TOPIC 04 LAW OF CONTRACT 3
Legal Principles
A vitiating factor makes a contract invalid. An invalid contract is either void or voidable.
Void contract is nullity (legally void) from the very start, unenforceable and property transferred is given back to its original owner and the process of restitution (property transferred is given back to its original owner and the money is returned to the buyer).
Voidable contract is perfectly valid so long as the innocent party does not take steps to rescind (to avoid it).
A contract may be “vitiated” (make imperfect) by incapacity or misrepresentation.
A party to a contract must have capacity to contract except situation concerning minors. The age of majority is 18, if below 18, he is a minor.
For the following contracts however, the age of majority is 21:
Any contract for the sale, purchase, mortgage or settlement of any land not exceeding 3 years / more than 3 years;
Any contract pledged as collateral for any purpose.
A minor who enters into any contract can sue but cannot be sued by the adult meaning contract is void as regards the minor,
3 situations where a contract with a minor may be binding:
Valid contracts for necessaries;
Beneficial contracts for the minor’s health, education and welfare; and
Voidable and ratifiable contracts
Necessaries are more than mere necessities in regard to the minor’s station in life and his requirements at the time of sale and delivery (Nash v. Inman and Peters v. Fleming). Such contracts are fully enforceable and are binding on both the minor and the other party.
Beneficial contracts refer to contracts of service of employment that is beneficial to the minor (Chaplin v. Leslie Frewin Publishers). Such contracts are valid and enforceable against both minor and the other party unless it is not beneficial (De Francesco v. Bernum).
Minor’s ratifiable contracts refer to any other types of contracts generally not binding on the minor (e.g. retail goods which are not...