Forming enforceable contracts—capacity
Forming enforceable contracts—capacity

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Forming enforceable contracts—capacity
  • Capacity to contract—the general principle—presumption
  • Capacity to contract—burden of proof as to capacity
  • Capacity to contract—minors—liability for contracts for 'necessaries'
  • Minor's liability for 'necessaries'—position at common law
  • Minor's liability for 'necessaries'—position under statute
  • Minor's liability for 'necessaries'—services
  • Capacity to contract—minors—liability for other contracts
  • Contracts that are binding unless repudiated
  • Contracts that are unenforceable unless ratified
  • More...

In English law, there is a presumption that everyone has a capacity to contract. However, if you are a minor or you lack the necessary mental capacity or you are a drunken person, that presumption will be rebutted and the contract will not be enforceable.

This Practice Note sets out the scope of the capacity doctrine.

Capacity to contract—the general principle—presumption

The law presumes that everyone has a capacity to contract.

Any person seeking to rebut that presumption must strictly prove that they belong to one of three classes of individual:

  1. a minor. For the purposes of the law of contract, a 'minor' is any person under 18 (Family Law Reform Act 1969, s 1)

  2. a person lacking the requisite mental capacity

  3. a drunken person

In the case of mental incapacity, abnormal weakness of mind as prevents a person from understanding the nature of a transaction or an absence of knowledge in relation to the subject matter of the transaction will not be sufficient. However, such a person may be able to seek relief at law or in equity on the alternative ground(s) of undue influence or inequality of bargaining power.

Mental incapacity or drunkenness are treated differently because they deprive the sufferer of:

  1. understanding the transaction, and

  2. the awareness that they do not understand it

Contrast the position of the illiterate person who is aware of their lack of understanding

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