Basics in law of contract

CAPACITY TO CONTRACT

1. Capacity to enter into a legal contract

2. Contract made by an infant

3. Contract made by illiterate

4. Contract made by a lunatic

5. Uncharacterized persons such as corporations or organizations.

6. Married women.

CAPACITY; The general rule is that; all persons can enter into a contract but however, the exception to this general rule is depending on the person contracting or willing to enter into a contract. Moreover, there are persons who have no contractual capacity such as minors, or an infant, a married woman, a lunatic, or an illiterate person.

The question who is a minor may be ranging on your mind now, under Nigerian law and most of the common law countries, a minor is a person under the age of 18, in some regards it is below the age of 21 for example, under the land use Act of 1978, a minor (A person under the age of 21) cannot enter into a valid contract to own a land title. However, there are certain exception to this general rule also, where a minor can enter into a legal contract and become a party to valid contract, these exceptions are;

· Contract of necessities: Where a necessary goods are supplied or served for the minor and;

· Beneficial contract: Where benefit is reaped for the conduct, and favor of the minor, such contracts are; Food, shelter, education for the benefit of the minor. See the case of NASH VS INMAN. Moreover, when an infant made a contact or enter into a contract, such contract is either;

1. Valid

2. Void

3. Voidable

1. VALID CONTRACT FOR AN INFANT:

• Contract for Necessities

• Beneficial contract for the infant.

2. VOID CONTRACT FOR INFANT:

• Contract of loan

• Contract of goods other than necessary ones

• Account stated.

CONTRACT MADE BY AN ILLITERATE PERSON; So also as a general rule, an illiterate person is deprived the right to enter into a valid contract, but however it is well known establishment of the law that every general rule must have an exception, there is exception to this general rule, before we dive into the exceptions, we will like to know who is an illiterate?

The illiterate protection ordinance provided in section 3, to mean “A person who is unable to read a document in question in the language in which it is written. See Umaru Sunday v.s federal republic of Nigeria.

However, the exception to this, i.e where an illiterate will enter a contract and it will be valid. He must have made a literate person to make the contract on his behalf to show that;

• That he was instructed to write the document and represent the illiterate by the illiterate person.

• The signature, stamp, or sign of the illiterate must appear in the document.

CONTRACT MADE BY LUNATICS/DRUNKEN PERONS: A person who intoxicated himself is as same position as a lunatic, when a person entered a contract while he is in his drunken position, then that contract is not valid or it can be limited one. Generally, persons with mental health problems are classified into;

1. Lunatics

2. Insane persons

3. Drunken persons

4. Persons of unsound mind.

However, any person who is in any of the above stages is said to have lost “Consensus ad idem” which means he lacks the free will to enter into a valid contract. But moreover, there are two exceptions to this rule also, and they are;

• If the person of mental health problem proves that he is in his normal state of mind when the contract is initiated.

• If the other party contracting with him is aware of his mind position.

CORPORATIONS (Uncharacterized persons).

Capacity to contract is also on corporations which are registered and recognized by law, they are known as “JURISTIC PERSONS”. Where a corporate person is incorporated by a statute or law, it has no legal capacity, and the contract cannot be enforced.

MARRIED WOMEN.

A married woman under customary law has capacity to enter into a valid contract according to Chike, but however, in Nigeria there are wives;

• Under Customary law

• Under Islamic law

• 
  

Under common law.

And thus, their capacity varies under the law which their marriage is initiated.

PRIVITY OF CONTRACT; Privity of contract is the obligation or necessity of persons who are bound by a contract, the parties to be affected by the agreement in the contract or to put it simply, the persons to sue and be sued under the contract.

In privity of contract, only a party to the contract can be bound with rights and obligations to the exclusion of any third party. See Dunlop Vs Selfridge (1915).

Exception to this general rule is where the 3rd party is related to one of the contractual parties either by marriage or blood, and if the contract is for the benefit of that third party, the he can sue and be sued, he may sue to benefit from that contract. See the case of Bestwick Vs Bestwick.

However, there is also exceptions which are;

1. INSURANCE; There are various insurance companies which involve the insurance company and the nature of contract which involves the insurance company and their beneficiaries (which they are also third parties beside customers and they can sue and be sued in the contract involving the companies)

2. AGENCY; Contract of agency is also exception to this general rule of privity of contract, and it comes where the Principal, the agent, and the third party are involved and can sue and be sued. This is so because in contract of agency, the agent entered between the principal and the third party and thus;

i) The principal can sue the agent

ii) The agent can sue the principal

iii) The principal can sue the third party

iv) The agent can sue the third party

v) The third party can sue both the principal and the agent.

3. STATUTE; the third exception is the statute; where statute of the legislature confers rights on particular third party to sue and be sued on a contractual transaction. It is also exception to privity of contract.

MISREPRESENTATION; Misrepresentation or fraudulent misrepresentation under law of contract is where a party to the contract represents documents, facts, or things which appear not to be true, which resulting from reliance upon such misrepresented fact, the plaintiff suffered damages, however, in order to establish Fraudulent Misrepresentation, there are certain facts which must be proved.

1. False

2. Representation

3. Which the other party relied on (the Plaintiff)

4. And suffered damages resulting from reliance upon such misrepresented fact or thing.

ILLEGAL CONTRACTS (Illegality in contract)

Illegality arises when there is existence of illegal contracts which the law prohibits

Or immorally unacceptable, once there is any contract which is illegal, it is said to be null and void ab initio, and so unacceptable in law.

Examples of illegal contracts are;

a) Contract to commit tort or crime

b) A contract that is sexually immoral

c) A contract prejudicial to public safety

d) A contract prejudicial to administration of justice

e) A contract liable to corrupt public life

The consequence of illegality; in illegal contract the buyer even thought has paid money, cannot sue for non-delivery e.g where the buyer buys guns or explosives illegally without any lawful justification, he cannot bring an action against the other party if the other party failed to execute the contract, he cannot claim any damages, and thus, he cannot bring a valid action before the court to recover the property (Guns and explosives illegally contracted), and neither the other party will bring an action for the claim that the contract is not discharged.

LAWFUL CONTRACT ILLEALLY EXPLOITED; This means a contract may be invalid when unlawfully exploited even if it is valid one. For example, where A agrees to rent a room for B, and later A did not fulfill his part of promise (agreement) having knowledge that B would use the room for unlawful purposes (e.g, selling unlawful drugs), then B would not succeed even if he brought an action against A for breach of contract. See Frett V.s Hill.

DISCHARGE OF CONTRACT;

A contract may be discharged by;

1) By performance

2) By agreement

3) By breach of contract

4) By frustration

5) By death

DISCHAEGE BY PERFORMANCE; This contract is said to be discharged if the parties fulfilled their promise and terms of agreement, however where a promisor failed to fulfill his part of bargain to the promisee, or promisee to the promisor, then there is no discharge of contract. See Cutter Vs Powell.

However, there are exceptions to this general rule which are;

1. Divisible contract; when a contract is divisible, an action may succeed on the grounds of “Quantum Meruit” i.e Payment for work done.

2. Substantial Performance; where the contract is substantially performed by a party and fulfilled the substantial part of the contract, then an action may succeed if payment is refused by the defendant.

3. Prevention of performance; where the party prevents the other contracting party to continue performing upon his agreement, then he may sue to recover damages for breach of contract and may succeed to recover profits of his labor.

4. Acceptance of partial performance; Where a promisor has only partially performed his obligations binding him with the contract. The promise may accept his partial work and shall be reworded for his labor and performance.