Chapter 7 Textbook Notes PDF

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Chapter 7 Notes ...

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Chapter 7 Textbook Notes: It is best to have a written contract but the general principle is that a verbal contract is as binding as a written one. There are several situations where this isn’t true though. Capacity Some people are more vulnerable than others; thus, lawmakers have made special protection for them. Several categories of people have been identified as needing protection. Their freedom to enter contracts have been limited or eliminated completely. Minors and Infants The age of majority was at 21 for common law but reduced to 18/19 depending on the province by a statute; they are called infants or minors.  Someone under the age of majority They are not bound by their agreements but the adults they contract are bound. Even if they have a clear understanding of the contract and age, if one is a minor, they can choose not to be bound by it. Contracts made by a minor are unenforceable by court but the minor may enforce the contract against the adult. Firms are not allowed to make internet transactions with children under the age of 13 according to the Children’s Online Privacy Protection Act. This is why websites have to ask for ages and have a disclaimer since kids lie about their age all the time. Necessaries and Beneficial Contracts of Service Except in British Columbia, minors are bounded by contracts for buying necessaries.  The things you need in life When Jenica lost her luggage in NYC, she could only buy necessaries. Not just all her needs. Once a minor is married, they’re necessaries will grow. If he moved out, has medical, dental, or legal fees, his necessaries would grow as well. It does not guarantee that the merchant will get paid full price, as the minor is obligated only to pay a reasonable price for such necessaries. If a minor borrows money to buy necessaries, they only have to repay the debt if the funds are used on the necessary.  If a minor borrows $500 for house fees but spends it on new shoes, he doesn’t have to repay since he didn’t use it for a necessary Government student loans are expectations Contracts of employment are only binding if it can be demonstrated that the contract is for the benefit of the minor. If the minor is being taken advantage of or the contract is not in the minor’s best interests, the contract is not binding. On Becoming an Adult If a minor agrees to a contract that is for necessaries of a beneficial contract of service, they are not bound by it. Once becoming of age, he must follow past contracts if they become ratified.

 Certificating validation Giving information about a past contract counts as ratification. Ratification can be written or implied. There are certain contracts that a minor must accept within a reasonable time after becoming an adult to avoid obligations. When parties have entered into a contract but that minor has yet obtained any benefit from it and has not yet paid, the minor is not bound by the contract. This is called an executory contract.  A contract at the stage when an agreement has been made but before performance is due If a minor has received goods but has yet paid for the, she isn’t bound by the contract either. This is called a partially executed contract.  A contract at the stage where one party has performed and the other has not Minors are obligated to return things if they are not paid for. If they have been passed onto another person or destroyed, the merchant is not entitled to payment. Conflicts may arise once a contract has been executed.  A fully performed contract; when both parties have performed or fulfilled their obligations If a minor has obtained the benefit from a contract and they change their mind, they can only undo the transaction if they can prove that they didn’t gain anything at all. If not, they are bounded since the contract has been completed. Parent’s Liability Parents are not responsible for torts one by their children, nor are they responsible for the contractual obligations their children get into. If a minor gets into a contract with an adult and decided to not pay, the adult in the contract cannot turn to the minor’s parents. There are some situations where a parent will be liable due to the legislations created. A parent will be held liable if the minor is acting as an agent. Parents are also bound if they guarantee the minor’s obligations t the time the contract is entered into.  A written commitment whereby the guarantor agrees to pay the debt if the debtor does not Infants’ Liability for Torts Merchants will often sue minors for tort since they cannot enforce a minor to pay for things. A minor is as liable as an adult for torts committed; they just don’t have as drastic outcomes and the standard of behaviour expectation is different. Courts do not allow adults to bring a tort action just to get around the fact that minors aren’t obligated to stay in a contract. The merchant must sue in contract, not tort despite the protection given to minors. The adult can sue for negligence if the subject does not involve the contract. Insanity and Drunkenness The law protects those insane similarly to how minors are protected. It must be proved that the person could not understand the nature of the act being performance. It must also be proved that the other person in the deal who was sane and sober know that they were dealing with

someone insane or drunk. Alcohol and drugs create the same effect as someone who is insane therefore it is treated the same. If on drugs or being drunk, the person trying to escape the contract must move that once they became sober, the contract was finalized. If unsure and you wait to see if there is an affect, it becomes too late and you are bounded. The requirement of repudiation also applies to insane people who regain their insanity  An indication that one party failed to honour the contract due to not being capable A person who has a lower intellect or is just as vulnerable but not insane or mentally incompetent is still protected. Others of Limited Capacity Corporation contracts may limit its employees and their contracts. Private companies, Crown corporations, and other government bodies have been created to accomplish particular government purposes. These all depend on the first contract. If at war, any contract with an alien resident of the enemy country is suspended. Legality A contract must be legal and not contrary to public interest to be qualified as binding. Contracts Performed Illegally Illegality as to formation of the contract  The contract itself is illegal Illegality as to performance  The contract is performed in an illegal way Lawful contract performed in an illegal way may be enforced by the court. Illegal performance of a lawful contract involves breach of regulatory legislation that may suspend the contract. Courts will consider many factors, such as intent of the parties, actions, and public policy.  Unwritten social laws...