Case Study: Jacinta's Contractual Capacity and Loan Liability

This case study analyzes Jacinta's potential liability under a contract with Wizard Short Term Finance, focusing on her age at the time of the agreement. As Jacinta was 17 years and 10 months old when she entered the contract, the central issue revolves around whether she had the legal capacity to form a binding agreement. The analysis considers the general rule that contracts with minors are voidable, with exceptions for necessities. Applying the principles established in cases like Nash v Inman, the study assesses whether the loan and subsequent purchases (iPhone, smart watch) qualify as necessities, considering Jacinta's lifestyle and existing resources. Ultimately, the analysis concludes that Jacinta can likely avoid the contract and liability to repay the loan, as the contract doesn't fall under the necessities exception, and therefore, is not legally enforceable against her. Desklib provides students with access to similar case studies and study tools.

Question one
The issue in this question is related to the arguments that can be raised by Jacinta for the purpose
of avoiding her liability under the contract created with Wizard loan and to avoid the liability to
repay the loan. It has to be seen if Jacinta has the capacity to create a valid contract and if she is
liable under the agreement.
For the purpose of the creation of a contract between the parties, it is required that the parties
should have been president of contract. In this context, there are some persons and classes who
lack the capability of entering a contract that is lawfully enforceable. As a consequence,
generally the contract formed by such individuals cannot be enforced against them. This
deficiency related with capacity is usually created due to the fear that such persons are
vulnerable to mistreatment.1 However this has become a complex field in view of the statutory
developments that have taken place at the state level, due to which there is certain variance in the
application of these rules. In the present case, the issue is related with the validity of agreement.2
Both under the general law and legislation, there is a restriction imposed on the capability of the
minors to enter into an agreement that can be enforced under the law. According to the general
rule, the common law provides that a contract created by a minor (person less than 18 years of
age) is voidable. Repeatedly noted that there are certain exemptions present to the general rule.
Contracts for necessities: the law offers that a contract entered into by a minor and which is
related with the necessities of life is binding on both the parties. In this context, the necessities of
life have to be decided by keeping in view the existing lifestyle of the minor and the things that
are necessary for maintaining such lifestyle. The relevant instance in this context is Nash v
Inman (1908). The same issue has been dealt with by section 7, Goods Act, Vic.
1 Simon Whittaker, "The Optional Instrument Of European Contract Law And Freedom Of Contract" (2011) 7(3)
European Review of Contract Law.
2 Stefan Grundmann, "The Future Of Contract Law" (2011) 7(4)
European Review of Contract Law.

The brief facts are that Nash was a tailor who had formed an agreement for supplying among
other things, 11 elegant waistcoats to Inman. He was a student at Cambridge. When the parties
had entered into the contract, Inman was a minor and he had sufficient clothes that his father
gave him. Consequently, when Nash brought action for recovering the cost, Inman cited his lack
of capacity in this regard. It was held by the court that when the parties had entered into the
agreement, Inman was a minor who had the necessary supply of clothes. Therefore, Nash cannot
recover the cost of the clothes.
In this matter, Jacinta had formed a contract with Wizard Short Term Finance for obtaining a
loan. However at the time of the contract, Jacinta was 17 years and 10 months old. Therefore, he
was a minor at the time of the contract. As a general rule, the contract cannot be enforced against
her. Moreover, it cannot be said that the contract was related with the necessities of life.
Consequently, the contract is not legally enforceable and Jacinta can avoid repaying the loan to
Wizard.

References
Grundmann, Stefan, "The Future Of Contract Law" (2011) 7(4) European Review of Contract
Law
Whittaker, Simon, "The Optional Instrument Of European Contract Law And Freedom Of
Contract" (2011) 7(3) European Review of Contract Law
Case Law
Nash v Inman [1908] 2 KB 1
Legislation
Section 7, Goods Act, Vic