Contract Law and Capacity: Understanding the Requirements

Running head: CONTRACT LAW 1
Principal of Business Governance
Student details:
4/24/2019

CONTRACT LAW 2
According to the Australian contract law, it is required to enter into valid contract that both
parties to the contract must have contractual capacity. There are various kinds of people who are
not able to make the contract. For the example, an individual having mental disorder will not be
capable to have knowledge of the contract’s nature. The people with mental disorder lack a
capacity to make contract. In Australia as well as other states, the minimum age requirement of
signing a contract is 18 years. Children, who are below under the eighteen years, are considered
in the category of minors. Children under 18 years are unable to sign a contract with the
exception that the children enter into contract for an essential item. The essential items include
the things which are necessary to survive for a person like food, medicines and services or
products related to health. Otherwise, this is necessary that minor children must have take
consent from their parents or guardians to enter into the legal contract. A child under an age of
eighteen has the limited capacity to make the contract. It means that the contract with minor is
valid in various situations ("Contracts In Australia - Lawbuddy" 2019).
Additionally, if minor children have signed a contract for the items which non-essential to
survive without a permission of parents or any guardian, in that case a contract will not be valid.
In other terms, the parents or guardian can enter into the business related contact. They may also
cancel the contract. The contract will be valid only in case where permission has been given or
intention has made by the parents or guardian to the contract. In case of void contract, the minor
can give the item back to merchant. Fortunately, the merchants are required to take back the sold
items since they violated the state laws by taking entry into contract with a minor. As well, in the
mater wherever the children are not controlled, meaning courts awarded them maturity status
while they were still not mature, then that contract is to be valid ("Australian Contract Law | Julie
Clarke" 2019).