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house and buildings with water, by means of pipes to be laid in CH. VI. s. 6. a certain manner, and to a certain height, is an agreement
(Eremptions). relating to the sale of goods within the exception (n). The Stamp Act, 1891, by sect. 1, besides providing that the Exceptions
under parti duties thereby granted shall be subject to the exemptions contained
cular Acts. in that Act, provides also that they shall be subject to the exemptions contained “in any other Act for the time being in force.” These particular exemptions under particular Acts are very numerous, being at least 70 in number (0). Among the more important exemptions may be mentioned :
Contracts required to be in writing by Lord Tenterden's Act.
Friendly Societies Acts.
The Statute of Frauds Amendment Act, 1828, 9 Geo. 4, c. 14, Writings s. 8 (Lord Tenterden's Act), provides that “no memorandum or necessary by
made other writing, made necessary by that Act,” [e.g., representations Statute of of character whereupon to obtain credit, and acknowledgments Amendment to take debts out of the Statute of Limitations,] "shall be deemed Act, 1828. to be an agreement within the meaning of any statute relating to the duties of stamps.” But this enactment applies only to instruments which might be stamped with an agreement stamp; and therefore does not authorise the admission of an unstamped promissory note, for the purpose of taking a debt out of the Statute of Limitations (p). Where, however, there is a written acknowledgment of the debt, and promise to pay it, and this is put in evidence simply for the purpose of barring the statute, the above enactment exempts it from stamp duty (9) ; and so it is in the case of a simple acknowledgment in writing, from which a promise may be implied by law (r). The Poor Law Amendment Act, 1834, 4 & 5 Will. 4, c. 76, Contracts in
pursuance of s. 86, exempts from stamp duty all contracts in pursuance of any orders of rules of the Local Government Board; but in order to bring a
ment Board contract for the sale of lands within the benefit of this provision, under Poor it must appear that the sale was made in pursuance of an order of the Board (8).
(n) West Middlesex Waterworks Company v. Suwerkropp (1829), M. & M. 408.
(0) See Alpe's Digest, pp. 237--240. (p) Jones v. Ryder (1838), 4 M. & W. 32.
(9) Morris v. Dicon (1836), 4 A. & E. 845.
(7) Taylor v. Steele (1847), 16 M. & W. 065.
(8) Banbury Union v. Robinson (1843), 4 Q. B. 919.
OF CONTRACTS WITH PERSONS OF LIMITED CAPACITY.
PAGE 1. In general, capacity presumed. 140 2. Persons of unsound Mind
141 3. Drunkards' contracts voidable... 143 Ratification when sober
145 (b) Liability for Necessaries 146 (c) Beneficial Contracts
PAGE (d) What are not Necessaries ... 152
Trade Debts........ 153 (e) Ratification
157 Void by Infants' Relief Act 157 (f) Liability of Parent.... 158 (g) Liability of Party con
tracting with Infant 159 On Contract to marry
160 (h) Executed Contracts
160 5. Aliens
161 6. Convicts
163 7. Bankrupts and their Trustees... 164 (a) Existing Contracts ...
164 Disclaimer and Rescinding Order
165 (b) Contracts in Bankruptcy 166 Trustee has benefit..
167 Personal labour 8. Persons under Duress
Sect. 1.-In general. There must
The rule of law which requires the assent of the parties to a be capacity to
contract, assumes that such assenting parties shall be competent to contract; and, accordingly, in order to there being a valid
contract, a capacity to contract is absolutely necessary. The law pre
But the law presumes that there is in every one this capacity existence of
to contract; so that, where exemption from liability to fulfil an such capacity. engagement is claimed, by reason of the want of it, this fact must
be strictly established on the part of him who claims the exemption. Moreover, it is only in certain prescribed cases that this protection can be claimed; and, therefore, weakness of mind short of insanity; or immaturity of reason in one who has attained full age; or the mere absence of experience or skill upon the subject of the particular contract, affords, per se, no
ground for relief at law or in equity (a). Effect of in- In some cases, the incompetency to contract is general and capacity.
absolute; in others it is limited : in some cases again, the contract is void as against both the parties; in others, only the incompetent or protected party can shelter himself from liability upon it. Thus, the contracts of persons of non-sane mind, and of infants, are not, in every case, absolutely inoperative against (a) Osmond v. Fitzroy (1731), 3 P. Wms. 129 ; Lewis v. Pead (1789), i Ves. jun. 19.
them. They may, as we shall shortly see, enter into certain CH. VII. s. 1.
