Formation of a Contract: Capacity to Contract and Legality of Object 

Generally under the law, any person is capable and competent enough to bind themselves to a contract they choose to enter into as long as it is not illegal or void because of public policy. However, common law provides several exceptions to this and a major one is contracts involving minors, who before were designated as minors.

In law, a minor is a person who has not yet reached his 18th birthday. Ideally, the law governing minors’ contract show how the law must compromise between two major principles. First of all, the minor must be protected against his own inexperience and therefore his incapacity to understand. Secondly, the pursuance of the object of law should not cause unnecessary hardship to those who deal with them.

In this regard, there are certain contracts which when minors enter into will be considered valid for example those of necessaries where under the Sale of Goods Act, minors have to pay a reasonable price for necessaries sold and delivered. Necessaries are said to be “goods suitable to the condition in life of such minor and to his actual requirements at the time of sale or delivery.” The proof of which is usually upon the seller.

Certain contracts of service or apprenticeship are binding to a minor too, and he may be bound even where some of the clauses of the contract do not turn to be to his advantage. However, he would not be bound to a contract that on the whole is harsh or oppressive.

This therefore by extension means that a minor cannot be bound on a trading contract or on a contract for the purchase of non-necessary goods, that is unless he ratifies it when he reaches the age of 18.

In this particular case, there are certain unique characteristics. It is more of liability in tort. Generally, a minor cannot be made liable on a void contract through being sued in tort. That notwithstanding, he can be sued if the act that leads to the offence was not contemplated by the contract even when the contract is voidable. This is because by doing so, he takes himself out of the scope of the law of contract and the protection it thus affords to the minors.

Therefore, even though Drive Yourself Ltd. had entered into an otherwise illegal contract, West is still responsible for the damage he caused to the car as a result of over speeding because this lifts his protection under the law of contract and since it was contemplated that he would use the car for the purpose it was intended and within the confines of the law.

Mistake in Contract

Generally, and in the interest of business, apparent contracts should be enforced. So normally, mistakes as to the quality of product normally does not affect the validity of the contract involved unless the contract was signed by mistake or it is so fundamental as to amount to the quality by which it is identified.

The law developed the defence of mistake in the law of contract because ideally, there must be a meeting of the minds between the people contracting as pertaining every aspect of the contract that they are getting into. If this was not upheld in law, there would be a lot of abuse and especially in commerce.

The mistake may only be unilateral, where only one of the parties is aware of it or it could be in common where both parties are mistaken as to a certain element of the contract

It is also essential to draw a distinction between a contract that is void for mistake from one which is voidable for misrepresentation. Under common law, there are certain types of mistakes that may render a contract void provided that it is the mistake that brought about or was fundamental to the contract itself. These would be: mistake as to the existence of the subject matter, mistake as to the possibility of performing the contract, mistake as to the identity of the subject matter or mistake as to the identity to the other party.

Evidently, the case in point does not fall in any of these categories. It does however fall under the category of mistake as to the terms of the contract of which the other party is aware. This does not hold where it can be proven that the plaintiff was aware or could have been aware of that mistake.

Here, Golightly claims not to have been aware that the number of league games had been increased from 14 to 16. Given that the number of games in a league are fundamental to any contract of employment to a footballer, his argument is legitimate.

Where he does prove his case, he could be allowed to rescind the contract provided he is not at fault and justice can be done to the other party too. They could also renegotiate and in essence rectify the contract.

Misrepresentation

This is an untrue statement of fact, basis for which one is induced or caused to enter into a contract that she would otherwise not have entered. It however must not be a statement of opinion. That notwithstanding, if the opinion proceeds from an expert, it could amount to misrepresentation where a statement of opinion by implication involves a statement of fact.

Secondly, a statement of intention cannot be said to amount to misrepresentation unless it can be proved that the intention which is alleged never did exist. Where the law is involved, a person cannot claim misrepresentation because there is presumption that everybody knows the law.

Another main factor as to misrepresentation is that it must be the reason for which the party claiming to have been induced into the contract got into the contract in the first place. One therefore cannot claim or purport to avoid a contract when: she knew that the statement was false, or if she would have entered into the contract anyway despite the misrepresentation or was not aware that the misrepresentation had occurred.

Whenever a statement is made while the person making it knows it to be false, or without belief in its truth or recklessly while not caring whether it is true or not it amounts to fraudulent misrepresentation and if the innocent party has suffered loss he may claim damages, based on the tort of deceit, and may also refuse to perform the contract and as in this case claim rescission of the contract.

