The law of contract has a wide range of definitions.

Although, it is so one can define a contract

as an agreement between parties having an intention to be legally bound by the terms of the
contract. Contracts are part of our day to day lives and it serves great vitality to understand who
is capable of forming or being part of a contract, This essay will provide an insight on who is
capable of being part of a contract and what the law of contract has done to protect certain
groups of people such as the minors, companies

To begin with, a minor is someone below the age of eighteen 1. Minors in their legal capability
have what is termed as contracts for necessaries 2. These are contracts that are for the benefit of
the minor. In the case of Chapple v Cooper3 the minor had taken it upon herself to pay the bills
for her husband’s funeral. Later on in the funeral proceedings she was not willing to pay the bills
claiming that she was just a minor. The courts held that the minor had an obligation to bury her
husband as it was for her benefit. This was then a contract of necessity as it benefited her at the
end of the day to pay the bills. However given this view, the law protects these minors from
businesses that seek to take advantage of their ignorance and youth just because he or she is a
“child”.

The Sale of Goods Act 18934 defines the word ‘necessaries” as goods that are necessary and of
importance to an infant. Hence, goods that are given to a child must be of necessity suitable for
his or her ‘station in life” meaning the child’s social standing as well as whether or not the goods
obtained by the child were of actual requirement the moment the contract was created. In the
case of Nash v Inman5, the minor was the son of an architect who was supplied with goods
worth one hundred and twenty two pounds including fancy waist coasts. The courts held that, the
contract Q the supply of good was unenforceable because the minor was already supplied and
these goods where not of necessity. The supplied also needs to not only supply the goods but the
question would be, where the goods given to the minor where that of necessity or otherwise?
Where in a given contract the terms of the contract are harsh, the contract can be unenforceable
as witnessed in the case of Fawcett v Smethurst6. The minor had hired a car to transfer goods

1
Ewan M, Contract law (12th edition, Palgrave law Masters)375
2
Ibid 375
3
[1844] 3M & W 252
4
Sale of Goods Act 1893
5
[1908] 2 KB 1
6
[1914] 84 KB 473
and the terms of the contract was that the minor was to be held responsible for the damages. The
courts held that the terms of the contract where too stringent on the minor and therefore not
enforceable. Thus, if a minor engages in a contract that has harsh conditions towards them, the
law regards those contracts as void or invalid.
On the other hand an exemption to the rule of above is that a contract which is not generally
beneficial to the minor will not be binding on the minor because where the contract is made up of
terms which are mostly detrimental to the minor the court will have no choice but to invalidate
the contract as a whole and this statement can be backed by a case of De Francesco v
Barnum(1890) where a 14year old girl entered into a stage dancing apprenticeship with De
Francesco, under an agreement which was considerably more favorable to De Francesco than to
the girl. Therefore the apprenticeship deed was held to be unfair and enforceable against her,
they were not substantially for her benefit.

The second category of people who are limited when it comes to making a contract are
the mentally incapacitated. This deals with individuals who are mentally disabled as well as
those who are intoxicated when making a contract. It is understood that a contract made by two
parties in either state is binding, unless one party at hand does not have the capacity to
understand the nature of the contract and the other party knows this. In such a scenario, the party
that does not have full contractual capacity can choose either to terminate the contract or not. If
two parties enter an agreement and one party is intoxicated or unable to understand the nature of
the contract and the other party is not aware of this, the courts will conclude that the parties are
bound by the contract. In the case of 7Hart V O’Connor, it was held that “a person of unsound
mind was bound by his agreement to sell the land because when the contract was made, the
buyer did not realize that the seller had any mental incapacity.” If a person does not have full
contractual knowledge, that does not mean that the party is incapable of making the contract
hence if a party makes a contract that they do not fully understand, are still bound by their
agreement. This is seen in Barclays V Schwartz (1995) where a Romanian signed a contract that
meant he was liable for his company’s debts of over 500,000 pounds. Schwartz argued that his
poor English and illiteracy meant that he did not fully understand the nature of the contract. This

7
C Elliot, Contract Law (7th edition, 2009)
was rejected by the courts as described by the court as ‘straight from the book of feedable
excuses’. A person who did not understand the language of the contract had the obligation to
seek simple explanation of what it implies. As for drunkenness, if a party is aware that the party
they are making an agreement with is drunk, the contract will not be bound because the drunk
party is operating under the influence of an intoxicating substance. In the case of8 Gore V
Gibson (1843), the court held that a person who makes a contract so intoxicated to the point
where he does not know the consequences of his actions is not bound by it.