Contracts contracts; and they are bound thereby, in the absence of fraud.
with Lunatics, On the other hand, parties who contract with those whom the Infants,
Bankrupt, law shields from responsibility, cannot, in general, rely on the
&c. (in incapacity of the latter, as a defence. This, at least, is the rule general). in case of contracts with infants (b); and so it is where a party is induced by fraud or duress to enter into an agreement—the infant, or the party who was defrauded, or was compelled by duress to enter into the agreement, being entitled to maintain an action thereon, for any breach of the contract on the part of the person who contracted with him.
SECT. 2.-Contracts with Persons of Unsound Mind (c). An idiot, or natural fool, is one that has had no understanding Idiots. from his nativity, and who is, therefore, by law, presumed not to be likely to attain to any (d). But a person is not an idiot if he has any glimmering of reason, so that he can tell his parents his age, or the like common matters. A lunatic or non compos mentis, Lunatics. is one who has had understanding; but, by disease, grief, or other accident, has lost the use of his reason (e). A man or his representatives may show that when he made a Liability of
idiot or promise or sealed an instrument, he was so insane as not to know
lunatic. what he was about (f), and the Court will not authorise a committee to enter into a personal covenant on behalf of a lunatic (g). Prior to the Sale of Goods Act, 1893, 56 & 57 Vict. c. 71, it Contracts for
necessaries. had been laid down by the Court of Appeal that an obligation
Liability for may be implied on the part of a lunatic (whether so found or not) necessaries to repay a person having knowledge of the lunacy who has under Sale of supplied him with necessaries suitable to his position in life (h), with the intention of being repaid (i); and the 2nd section of that Act provides that where necessaries are sold and delivered to a person who, by reason of mental incapacity, is incompetent to contract, he must pay a reasonable price therefor; and, further, that “necessaries" in that section “mean goods suitable to the condition in life” of such person, "and to his actual requirements at the time of the sale and delivery.”
(6) Holt v. Ward (1733), 2 Str. 937. C. A. ; and cf. Cowper v. Harmer (1887), (c) See Bac. Abr., and Com. Dig., tit. 57 L. J. Ch. 460. Idiot.
(h) Rhodes, In re (1890), 44 Ch. D. 94, (d) 1 Bl. Com. 302 ; Co. Litt. 247 a. C. A. (e) 1 Bl. Com. 304 ; Co. Litt. 247 a. (i) Ib. In this case the implied obli
(f) Per Cur., Molton v. Camroux (1819), gation of a lunatic's estate to repay her 4 Exch. 17, Ex. Ch.
next of kin was held not to arise. (g) In re Fox (1886), 33 Ch. D. 37,
CH, VII. , 2. The liability of a person of unsound mind, on contracts other Contracts
than those for necessaries, was fully considered in Molton v. with Lunatics.
Camroux (k), in which it was held that the administrator of a Liability in other cases.
lunatic could not recover the price of two life annuities bought Molton v. by him from an insurance society not having knowledge of his Camrou.r.
lunacy. Result of all “ The result of all the cases is, that when a person enters into the cases.
a contract, and afterwards alleges that he was so insane at the time that 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 executory or executed, as if he had been sane when he made it, unless he can prove further that the party with whom he contracted knew him to be so insane as not to be capable of
understanding what he was about ” (). Effect of pre
If the party were sane when the contract was made, evidence vious or sub- of previous or subsequent insanity is not material, acts done by a sequent insanity. lunatic during a lucid interval being valid (m). But in a doubtful
case, such evidence might create a suspicion that the party was
insane at the time the agreement was entered into (11). Insanity of As between principal and agent, the insanity of the principal principal revokes
ipso facto revokes the agency, but the lunatic will be liable for agency. contracts meanwhile entered into by the agent with the third Drew v.
parties who were ignorant of the fact of the principal's lunacy, Nunn,
and to whom the lunatic had, when sane, represented the agent's authority (0). The insanity of an agent also revokes ipso facto the agency, for the principal cannot be presumed to intend that
he should be bound by the acts of a lunatic (p). Committees The Lunacy Act, 1890, 53 & 54 Vict. c. 5, consolidates the of lunatics.
statute law of lunacy, and the 120th section of that Act empowers the Judge in Lunacy to authorise the committee of a lunatic to exercise various powers on his behalf, and in particular to grant leases of the property of the lunatic, and to “perform any contract relating to the property of the lunatic, entered into by the lunatic before his lunacy."