If Galt can effectively prove that it is the statements that Valentino made that induced her to extend her dance classes, and he did so fraudulently she could find grounds to rescind the contract. Where the statement was made honestly and reasonably and if Valentino believed the statement to be true she may not be awarded damages but she can still claim rescission as this amounts to innocent misrepresentation.

In instances where the statement is made with no reasonable grounds as to the belief in its truth, the aspect of negligent misrepresentation arises and Galt may have a right to damages for the misrepresentation if she proves that she has suffered loss. However, if it can be proved that there were reasonable grounds for such a statement, and in fact did believe in up to the time the contract was entered into that the statement was true he could have a defence.

It however must be understood that where the innocent party, with knowledge of her rights affirmed the contract the rescission is barred. This is also the case where time has lapsed but only after it is evident that the truth is now out and where it was innocently misrepresented, time lapse affirms the contract. Therefore, if the reason that Galt now wants to rescind the contract is because of the new and tough instructor, she may not succeed.

The Interpretation of Contracts

Plain meaning Approach vs. Liberal meaning Approach

Figuring out what the wording in a contract is usually very important when determining hat the parties in the contract intended. Normally, a person is expected to know and understand the meaning of the words on their prima facie value. So if a person signs a contract that is relatively clear as to the meaning or intention she ought to be held to it. That is to say that the standard dictionary meaning is the most reasonable interpretation of the words of a contract. This in law is referred to as the “plain meaning” approach of interpreting a contract. In this case, there is normally no need to admit other evidence when a conflict arises from such a contract. 

On the other hand there is the “liberal” approach of interpreting the contract. Liberal approach. Under this approach, it is stated that words do not just have one meaning but may have to be interpreted in the context within which they are used. Normally under such circumstances, other evidence is usually admitted. That is to say that word are said to be interpreted in the context of commerce and not merely under the rules provided in law. This therefore means that even when words on their face value seem clear, they must be analyzed.

For example, in the plain meaning approach, the word dozen would normally mean that a person is referring to a set of 12 things. However, consider in the liberal approach where it may be referring to a bakers dozen, which in essence refers to a set of 13.

Express Term vs. Implied Term

The terms of a contract state what the parties thereto are agreeing to be bound to. Generally, there is never an implied term as to the quality or the fitness of the products if it is a contract for sale which is of course the basic principle of caveat emptor. Terms that form the basic foundation of a contract are referred to as conditions and form the main purpose for which the contract is formed while the rest are normally classified as warranties.

Express terms of a contract are those that the parties have agreed to, and can normally be interpreted from the agreement itself depending on the wording of the contract. Where there is a dispute therefore, the court usually determines what terms. They may either be oral or in writing.

Implied terms on the other hand may not be provided for in the written agreement and would normally relate to an event that is otherwise known to both parties and it is sometimes left to the court to determine what they are. Normally they are “included” in the contract because otherwise the contract would not make sense.

For example if a person were to pay Canadian $100, it would be important to expressly distinguish it from US $100, similarly if it were so obvious to both the parties that they were negotiating based on Canadian dollars, then the $ 100 would suffice.

It is important to distinguish between the two because the rule of “strict compliance” is limited only to the express terms.

Condition Precedent

In the law of contract, an event that which must happen before any party to the contract must do or perform. For example where a daughter has to marry before she acquires the property, in conveyance of real property where the deed is involved, before either the right or the title to the property vests on her or where a buyer promises to buy when the ship carrying the goods docks at the harbor.

Assignment of Contractual Rights  

Under a contract, assignment is the complete transfer of the rights to receive the benefits that accrue out of the contract to one of the parties privy to it. Under provisions of common law, there is usually the freedom of assignment unless the contract itself expressly prohibits or prevents such an assignment especially where it concerns the assignment of contractual obligations.

Where it is permitted, the person assigning is not under any obligation to get the permission of the other party. This is normally for contracts where the assignment cannot affect the duties and/or obligations of the other party or where it cannot reduce the possibility of that person getting complete performance and of a similar or same quality.

This in essence means that there are some kinds of performances that are impossible to assign as a result of their unique character and because of the unique relationship that they create as a result therefore.

It is normal practice that for an effective assignment, it must take place in the present and the words that are used must be express and very clear. Even when the contract expressly prohibits it, such a clause merely gives the party that may be aggrieved by such an act to sue.

However, rights that are highly personal to the original parties, for example those that involve giving a concert cannot be assigned without the consent of the other party in the contract. The sponsors of Rigolleto can therefore sue him successfully for the breach of contract if and when he fails to perform in the concert even if the contract does not specifically prohibit assignment of such obligations.

References

Smyth, J. E., Soberman, A. J. and McGill, S. A. “The Law and Business Administration in Canada”. 12th Ed. Pearson Education Canada. 2009.