Contractual capacity and free consent
Parties must have legal capacity and their consent must be free. Misrepresentation, mistake, duress and undue influence make a contract voidable or void.
Capacity
Capacity is the legal ability to make a binding contract. Most adults have full capacity. The law protects people who may not understand or guard their own interests. Under Roman-Dutch law, a contract made by a minor without the assistance of a parent or guardian binds the other party but not the minor. This is called a limping (claudicating) contract: the minor may enforce it, but cannot be forced to perform. The minor must not be unjustly enriched, so he is liable to the extent that he has actually benefited. A contract made with the guardian's assistance binds the minor.
Persons with limited capacity
| Person | Legal position |
|---|---|
| Minor (under 18) | Unassisted contract binds only the other party; liable only to the extent of benefit received; bound if the guardian assisted |
| Person of unsound mind | Cannot contract while unable to understand the transaction; a contract made in a lucid interval is valid |
| Intoxicated person | No valid consent if so drunk that he could not understand what he was doing |
| Company | Acts through its board and authorised agents, within the Companies Act and its articles |
| Alien enemy | In wartime, cannot sue in the courts |
Minors: Roman-Dutch and English law
Factors that destroy free consent
| Factor | Meaning | Effect | Example |
|---|---|---|---|
| Misrepresentation | A false statement of fact that induces the contract (innocent, negligent or fraudulent) | Voidable; damages if fraudulent or negligent | A seller says a van has never had an accident when it has |
| Fraud (dolus) | A deliberate false statement or concealment to deceive | Voidable, plus damages | A forged valuation report for a land sale |
| Mistake | A wrong belief about a basic fact: common, mutual or unilateral | Fundamental mistake makes it void; otherwise usually no effect | Raffles v Wichelhaus: two ships both named 'Peerless' |
| Duress (metus) | Consent obtained by threats of unlawful harm that cause real fear | Voidable | Signing a supply deal after threats of violence |
| Undue influence | A person in a position of trust or power uses it unfairly | Voidable | A guardian, doctor or spiritual adviser pressing a dependent person |
Remedies and limits
- Rescission: the innocent party cancels the contract and both sides return what they received.
- Damages: available for fraud and negligent misrepresentation.
- Refusal to perform: the innocent party may refuse to carry out a voidable contract.
- Rescission is lost if the innocent party affirms the contract, delays too long, cannot return what was received, or an innocent third party has acquired rights.
A leasing company that finances a motorbike for a 17-year-old without a guardian's help takes a risk: under Roman-Dutch law the minor is not bound, but the company is. That is why lenders check proof of age before signing. A buyer misled about a used vehicle's accident history can rescind for misrepresentation.
Short answer: “What is a limping (claudicating) contract?” A contract made by a minor without the guardian's assistance; it binds the other party but not the minor.
Structured question: “Explain the position of a minor's contract under Roman-Dutch law.” Age of majority 18; unassisted contract binds only the other party; minor liable to the extent of enrichment; guardian-assisted contract binds the minor; contrast with English necessaries.
Essay: “What is free consent? Explain the factors that affect free consent.” Define free consent; explain misrepresentation, fraud, mistake (Raffles v Wichelhaus), duress and undue influence with effects and examples; remedies; close.
Consent is spoiled by M-F-M-D-U: Misrepresentation, Fraud, Mistake, Duress, Undue influence. All voidable, except fundamental mistake, which can make it void.