Lastly, a corporation is one entity that is able to make contracts to a particular extent.
With it being a legal entity, a company is seen a separate identity from the person or people who
constitute it. The capacity of a company to make a contract is regulated by the law. In the case of
9
Ashbury Railway carriage Co. V Riche (1875), it was held that “this agreement was ultra vires
(beyond or outside the powers of the company) and that not even the subsequent assent of the
whole body of shareholders could not make it binding.”

From a necessaries point of view, It is immaterial that the mental disability is known to the other
party, if necessaries are supplied to a mentally disordered person or to his wife, suitable to the
position in life in which he moves, for in this case an implied obligation rises to pay for them out
of what he owns. The obligation does not arise unless it was intention of the person supplying the
necessaries that he should be repaid. He should intend, not to play the role of a benefactor but to
constitute himself a creditor.10 With regards to the supply of necessary goods, this obligation to
pay is converted by the sale of goods act11 into a statutory obligation to pay a reasonable price.
Section 3(2)12 states that: When necessaries are sold and delivered to one who because of mental
incapacity or drunkenness is not competent to contract they should pay a fair price for them.

8
13 M & W 621 ; 153 E.R 260
9
LR 7 HL 653
10
IBID
11
act of 1979
12
Act of 1983
A company is an artificial person created by the law. It is a separate entity from the owners and
because of that it is treated separately from the owners by the law. The company has the power
to sue and to be sued. For the company to come into existence it has to be registered under the
registration Companies Act, Cap 338, or under the Act of parliament and therefore its capacity is
regulated by the law. The Act of parliament that establishes that company would set out its
contractual capacity. A company’s ability to create contracts is controlled by the law.
Corporations follow a rule know as ‘ultra vires doctrine’, it is a Latin phrase meaning “beyond
powers” and is a fundamental rule of company law which involves the following;

A corporation’s articles of association are documents which set down objects, functions and
the purpose of the corporation.Any agreement created outside the corporation’s objects shall
be ultra vires and void.The doctrine is a means of preventing the company from doing
anything that was not empowered by objects clause.The doctrine is intended to guard three
classes of persons namely investors, creditors of the company, third parties entering
transactions with the corporation.

Under the capacity of corporations is the capacity of Directors. Section 22(3) of the Companies
Act13 provided that a company shall be limited as to the exercise of its powers through the
dictates of the Articles of Association. Through the daily transactions made by the Directors,
third parties are protected from the doctrine of ultra vires by which sometimes a company may
involve itself in an agreement that is beyond the limits of its Memorandum of Association and
those contracts said to be void. Shareholders are said to have the ability to restrain Directors
from making contracts that beyond its capacity14.
In conclusion, we can say that the law of contract has done all it can to protect,aid and serve
justice on both ends by laying out who is capable of being part of a contract, setting standards
and allowing certain members of society to be parties to contract while protecting their rights and
restricting them from abusing such rights.

BIBLIOGRAPHY

13
Chapter 388 of the Laws of Zambia
14
Richards P, Law of contract, (13th edition, Pearson publishers,2017)121
STATUTES

[1844] 3M & W 252

Sale of Goods Act 1893
[1908] 2 KB 1
[1914] 84 KB 473
13 M & W 621 ; 153 E.R 260
LR 7 HL 653
act of 1979
Act of 1983

Chapter 388 of the Laws of Zambia

Richards P, Law of contract, (13th edition, Pearson publishers,2017)121
Ewan M, Contract law (12th edition, Palgrave law Masters)375