CAPACITY TO CONTRACT

MENTAL PATIENTS & DRUNKEN PERSONS

1.0       Introduction

2.0       Objectives

• Main Content
• Mental Patients
  • Lunatics
  • Insane
• Those Not Certified as Insane
• Drunken Persons

4.0       Conclusion

5.0       Summary

6.0       Tutor-Marked Assignment

7.0       References/Further Readings

 INTRODUCTION

A person who puts himself in a situation of intoxication is in same position as a lunatic. When a person is in a state of intoxication, his contractual capacity diminishes and becomes limited. If he enters into any contract in such a state of intoxication that he did not know what he is doing and the other party is aware of that fact, the contract is voidable at his option. A lunatic can ratify the contract when he becomes sober. A person entering into a contract with lunatic may enforce the contract if he can prove he had no knowledge of, and took no advantage of, the drunkenness. In case of necessaries supplied to a lunatic, the provision of Section 2 of the English Sale of Goods Act, 1893, as amended by 1979 Act, that a drunken person is obliged to pay a reasonable price of such goods sold and delivered would be applied in our courts even though such provision is not in our sale of goods law.

 OBJECTIVES

• Understand what the law says about Mental Patients
• Identify those termed insane and drunk and the circumstances under which they can enter into a contract if any

 MAIN CONTENTS 

• Mental Patients

Such individuals are bound by the contract unless they fall into one of two categories:

Those certified insane by virtue of Part VII of the Mental Health Act 1983 a person may be certified as being insane by two medical practitioners where they are both of the opinion that the person in question is incapable of managing their own affairs and property because of their mental state. In these circumstances, the property of the insane person fails under the control of the court, so that any attempt by the individual to dispose of the property is not binding. It does not seem to be settled whether contracts other than those to dispose of the property will bind the individual involved. Treitel suggests not, since all contracts are a potential interference with a person’s property.

 Lunatics

The term lunatic, Lunacy Act, Cap. 112, Laws of the Federation of Nigeria, 1958, S.

2. See also Lunacy Law, Cap 81, Laws of Eastern Nigeria, 1963 S.2, includes an idiot and any other person of unsound mind. On principles, a contract cannot exist except there has been an agreement; in sort, as far as the respective parties to the contract are concerned, there must be consensus ad idem. From a logical point of view, it follows that a person of unsound mind or drunkard cannot enter into a contract for he would be lacking the genuine contract necessary for its formation. However, the law is not as strictly logical as that.

First, the general rule in contracts with mental patients, (i.e., persons of unsound mind) or drunken persons id that they are prima facie bound by the contracts they make such contracts are, however, voidable at the instance of the insane or drunken person, i.e., binding until repudiated within a reasonable time after the mental patients must have recovered or of being sober, unless they can show that:

1. At the time of the contract their mental condition was such that they could not understand what they are doing, i.e., appreciate the nature of their act, and
2. That the other party to the contract was aware of their condition, Imperial Loan Co. v Stone (1892) 1 QB 599. Thus, in Mancles v Trimborn (1946) 115 L.J.K.B. 305, an old lady, who had drawn a cheque, successfully repudiated liability thereon on the ground that she was, to the drawee’s Knowledge, incapable of understanding the transaction of which the cheque formed a part. But knowledge of this kind is immaterial where the contract is made during a lucid interval, for the ability to consent is then present and the contract would be binding.

Secondly, it is well established that where necessaries are supplied to an insane or drunken person or his wife, suitable to his station in life, section 2 the Sale of Goods Act, 1893, provides that he must pay a reasonable price for them. In other words, an implied obligation arises for him to pay for them out of his property, See Re Rhodes (1980) 44 Ch. D. 94. In such a case, it is immaterial that the insanity is known to the other party, who nevertheless, must have intended to be repaid for the necessaries he supplied. The obligation to pay has been converted by the Sale of Goods Act 1893, into a statutory obligation to pay a reasonable, not necessarily the contract price. It is provided in section 2 of the Act that:

Where necessaries are to a person who by reason of mental incapacity or drunkenness is incompetent to contract, he must pay a reasonable price therefor.

This, rule, however, was extended in Re Beaan (1912) 1 Ch. 196. There, it was held that, where money is supplied by way of loan and is spent in the purchase of necessaries for a lunatic, the person so lending will be subrogated to the rights of the creditors supplying the necessaries.

The ancient rule of the common law was that a lunatic could not set up his own insanity (though his heir might) so as to avoid an obligation which he had undertaken. But by 1847 Pollock C.B. was able to say, in delivering the judgment of the Court of Exchequer Chamber in Moulton v. Camroux, 2 Ex 487, that "the rule had in modern times been relaxed, and unsoundness of mind would now be a good defence to an action upon a contract, if it could be shown that the defendant was not of the capacity to contract 'and the plaintiff knew it."' Cf. Imperial Loan Co. v. Stone [1892] 1 QB 599, CA. Section 3 of the Sale of Goods Act 1979 makes the same provision for persons who are incompetent to contract by reason of mental incapacity as for minors (see above).

A lunatic so found by inquisition was held to be incapable of making a valid inter vivos disposition of property (although he could make a valid will) since this would be inconsistent with the position of the Crown under the Lunacy Acts: Re Walker [1905] 1 Ch 160. Presumably the position of a lunatic so found with respect to contracts not effecting inter vivos dispositions of his property was the same as that of a lunatic not so found; that is, he would be bound unless he could show that he was not in fact of capacity to contract and that the plaintiff knew it. The Lunacy Acts have been repealed, but an order under the Mental Health Act 1983, may have the same effect as a finding of lunacy.

  Insane Persons

The insane are the category of people cannot enter into valid contract. However, an exception is when they are in their lucid or crisis-free moments. A contract made by an insane person when in that lucid state is valid while any contract made while he is in crisis is only voidable at his option if only he can prove that he was normal then.

 Those not certified as insane

Where the person is not certified as insane, the contract will be voidable if the other party is aware of the person’s disorder and the mentally person did not understand the transaction in question. The burden of proving these two factors is on the mentally disordered person. Further, if the disordered person ratifies the contract on being cured of their condition then they will become absolutely bound by the contract.

Person of unsound mind

As a general rule, the contracts are made with a person of unsound mind are valid, unless in the following circumstances.

1. If by his mental incapacity, he does not understand the nature of the contract.
2. That the other party is aware of his condition.

If the above conditions are proved by the victim, the contract becomes voidable at its option. Contract entered in to by insane person during their lucid period are binding on them if the contract was entered into before he becomes insane.

  Drunken Person

A person who is under intoxication is in the same position as a lunatic because his concentration is impaired one his Contractual capacity diminished. If he enters into any contract in such a state of mind, he must prove that he did not aware of such fact. The contract is voidable at his option accordingly, when he becomes normal. He can ratify the contract.

A contract is voidable if drunkenness prevents an individual from understanding the transaction they have entered into and the other party is aware of their of intoxication, though this latter situation rarely arises since it must be virtually impossible for a person to be so drunk as not to know what they are without this factor being obvious to the other party. It should be noted that a drunk will be liable to pay a reasonable price for items considered necessaries and in any event will be liable on the contract should they ratify it on becoming sober.

In contract of marriage, the weight of judicial pronouncements favours the view that contract by a drunkard, like contracts entered into by insane persons, are voidable, if the drunkards was so intoxicated as to be incapable of comprehending the nature and effect of the contract, and it is irrelevant whether the state of intoxication was voluntary or otherwise. However, slight intoxication which does not dethrone a person’s reason and comprehension may be insufficient to affect the validity of the contract.

A contract, though voidable and not void, at the options of the drunken person may, when he regains his sobriety be ratified by him Mathew v Baxter (1873) L.R. 8 Exch., p. 132. Again, if the lunatic contracted during a lucid interval or the drunkard contracted after he had regained his sobriety, the contract is valid and enforceable. But the other contracting party or any third party cannot attack the validity of a contract by pleading the infirmity or insobriety of the drunken person, because these pleas are the exclusive priviledge of the person under disability. As already stated, section 2 of the Sale of Goods Act, 1893, provides that drunkards ‘must pay a reasonable price therefore’, for necessaries furnished to them.

CONCLUSION 

While contractual promises are enforceable against anyone having legal capacity, some persons are deemed by law as either incapable of contracting or having only limited capacity to contract. In cases involving limited capacity, the contract is usually considered voidable; that is, the contract is valid until the individual goes to court to void

1. As long as the person of limited capacity allows the contract to exist, it may not be voided.

 SUMMARY 

People with limited capacity to enter a contract include:

• mentally incompetent persons (those having diminished mental capacity);
• intoxicated persons (incapable of understanding the nature of a contract by virtue of excessive use of drugs or chemicals);
• illiterates (unable to read or write); and
• minors (those under the age of majority

 TUTOR-MARKED ASSIGNMENT

Discuss the position of law in respect of contract entered into by the following people

1. Drunk
2. Lunatic

 REFERENCES/FURTHER READINGS

Olusegun Yerokun, Modern Law of Contract, 1^st ed., Nigerian Revenue Project Publishers (1999)

T.O Dada, General Principles of Law, 3^rd ed., T.O. Dada & Co. (2006) Paul Richards, Law of Contract, 8^th ed.,

I.E. Sagay, Nigerian Law of Contract, 2^nd ed., Spectrum Law Publishing (2001) Ewan Macintyre, Business Law, 1^st ed., Pearson Education Limited (2008)