Audio recording 21.1 transcript

Chapter twenty-one is about capacity, which isn't generally an issue in contract law, but clearly you do have to have capacity to enter into a contract. And the major difficulties that you you'd think about are – age – so when you, you've got to be careful about contracting with minors under eighteen years old, and mental capacity. And I suppose you also have to still be sure that the public authority you're contracting with has the capacity to enter into the contracts. So public authorities have to act within the scope of their statutory powers. Otherwise the contracts might be void on the ground of ultra vires. And there used to be something similar as regards to companies, but now the Companies Act 2006 makes it clear that a contract a company enters into can't be challenged on the base of ultra vires, on the grounds of lack of capacity, simply because of something that might be hidden away in the company's constitution which purports to limits its capacity. So now I think the two major things to consider are age, mental capacity, and also thirdly, perhaps public authorities as well. So, for minors you, as I say, you do have to be careful when you're contracted with minors. The general rule is that contracts are unenforceable as against a minor, but they are not void and they can still have some legal effects. And there are exceptions to the general rule. So, some contracts will be voidable by the minor. And where contracts are for necessaries, also as necessaries, which are basically necessary goods, that the contract won't be unenforceable. And to decide what's necessary, you should take into account the characteristics of the minor. And thirdly, if you're looking at a contract which is obviously beneficial for the minor, so a contract, an apprenticeship, for example, then that contract won't be an unenforceable either. And when you're thinking about remedies often here, the remedy might be an unjust enrichment on the ground of total failure of consideration, which you've seen already, and we'll look at it more in chapter twenty-nine, and not necessarily contractual. So, they're sort of major things to think about when you're contracting with minors. On mental capacity the common law has always been very difficult as the effect of mental incapacity. But where the defendant knows of the claimant's incapacity then the contract might be an unconscionable bargain, which we looked at in chapter nineteen. But the Mental Capacity Act 2005 has helped to bring greater clarity to this area of law. Because now it is clear that the person is presumed to be of full capacity, unless it is established that they lack capacity. But, still the common law has not entirely disappeared and it does exist alongside the statutory regime. But I think the message is that generally in contract law capacity isn't an issue. And the areas we look at in this chapter are really quite narrow, I think.