Capacity to Contract

Capacity to Contract in United Kingdom

Definition of Capacity To Contract

In accordance with the work A Dictionary of Law, this is a description of Capacity To Contract : Competence to enter into a legally binding agreement. The main categories of persons lacking this capacity in full are minors, the mentally disordered, the drunk, and corporations other than those created by royal charter.

A minor is capable of making valid contracts for *necessaries and is also bound by any beneficial contract of service into which he enters (i.e. any contract of employment or training that is advantageous to him taken as a whole). Certain contracts of a proprietary nature (e.g. tenancy agreements, agreements to buy company shares, and partnership agreements) are voidable in that a minor may repudiate them either before he comes of age or within a reasonable time thereafter. If he fails to repudiate, he becomes fully bound. All other contracts made by a minor are unenforceable unless ratified by the minor when he comes of age (See ratification) unless the Minors Contracts Act 1987 applies. This Act gives the court the right to require the transfer of property acquired by a minor under a contract when it is just and equitable to do so and improves the rights of adults contracting with minors.

A contract made by a person who is mentally disordered or drunk is voidable if the other party knows that his disorder or drunkenness will prevent him from understanding what he is doing. This means that, subject to certain limitations, he can set the contract aside by *rescission.

A corporation incorporated by royal charter has full contractual capacity, but a statutory corporation has power to contract only for purposes connected with the objects for which it was incorporated. Other contracts are *ultra vires and void.


Posted

in

,

by

Tags:

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *