These “voidable” contracts fall under two headings: i) those which are valid and binding on the infant until disaffirmed; and ii) those which are not binding until ratified after majority
“No doubt in ordinary cases, an infant is called upon to repudiate within a reasonable time after attaining majority”
Sales of Goods Act
The act governing minors
R.S.O 1990, c.S.1
3(1) Capacity to buy and sell is regulated by the general law concerning capacity to contract and to transfer and acquire property, but where necessaries are sold and delivered to a minor or to a person who by reason of metnal incapacity or drunkenness is incompetent to contract, he or she shall pay a reasonable price therefor.
(2) in this section, “necessaries” means goods suitable to the conditions in life of the minor or other person and to his or her actual requirements at the time of the sale and delivery.
Nash v Inman
Children buying things, is the thing a “necessary” (return to this as well)
Issue
Ratio
Notes
D (not age of majority but old) purchased tonnes of clothes
P is trying to recover
Can P recover?
•An infant is liable for goods sold and delivered provided that they are necessaries of life
$10,000 in liquidated damages for breach of non-compete: penalty or liquidated damages
Issue
Ratio
Notes
D sold business to P and signed non-compete
D agreed breach of non-compete = $10,000 liquidated damages
P sues
•The court may decline to construe the words "liquidated damages" according to their ordinary meaning and may treat such a sum as a penalty if there is the potential for varying breaches some of which are trivial and some which are significant.
Questions to ask: is the breach on that could only occur once? Could it occur repeatedly? Could it occur repeatedly with varying effects?
Note Case: liquidated damages will be read as a penalty clause if blatantly punitive
Issue
Ratio
Notes
• The Court will read "liquidated damages" as a penalty if the amount exacted is a grossly excessive and punitive response to the breach in question.
The exaction of gross trading profits as a penalty in this case because it is in my opinion, a grossly excessive and punitive response to the problem to which it is addressed.
When a buyer is attempting to recover money paid to a seller in restitution:
If there is NO forfeiture clause:
•If money is paid and the buyer defaults the buyer cannot recover money so long as the sell keeps the contract open and available for performance
•If the seller rescinds the contract or treats it as ended due to the buyer's default, then the buyer can recover the money
If there IS A forfeiture clause (Or money paid expressly as deposit):
•The buyer who is in default cannot recover the money at all
•The buyer MAY have a remedy in equity IF:
1.The forfeiture clause is of a penal nature (the sum is out of all proportion to the damage); and,
2.It must be unconscionable for the seller to retain the money
