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In relation to the Law of Contract, illustrate your understanding of Capacity to Contract. - Leaving Cert Business - Question C - 2010
Question C
In relation to the Law of Contract, illustrate your understanding of Capacity to Contract.
Worked Solution & Example Answer:In relation to the Law of Contract, illustrate your understanding of Capacity to Contract. - Leaving Cert Business - Question C - 2010
Step 1
Capacity to Contract
Answer
Capacity to contract refers to the legal ability of all natural persons (human beings) and legal/ corporate persons, such as companies, to enter into a contract.
- Natural Persons: Individuals who are of legal age and sound mind can enter into contracts.
- Legal Persons: Companies possess contractual capacity derived from their Certificate of Incorporation, making them separate legal entities. If a company acts beyond its legal powers, it is considered to be acting 'Ultra Vires'.
Understanding these distinctions ensures that contracts are valid and enforceable.
Step 2
Persons Generally Lacking Capacity to Contract
Answer
The following groups generally do not possess the capacity to enter into a contract:
- Infants: Individuals under 18 years of age, although exceptions exist (e.g., contracts for necessities).
- Persons Under Influence: Those under the influence of alcohol or drugs may lack the capacity to understand the contract.
- Insane Persons: Individuals who are deemed insane and cannot comprehend the nature of the agreement.
- Bankrupt Persons: Individuals declared bankrupt may have restrictions on their contractual capacity.
- Diplomats: Certain governmental representatives may be immune from contract obligations based on their diplomatic status.