Capacity to Contract: Legal Implications in UK Contract Law

This report provides a comprehensive overview of the capacity to contract under UK law. It defines capacity as the ability to enter into a contract, emphasizing that individuals must possess this capacity for a contract to be enforceable. The report details how contracts entered into by minors (under 18) and individuals with mental disabilities are often deemed voidable. It examines the UK contract law's key elements, including the necessity of competent parties, legal and enforceable agreements, and consideration. The report highlights the importance of confidentiality and the distinction between agreements based on factual errors versus those lacking contractual capacity, citing the case of Glasgow City Council v Dahhan to illustrate the legal implications of lacking capacity. The report also covers essential aspects like written and oral contracts and their legal implications. This report aims to provide a comprehensive understanding of the critical legal considerations surrounding contract formation and validity within the UK legal framework.

Running head: CAPACITY TO CONTRACT
Capacity to Contract
Name of the Student
Name of the University
Author Note

1CAPACITY TO CONTRACT
Capacity to contract is defined as the ability to enter into a contract. The law says that
anyone entering into a contract should have the capacity to enter into the contract otherwise the
contract will be termed voidable1. A voidable contract is one which, though valid and
enforceable deems the contract invalid at his discretion. Under a voidable contract, one party has
the right to avoid the terms of the contract and exercises that right to ignore the terms of the
contract. For a contract to be deemed enforceable, the parties entering into the contract need to
be adults. Under the United Kingdom Law, minors and people with mental disability are barred
from entering into an enforceable contract. The contract law is there to ensure that the parties
entering into the contract get justice in cases of breach of contract. Minors and people with
mental disability do not have the right under Contract Law to enter into any contract and get the
benefits of the contract law. In cases when the parties do not have the capacity to enter into the
contract, the contract will turn voidable. The intention of the contract law in United Kingdom is
to make sure the needs and requirements of the individuals are met2.
Minors and mental capacity to contract
To be called a minor, the individual has to be above the above of 18 years. A minor has
the right to enter into a contract but the contract is considered voidable by the minor till he
attains the age of 18. This gives the minor the right to enter into the contract and also terminate
the contract at his own free will. The UK law also takes into consideration the needs of the
minors to enter into contract. The needs can be education driven or the need to buy necessary
substances like food, medicine or clothing. An example of a contract entered into by a minor to
necessitate need is apprenticeship. These are considered enforceable against the minor.
1 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
2 Poole, Jill. Textbook on contract law. Oxford University Press, 2016.

2CAPACITY TO CONTRACT
In the case of Glasgow City Council V Dahhan UKEATS/0024/15/JW3 an appeal was
preferred against a decision of the Employment Tribunal and whether it has the jurisdiction to
dismiss an agreement because the claimant lacked the capacity to enter into the contract. The
Appeal was dismissed. The Appellate Tribunal was held to have jurisdiction because the party to
the agreement did not have the capacity to enter into the contract because he lacked the mental
capacity4.
Important points of the UK Contract Law
The UK contract law is a very comprehensive legislation that determines the rights of the
parties and upholds the key elements of privacy, capacity and consideration. The key elements of
a valid contract are that there has to be a minimum of two parties, a legal and enforceable
agreement in law, consideration validating the contract.
Parties: For a contract to be valid the parties need to be competent to enter into the contract and
they need to be above the age of 18. The parties have to ensure that the terms of the contract are
confidential and are not made public.
Consideration: It is a very important element of contract law. Consideration can be defined as a
thing of value given to one party by the other party in return of a promise to perform the contract.
The consideration can be paid in the present or in the future.
A contract can be either written or oral in nature. A written contract is more valuable because it
gives a substantial proof of the terms of the contract and in cases when the party breaches the
terms of the contract, damages can be claimed.
3 Glasgow City Council V Dahhan UKEATS/0024/15/JW
4 Stone, Richard, and James Devenney. The modern law of contract. Routledge, 2017.

3CAPACITY TO CONTRACT
. In the Glasgow City Council v Dahhan 2016 case it was held that there needs to be a difference
between agreements entered between parties that happens due to error in construing facts and in
cases where the parties lacked the capacity to enter into the contract. This distinction is held to be
artificial and unsound.5 The contract entered into by parties who are competent will give rise to
obligations which are enforceable in law. The case is based on the essentiality of capacity to
enter into a contract and the issue was regarding signing the settle agreement and what rights
followed after that6. The capacity to enter into a contract has to be understood from the aspects of
both the parties because both parties are essential to the contract and if the requirement of
capacity is not met, parties will face problems of enforceability just like the case of Glasgow City
Council v Dahhan 2016.
5 Smits, Jan M., ed. Contract law: a comparative introduction. Edward Elgar Publishing, 2017.
6 Andrews, Neil. Contract law. Cambridge University Press, 2015.

4CAPACITY TO CONTRACT
References
Andrews, Neil. Contract law. Cambridge University Press, 2015.
Glasgow City Council V Dahhan UKEATS/0024/15/JW
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK),
2014.
Poole, Jill. Textbook on contract law. Oxford University Press, 2016.
Smits, Jan M., ed. Contract law: a comparative introduction. Edward Elgar Publishing, 2017.
Stone, Richard, and James Devenney. The modern law of contract. Routledge, 2017.