Contract Law

Capacity
In general all natural persons have full legal personality, and therefore, contractual capacity;
that is, they are fully capable of entering into contractual relations with other persons.
However, certain classes of natural persons lack full contractual capacity: minors, drunken
persons, insane persons and illiterates.

Minors

The age of adulthood or majority, 18 years, is set by legation, and is the age at which natural
persons generally become legally capable of entering into contracts. Minors thus generally lack
contractual capacity; however, in some circumstances, contracts made or purported to be
entered into by minors are binding; the validity and enforceability of such contracts are
governed by common law principles as amended by legislations.

Under general common law principles, contracts entered into by minors can be grouped into
three categories, as follows:

A. Contract render void by statute (Jamaica is primarily governed by common law

principles);
B. Contract voidable at common law; and
C. Contract binding on the minor

Voidable Contacts.

Voidable contract are contracts which remain binding on the minor unless he repudiates them
before becoming an adult, or within a reasonable period of time after attaining the age
adulthood. This category of contract is limited to those under which the minor acquires an
interest in something permanent in nature, that is, out of which arise continuing obligations
that are binding on a minor e.g. leases of land, partnership agreements, and agreement to take
shares not fully paid up.

Note, what is a reasonable time will depend on the circumstances of the case. In
Edwards v Carter, it was held that repudiation by a minor of a covenant in a marriage
settlement four and a half years after the minor had attained majority was unreasonably late
and therefore ineffective.

Until minors decide to repudiate, he is fully liable to perform his obligations under the
contract. Thus, for instance, a minor who takes a lease property, including covenants to pay
rent, and a minor who takes up shares in a company is liable to pay calls on shares. Following
repudiation it is clear that minor ceases to be liable for future obligations under the contract,
such as rent due after the date, but there is some doubt as to whether he is liable to satisfy
existing obligations, such as payment of rent falling due before the repudiation. 1 It seems the
better view is that minor is bound by obligations accruing before repudiation. Thus, in Blake v
Concannon, it was held that a minor who repudiated a tenancy on attaining his majority, having
occupied the premises for several months, was liable to pay a year’s rent, accruing while he was
in possession.

Where a minor repudiates a contract, he may recover any money paid or property
transferred, but only where there has been total failure of consideration. The test for ‘total
failure of consideration’ is not whether the minor received any real advantage from the
contract, but whether he had obtained the very consideration which he had bargained for. In
Steinberg v Scala, a minor applied for and was allotted shares in a company; she received no
dividends, and the value of the shares remained low. 18 months after allotment, while she was
still a minor, she repudiated the contract and sought to recover the amount she had paid on
allotment and on the first call. It was held that that she could not recover the money; there had
been no total failure of consideration, since, by allotting the shares to her, the company had
done all that it had bargained to do under the agreement.

Contracts binding on Minors

1 See Cheshire, Fifoot and Furmston, Law of contract, 13 th edn, p 448.
A minor is fully bound if he enters into a contract for necessaries. ‘Necessaries’ are defined by
the sale of goods legislation as ‘goods suitable to the condition in the life of such [minor]… and
to his actual requirements at the time of sale and delivery’. Furthermore, ‘where necessaries
are sold and delivered to a [minor]… he must pay a reasonable price therefor. 2

Case law is instructive in fleshing out the meaning of the term ‘necessaries’. These include not
only necessaries but also such essentials as:

i) Board and lodging;

ii) Medical care (Peters v Fleming);
iii) Legal advice (Helps v Clayton);
iv) Food and clothing for minor’s wife or children (Chapple v Cooper); and
v) Instruction in art or trade, or intellectual, moral and religious training may also be
deemed necessary, since ‘the proper cultivation of the mind is as expedient as the
support of the body.

Goods which are merely luxury are always excluded but luxurious articles of utility are in
some cases allowed. The question of necessity or otherwise is a mixed question both law and
fact.

For a minor to be liable for necessaries, the onus is on the seller to prove not only that the
items sold minors were suitable to his station in life but also that he was not adequately
supplied with goods of that nature at the time of the sale. In Nash v Inman, where a tailor
brought an action against a Cambridge undergraduate (a minor) to recover £122, being the
price of eleven (11) fancy waistcoats supplied to him. The action was dismissed on the ground
that the defendant was sufficiently supplied with clothes suitable to his position. Therefore the
seller of the ‘necessary’ acted at his own peril.

