Contract Law LA4001 In order to able to outline the contract law on capacity in the light of this statement basically means how does the contract is being issued to the lay people who has no or little knowledge about law and how does it seek to protect the interests of those making the contracts. Contracts are of course not only made between individual people. In many case one or both parties will actually be groups of people such as companies, local authorities and other organizations.
Such groups are called corporations, and the contracting capacity of a corporation depends on what type of corporation it is. An individual the age of 18 regarded as a minor and the basic rule is anyone is a minor not bound by any contract. However some type of contract which are binding on minors or which are merely voidable despite the general lack of capacity. In Nash v Inman (1908) a minor will have to pay a reasonable price for a necessary if the contract is generally beneficial to him. In addition under common law, a similar approach is taken to contract for services as for goods.
In Chapple v Anne Cooper (1844) a undertaker sued a widow who was a minor and court said ‘articles f mere luxury are always excluded though luxurious articles of utility are in some cases allowed. Minors are also bound by contract of service, providing these are on the whole beneficial to them. In Clements v London and North western Railway Co (1894) it was held that the rights gained were more beneficial than those given up, so the contract was on balance, for the minor’s benefit and therefore binding.
In Doyle v White city stadium limited (1935) and De Francesco v Barnum (1890) the Court have widened the concept of a contract beyond the usual employment situations. Contracts voidable at common law a contrasting case is Steinberg v Scala (Leeds) Ltd (1923) in this case the plaintiff is minor and the Court held that terminating the contract mean she was free from any future obligation to make payment and could not get money back because failure of consideration.
In mental incapacity all type of contract is voidable, an example like in Barclays Bank v Schwartz (1995) the Court of appeal rejected their argument about illiteracy and the obligation was on them to make sure that the contract was explained. A company lack of capacity to make a contract under its constitution will not now affect a good faith outsider to the company, contracting with the company As a result, In general contract capacity seeks to protection of those who are viewed as vulnerable and on the other hand protect the legitimate expectations. Textbook: Laurence Koffman & Elizabeth Macdonald.
Website: (1) Westlaw UK (2) Just cite ——————————————– [ 1 ]. Nash v Inman Court of Appeal  2 K. B. 1 [ 2 ]. Chapple v Anne Cooper (1844) Court of Exchequer 153 E. R. 105 [ 3 ]. Clements v London & North Western Railway Co Court of Appeal ( 1894)  2 Q. B. 482 Top of Form Bottom of Form [ 4 ]. Doyle v White City Stadium Ltd Court of Appeal  1 K. B. 110; De Francesco v Barnum (1890) 45 Ch. D. 430 [ 5 ]. Barclays Bank Plc v Schwartz Court of Appeal (Civil Division) 21 June 1995 [ 6 ]. Ss 39, 40 companies Act 2006.