (CAPACITY) ACT 2015 Part III of the Act enables the appointment of an ‘assistant’, eg family member or carer, who can help with the decision making process. But no veto. Part IV Co-decision maker: can be appointed, and does have a veto. Also, decision-making representative, i.e. makes decision on behalf (i.e. person of unsound mind out of the equation). Basic idea: phase out wardship. But whatever capacity, necessities are still binding contracts, see s. 137 of the Act.  INTOXICATION Contracts made with intoxicated persons are voidable so long as the intoxicated rescinds it at first available opportunity Level of intoxication required is stuperious, i.e. that does not understand what s/he is agreeing to Whether someone is so intoxicated so that s/he does not understanding what s/he is doing is a matter of proof (White v McCooey (24 June 1976)) [doubted evidence as to level of intoxication; claims that drunk 18 brandies and 22 pints of Harp Larger] Same rule as to knowledge of drunkenness as with mentally incapacitated (subject to rescission rule) And to unconscionable bargain  CASE IN FOCUS McGonigle v Black (14 November 1988), HC.  BUT, IF NO SUCH IMPAIRMENT… Then, once has reached the threshold for contracting The courts will presume that you have full contractual capacity, and this includes the assumption that you know your mind They will be very reluctant to second guess this assumption, and will not re-write any contractual agreement even if it appears one sided  BUT, IF NO SUCH IMPAIRMENT… That you may be naïve or a ‘Homer economicus’ is irrelevant https://www.youtube.com/watch?v=6rtYfx1-FS4 E.g. mortgage contract with bank. Pls of full capacity said they did not understand how variable interest rate mortgages worked and how much financial loss they were potentially exposing themselves to; court did not entertain the claim because language in mortgage ‘plain and intelligible’ to the average consumer (Start Mortgages DAC v McNair IEHC 140 (High Court, 23 March 2020, Simons J.) => sanctity of contract.  FOR NEXT WEEK Covering offer and acceptance Read Chapter 2 of McDermott and McDermott or Chapter 1 Clark Lecture cancelled on Monday, 16th September! I will post a recorded lecture on Loop for you to watch at that time I will also post this information on Loop but advise your classmates