CHAPTER II

CAPACITY OF PARTIES TO CONTRACT

§ 38. General Rule.-Every natural person is competent to enter into a contract who is of full age and of sound mind, and is not specially disqualified by law.

No distinction is now drawn between subjects and aliens as regards capacity to contract, but alien enemies are subject to certain disabilities during war.

The capacity of an artificial person, such as a corporation, to contract depends mainly upon the purpose of its existence, except where it is expressly defined in the instrument or statute creating it.

INFANTS

§ 39.-A person under the age of twenty-one is an "infant." The position of infants in regard to contracts may be summed up in the following propositions (a) Contracts made with infants relating to (1) loans of money, (2) sales of goods other than necessaries, and (3) accounts stated, are absolutely void.

(b) Contracts made with infants relating to necessaries or for their benefit are valid.

(c) By custom in certain places and by Act of Parliament, infants may enter into special kinds of contracts.

(d) All other contracts made with infants may be avoided by them either before or within a reasonable time of their coming of age.

§ 40. (a) Void Contracts of Infants.-It follows from the principles above laid down that if a merchant or shopkeeper supplies goods to an infant which are not necessaries, or if a money-lender lends him money, or if an account be stated of dealings with the infant, the merchant, the shopkeeper, the money-lender, or the person stating the account, has no remedy against the infant. The infant may pay

what is due if he likes, but he is not bound to do so. Even if he represent himself to be of full age, the contract is void. The courts will not, however, allow any person, even an infant, to take advantage of a fraud. And though they must bow to the rule that says the contract is void, they will, on the ground of the fraudulent misrepresentation, compel the infant to restore any benefit he may have derived under the contract.

§ 41. (6) Contracts of Infants for Necessaries.—It is an old rule that an infant may enter into a binding contract for the supply of "necessaries" for his own use. "The word 'necessaries,' ," said Baron Parke, "is not confined in its strict sense to such articles as were necessary to the support of life, but extended to articles fit to maintain the particular person in the state, degree, and condition of life in which he is." Food and clothing are examples of necessaries, but it would be impossible to give any list, inasmuch as what would be regarded as necessaries at one time or to one person, would be held not to be necessaries at another time, or to another person. Luxuries and ornaments, such as cigars and jewellery, are not regarded as necessaries except under very special circumstances. It is for the judge before whom the case is tried to say whether the articles can reasonably be considered as necessaries at all, but if he thinks the question an open one, the jury will be asked to say whether the particular things supplied were, under all the circumstances, to be regarded as necessaries. A few examples taken from decided cases will illustrate the above principles.

Livery for a servant, a horse, and a regimental uniform were regarded as necessaries where they were specially suitable to the position in life of the infant. On the other hand, a pair of jewelled solitaires that cost £25 were held

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not to be necessaries for a young man of large fortune. watch may be regarded as a necessary, but its price must bear some relation to the circumstances of the purchaser.

§ 42. (c) Special Contracts of Infants.-By custom and by statute infants are authorised to enter into special contracts. These contracts relate rather to real property than to mercantile law, but it may be pointed out that, according to the custom of London, an infant unmarried and above the age of fourteen, though under twenty-one, may bind himself apprentice to a freeman of London by indenture with proper covenants.

§ 43. (d) Voidable Contracts of Infants.-We have seen that contracts of infants for goods sold, for money lent, and contracts in the form of accounts stated, are void, whilst contracts of infants for necessaries and contracts specially authorised by custom or statute are good. It remains to point out that all other contracts can be enforced by an infant if he chooses, but such contracts cannot be enforced against him. Formerly an infant was allowed, on coming of age, to ratify any contract that he had entered into during infancy, but in 1874 this power was taken away by the Infants Relief Act, which enacted that no action can be brought against a person upon any promise made after he attains his majority, to pay any debt contracted during infancy, or upon any ratification made after full age of any promise or contract made during infancy.

MARRIED WOMEN

§ 44. Old Rule. The old common law regarded a husband and wife as one person, and disqualified the wife from entering into contracts binding on her personally. The custom of the city of London, however, permitted a married woman to trade, and for that purpose to make valid contracts, and by personal service a woman might acquire certain rights, but even in these cases the husband had to be a party to any action brought by or against her.

A married woman divorced or judicially separated from

her husband has the capacity to contract as if she were unmarried. A protecting order from a magistrate confers on her a similar capacity.

§ 45. Separate Estate.-At common law the moveable property of a wife belonged to the husband, and he acquired by marriage important interests in her immoveable property such as land. In short, subject to certain limitations, the property of the wife belonged to the husband. In course of time the doctrine came to be established that a married woman might by means of a trustee hold property for her own use independent of the husband. To such property the term " separate estate" was applied. Not only was she allowed to hold such property, but she was allowed to enter into contracts regarding it. Such contracts were regarded as not binding her personally, but as only binding the separate estate. In other words, if she were sued on a contract and judgment was recovered, she could not be committed to prison for refusing to pay. The doctrine of separate estate has been greatly extended by Acts of Parliament, but the principle still remains that the contracts of a married woman bind her separate estate only. The Married Women's Property Act 1882 says: "A married woman shall be capable of entering into and rendering herself liable in respect of and to the extent of her separate property on any contract," and of suing and being sued, as if she were a single woman.

There is a method by which a married woman may be prevented from binding her separate estate, viz. by using in the instrument granting her the property words restricting her from alienation. In such a case she has no power to bind her estate by contract. This disability lasts during marriage, and if she becomes a widow the power to contract revives.

§ 46. Contracts binding Separate Estate.—It is essential to the validity of the contract that at the time it is made the married woman should have some separate property, otherwise the contract is void. The value of such property may be very much less than the amount she contracts to pay; that is immaterial as far as the validity of the contract

is concerned. If the contract be valid, it will bind not only the separate estate she possessed at the time the contract was made, but also after acquired separate estate.

On the other hand, if she has no separate estate at the moment of time the contract is made, the contract is void, even though she should acquire such estate afterwards.

§ 47. As Agent for Husband.—A married woman residing with her husband has an implied authority to contract on behalf of the husband for a reasonable supply of goods and service for the household. The authority may be revoked at any time, and it is desirable that notice of revocation should be given to those with whom she has been accustomed to deal. The duty of proving that the wife has authority rests with the party seeking to enforce the wife's contract against the husband. The husband being bound in law to maintain his wife, she can, if he fails to support her in a manner suitable to his station, bind him as his agent for what she requires. The husband cannot deprive the wife of this authority. If, however, the wife voluntarily leaves the husband's house and lives apart, she loses all right to pledge his credit, and those supplying her with goods do so at their own risk.

§ 48. Contracts with Husband.—A married woman may contract with her husband in respect of her separate estate. She may, for example, lend him money out of such estate. She may also enter into a contract with him relating to any litigation between them, or for a judicial separation. But as regards other kinds of contracts, she cannot as a rule contract with him directly.

CORPORATIONS AND COMPANIES

§ 49. Definition. -A corporation is an artificial person created by law having a perpetual succession, a distinctive name, and a common seal. Not being a natural person, it can only contract through an agent, and such agent must have the requisite authority to enter into the contract.

§ 50. Powers of Contracting.—The powers of a cor