Week 3- LAWS1104

• Contractual capacity

  The legal ability of parties to enter into a contract
• Situations when a contract is unenforceable for lack of capacity


  • Minors
  • Mentally Incapacitated Persons
  • Intoxicated Persons
• Minors

  Contracts entered into by minors (persons under the age of majority) are generally voidable at the option of the minor, except for contracts for necessaries
• Mentally Incapacitated Persons

  Contracts entered into by individuals who lack the mental capacity to understand the nature and consequences of the contract are typically voidable
• Intoxicated Persons

  Contracts entered into by individuals who are under the influence of alcohol or drugs to the extent that they lack understanding are generally voidable
• Mistakes that make a contract unenforceable

  • Mutual Mistake
  • Unilateral Mistake
  • Mistake as to Identity
  • Mistake as to Subject Matter
• Mutual Mistake

  Both parties make a mistake regarding a fundamental aspect of the contract
• Unilateral Mistake

  One party makes a mistake, and the other party is aware of or takes advantage of the mistake
• Mistake as to Identity

  One party enters into a contract under a mistaken belief regarding the identity of the other party
• Mistake as to Subject Matter

  Both parties are mistaken about the subject matter of the contract
• Misrepresentation

  One party makes a false statement of fact that induces the other party to enter into the contract
• Types of misrepresentation

  • Fraudulent Misrepresentation
  • Innocent Misrepresentation
  • Negligent Misrepresentation
• Fraudulent Misrepresentation

  Intentional or reckless misrepresentation of a material fact with the intent to deceive and induce reliance
• Innocent Misrepresentation

  Unintentional misrepresentation of a material fact made without knowledge of its falsity
• Negligent Misrepresentation

  Misrepresentation made without reasonable care or investigation of its truthfulness
• Duress

  One party is forced or threatened into entering a contract against their will
• Economic duress

  Threats or pressure related to financial harm, such as withholding payment or threatening to breach an existing contract
• Undue influence

  One party exercises influence over the other party to the extent that the influenced party's free will is overcome, and they are unable to make independent decisions
• Situations when a contract is unenforceable due to undue influence

  • Relationships of trust and confidence, such as doctor-patient, guardian-ward, or attorney-client relationships
• Unconscionable conduct

  Taking advantage of a vulnerable party's weakness or ignorance in a grossly unfair manner
• Situations when a contract is unenforceable due to unconscionable conduct

  • One party has significantly more bargaining power and exploits the other party's vulnerability
• Illegality

  Contracts are unenforceable if they are illegal under statutes or common law principles
• Illegal contracts

  • Involving illegal activities
  • Violating public policy
• Restraint of trade

  Agreements in restraint of trade are generally unenforceable under common law unless they are reasonable in scope, duration, and geographical extent, and necessary to protect legitimate business interests