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Le3.law1

Le3.law1

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Published by Diana Soni

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Published by: Diana Soni on Dec 31, 2012
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05/23/2014

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If an adult person makes a promise to pay a debt contracted during infancy or perform a
void contract made during infancy, the promise is void and unenforceable against the
promisor: Infants' Relief Act, S. 2.

Although the Infants Relief Act has been repealed in England by the Minor's Contracts Act,
1987, it appears that it is still a prima facie source of Kenya Law since the repealing Act
has not been made part of the Kenya Law.

3.1.5Contractual Capacity of Drunken Persons

If a person purported to enter into a contract at a time when he was too drunk to understand
what he was doing and the other party was aware of his mental condition, the contract will
be voidable at his option: Gore v. Gibson in which the court held that the defendant was
not liable on a bill of exchange which he had indorsed at a time when he was, to the
knowledge of the plaintiff, so drunk that he could not appreciate the meaning, nature or
effect of the endorsement.

The basis of the court's decision is not the defendant's intoxication but the plaintiff's
inequitable attempt to take advantage of a person in a weaker position. It would therefore
appear that if both parties were materially intoxicated at the time of contracting they would
be bound by the contract since none of them could take advantage of the other.

The following points should be noted:

(a)

Ratification

A drunken man who enters into a voidable contract may affirm or ratify it when he
is sober: Matthews v. Baxter in which the defendant was held liable for breach of
contract to buy some houses from the plaintiff which he had made when he was
drunk but had nevertheless confirmed after he became sober.

(b)

Necessaries

A drunken person is liable to pay for necessaries supplied to him pursuant to a
contract which he entered into when too drunk to know what he was doing: Gore v.
Gibson
in which Alderson, B. stated that the ground of liability is an implied
contract
to pay for the goods which arose from his conduct when sober.

LESSON 3

LAW OF CONTRACT

13

(c)

The drunken person is liable to pay "a reasonable price" under S.4 of the Sale of
Goods Act. He is not liable for the agreed price - apparently because, being drunk,
he could not know the correct or fair price of the goods.

3.1.6Contractual Capacity of Persons of Unsound Mind

A contract entered into by a person of unsound mind is voidable at his option if it is proved
that the other party was aware of his mental condition: Imperial Loan
Co. Ltd. v.
Stone,
in which Lopes, L. J. stated that "a contract made by a person of unsound mind in
not voidable at that person's option if the other party to the contract believed at the same
time he made the contract that the person with whom he was dealing was of sound mind".
The following points should also be noted:

(a)

Ratification

A contract entered into by a person when he is insane can be ratified by him when he
becomes of sound mind.

(b)

Necessaries

A person of unsound mind, like a drunken person, is liable to pay for necessaries
supplied to him. However, he is only liable to pay reasonable prices for the
necessaries under S. 4 of the Sale of Goods Act.

3.1.7Contractual Capacity of Corporations

The courts have developed what is known as the doctrine of "ultra vires" in order to
determine the contractual capacity of legal persons or corporations.

The gist of the doctrine is that a body corporate's contractual capacity is limited to the
attainment of objects or purposes for which it was created. If the corporation purports to
enter into a contract to undertake a transaction which is neither expressly nor impliedly
within its objects. The contract is "ultra vires" (i.e. "beyond the powers of") the corporation
and is void, illegal and incapable of ratification.

This rule applies to statutory corporations, co-operative societies and registered companies.
This can be illustrated by the case of Ashbury Railway Carriage and Iron Co. Ltd v.
Riche
in which the House of Lords held that a company whose object was, inter-alia, to
make railway carriages could not contract to build a railway line and Riche could not sue the
company for refusing to pay for the expenses incurred toward the construction of the railway
line.

3.1.8Married Women

At common law, married women have no contractual capacity because they are presumed to
be non-existent (i.e. they are "part" of their husbands—the two constituting one person who
is the husband.)

This common law rule was changed by the Law Reform (Married Women and Tortfeasors)
Act 1935 of England which is applicable to Kenya under the Law of Contract Act 1961.
The Act gives married women full contractual capacity as if they were " femme sole".

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