(k) Molton v. Camroux (1819), 4 Exch. and it was held that there must be a new 17, Ex. Ch. ; and see Brown v. Jodrell trial. (1827), M. & M. 105; Niell v, Morley (m) Hall v. Warren (1804), 9 Ves. jun. (1804), 9 Ves. 478; Beason v. McDon- 605, 610; and see Drew v. Nunn (1879), nell (1854), 9 Ex. 309; and as to setting 4 Q. B. D. 661, C. A., as to the extent of aside the deed of an alleged lunatic, see the insanity being a question for the jury. Selby v. Jackson (1844), 13 L. J. Ch. (n) See M'Adam v. Walker (1813), 1 249.
Dow, 177, in H. L., per Eldon, C. (1) Imperial Loan Co. v. Stone, (1892) (0) Drew v. Nunn (1879), 4 Q. B. D. 1 Q. B. 599 : in this case the action was 661, C. A. ; and see this case well dison a promissory note. The jury found cussed in Evans on Agency, 2nd ed., that the defendant was insane, but disagreed on the point whether his insanity (V) See Evans on Agency, 2nd ed., was known to the plaintiff's agent wh was present when the note was signed,
But the Court in Lunacy will order a proper allowance to be CH. VII. s. 2. made out of the income and capital of a fund in Court belonging
with Lunatics. to him, though the effect may be to make the capital insufficient
Creditors of for the payment of creditors of the lunatic who have obtained lunatic postorders on the fund; and the creditors are not entitled to have im- poned to
charges for pounded an amount of capital sufficient to meet their demands (q). his maintenA promise made by a sane person in pursuance of a moral ance;
Discharge obligation, and therefore void at law, may be fulfilled by the of moral Court out of his estate after he becomes lunatic (r). This
of lunatic. held in a case where a lunatic, before he became such, had by Whitaker, an accident greatly benefited by a will, and had in discharge of In re. what he considered a moral obligation secured to the person who would have benefited, but for the accident, the sum of 50,0001. by a promissory note payable in ten instalments, of which he had paid three (r).
Sect. 3.-Contracts with Drunkards.
In Pitt v. Smith (s), Lord Ellenborough ruled that a person in a state of complete intoxication has “no agreeing mind;" and afterwards, in an action for work and labour, that proof that the plaintiff was drunk when he signed what the defendant insisted upon was an agreement, dispensed with the necessity of producing it, the instrument being a nullity (t). And in Gore v. Gibson (u) it was laid down by the Court of Exchequer on demurrer that a plea of complete drunkenness was a good answer to an action on a bill of exchange. But it is settled by Matthews v. Baxter (x) Voidable. that the contract of a man too drunk to know what he was about,
Matthews v. though to the knowledge of the other contracting party, is voidable only and not void, and may be ratified by him when he becomes sober.
Complete drunkenness is a ground for setting aside a con- Setting aside tract (y), and so is partial drunkenness if fraudulently induced or taken advantage of (y).
For necessaries sold and delivered, the liability of the drunkard Liability for is, by sect. 2 of the Sale of Goods Act, 1893 (ante, p. 141), similar to that of a lunatic.
(9) Plenderleith, In re, (1893] 3 Ch. 332, C. A.
(r) Whitaker, In re (1889), 42 Ch. D. 119. The next of kin consented. It was held that the promissory note being without consideration could not constitute any legal claim on the lunatic's estate.
(s) Pitt v. Smith (1811), 3 Camp. 33.
(u) Gore v. Gibson (1845), 13 M. & W. 623.
(2) Matthews v. Baxter (1873), L. R., 8 Ex. 132.
(y) Cooke v. Clayworth (1811), 18 Ves. 12; Butler v. Mulvihill (1823), 1 Bligh, 137 (H. L.).