Law Chapter 7

People Needing Special Protection

Minors/infants, insanity and drunknness, others of limited capacity

Minors

Not bound by contract, the BC Infant act confirms that they are not contractually liable except for necessities and contracts for service, in BC no contract is enforceable against a minor

When can a Parent be Liable for a Child’s Contract

When the parent is acting as an agent for the child, if the parent agrees to the obligation of a minor, contracts entered into by minors for necessity

Insanity and Drunkness

To qualify, it must be shown that the person could not understand the nature of the act being performed, the burned of proof is on the person claiming it, they also have to prove that the opposing party was aware that they were incapacitated

Others of Limited Capacity

Corporations can limit their ability to contract by stating so in their incorporating documents, incorporated corporations may limit their ability to enter into certain contracts

Legality of a Contract

A contract must be legal and not against public policy to be binding, there’s a distinction between illegality in the formation of the contract vs the illegality of the performance of the contract, only illegality of the formation is nonbinding

Types of Illegal Contracts

1. Contracts to commit a crime

2. Contracts to commit a tort

3. Contracts involving immoral acts

4. Contracts that are bets and wagers

5. Contracts in restraint of marriage or in favour of divorce

6. Contracts that promote litigation

7. Contracts that obstruct justice

8. Contracts that injure the state

9. Contracts that injure public service

10. Contracts between business to fix prices or otherwise reduce competition

11. Contracts that unduly restrain trade (ie, non-competition clauses)

Intention

The parties must intend for legal consequences to flow from the contract, ask “would a reasonable person have thought that the person making the promise was serious and that the agreement was legally binding"?’

Types of Intention

1. Stated intention of the parties (clearly stated)

2. Commercial relations (implies that the contract will be binding)

3. Domestic and social relations (presumption that the contract is not binding)

4. Social and business relations (the reasonable persons test)

5. Exaggerated claims (often in advertising, courts balance against consumer protection)

Forming a Contract

Written or verbal, better when in writing

Forming a Contract when Writing Exists

Contracts cannot be performed within 1 year (doesn’t apply inBC)

Land Dealings (any contract that affects the party’s interest in land)

Guarantees and indemnities (both must be in writing to be enforceable in BC)