Even where a contract with a minor concerns the sale or supply of necessaries, it will be
avoided if it contain harsh or onerous terms which are disadvantageous to the minor; as in

2S 3 Sale of Goods Act (Jamaica)

Fawcett v Smethurst, where a car rental agreement provided that the minor was to be
absolutely liable for damage to the vehicle, whether or not it was caused by his fault or neglect.

Beneficial Contracts of service

Minors are bound by beneficial contracts of service, that is contracts under which minor obtains
education or training for a trade or profession. The contract in order to be valid, must be an
employment or apprenticeship contracts, or at least must be analogous to such contracts.
Contracts under this heading are binding on the minor only if they are proved to be
substantially for his benefit. However, other types of contract will not be binding on the minor
merely because they are beneficial to the minor. It is well established that trading is not binding
on a minor, however beneficial it may be for him. The case of Mercantile Union Guarantee
Corporation Ltd v Ball, is instructive on this point, where a haulage contractor (a minor) was
held not to be liable to pay installments under a hire-purchase agreement in respect of a
vehicle which he had hired for use in his business. Also in Cowern v Nield, where a minor,
contracted to sell and deliver a consignment of hay, but failed to deliver, it was held that he
was not liable to repay the price to the buyer.

Mentally Disorder Persons

Under the sale of goods legislation, a mentally disordered person is bound by contracts for
necessaries.3 As in the case of minors, the definition of necessaries is set by the legislation as
goods which are suitable (a) to the condition in life of the mentally incapable, and (b) to the
actual requirement of the mentally disordered person at the time of sale and delivery. A
mentally disordered person must pay a reasonable price, for necessary good provided under a
contract which he purported to make.

3 S 3 Sale of Goods Act (Jamaica)

As in the case of minors, the liability to pay is quasi-contractual, so that it arises only where the
goods are actually delivered to the mentally disordered person. There must have been some
element of consent on the part of the mentally disordered person, since the seller cannot force
the goods on him and then claim payment.

In the case of non-necessary goods, the mentally disordered person is bound by his contracts
unless he can show:

(i) That, owing to his mental condition, he did not understand what he was doing
(Boughton v Knight), and
(ii) That the other party was aware of his incapacity (Molton v Camroux).

Lord Escher MR articulated the rule as follows:

When a person enters into a contract, and afterwards alleges that he was so insane at the time
he did not know what he was doing, and proves the allegation, the contract is as binding on him
in every respect, whether it is was executory or executed, as if he had been sane when he made
it, unless he can prove further that the person with whom he had contracted knew him to be so
insane as to not be capable of understanding what he was about.

Contracts made by a mentally disorder person during a lucid interval, and those made before
but ratified during a lucid interval, are binding on him (Hall v Warren).

The rule governing capacity of the mentally ill may, by analogy, be applied to the senile
or to persons suffering from ‘mental infirmity’. In Wiltshire v Cain, the plaintiff brought an
action for specific performance of an agreement for the sale of land. Counsel for the defendant,
an elderly gentleman, argued inter alia that at the time of making the agreement and for at
least one year prior to thereto, the defendant was suffering from a general loss of memory,
metal debility and senile decay and was incapable of understanding the meaning and the effect
of the agreement. It was further argued that the plaintiff was aware of his mental infirmity at
the time of the agreement. Field CJ commented:
A person may become of unsound mind because he has lost the ability of reason by disease,
grief or accident. Where a person in such condition can be shown not to have understood,
because of his mental condition, what he was doing and further, that the other party was
aware of this incapacity, then any contract, other than contract for necessaries, made by such a
person is not binding on him.

Drunken persons

Under the sale of goods legislation, a drunken person is bound to pay a reasonable price for
necessaries sold to him.4 Where a person enters into a contract in such a state of intoxication
that he did not understand what he was doing, and the other party was aware of that fact, the
contract is voidable at the drunkard’s option, but may be ratified later when the intoxication
ceases.

Illiterates

At common law, the defence of non est factum (it is not [my] deed) may be available to an
illiterate person who signs a document under a fundamental mistake as to its nature or the
consent.

4 S 3 Sale of Goods Act (Jamaica)