The contracts a company enters into with its customers and others are important for its long-term growth and profitability. However, some people do not have the capacity or legal capacity to enter into contracts. The law defines who these individuals are and prevents other individuals and companies from having valid contracts with those who are said to be incapable of doing so. The United States is not the only country to recognize this legal concept. For example, France, a civil law country, has also adopted this idea. The legal capacity of companies was recently reformed by Regulation No. 2016-131, which entered into force in 2016. According to Article 1147 of the French Civil Code, the impossibility of paying of a company is a ground for relative nullity, a defence that can be invoked by the injured party to cancel the contract. In this case, the injured party would be the company.
In addition, Article 1148 allows the French companies that are not able to conclude contracts that are daily actions authorized by customs or laws. People who are under the influence of alcohol or drugs are generally not considered fit for the contract. However, in some cases, the courts force those who have voluntarily become drunk to comply with the obligations they have contracted under the influence of alcohol. However, this is a tricky situation, as most courts have also agreed that the sober party should not take advantage of a person intoxicated by drugs or alcohol. Therefore, in business environments, it is best to avoid selling products and services to people who seem to be under the influence. In common law countries, a company`s capacity is limited by the company`s company agreement. This document contains the clause that describes the business activities in which the company is involved and thus describes the capacity of the company. Some people do not have the capacity to enter into a legally binding contract: mental incapacity is a legal term that refers to people who cannot enter into contracts due to mental disabilities.
In most jurisdictions, mental performance is defined as the ability to understand the full meaning and impact of the contract. If the person is not able to cognitively delineate all his rights and obligations of the contract, he is not legally capable of concluding the contract. Some states have also introduced a « motivation test » to measure capacity. If there is a reason for concluding the contract, it can be assumed that the person has legal capacity. Ultimately, courts will rely on expert witnesses to determine legal capacity, as situations can vary greatly from a person with different mental disabilities. Contractual capacity means that a party has the legal capacity to enter into a contract.3 min read Companies must also be capable of capacity when concluding an agreement. If this is not the case, it can have serious consequences, particularly with regard to guarantees. There are similarities between legal systems and courts as regards the general rules governing the legal capacity of undertakings. For example, the legal theory that a corporation has a separate legal personality is recognized in civil and common law jurisdictions. This means that as a defined legal entity, a company has the ability to enter into a contract with other parties and can be held liable for its actions.
Contracts with persons who do not have legal capacity are voidable. The other person has the right to withdraw, the possibility to cancel the contract and all related terms and conditions. Courts may decide to cancel or cancel a contract if one of the parties does not have legal capacity. If the court cancels the contract, it will try to put all the parties back in the situation they were in before the agreement, which may involve the return of property or money if possible. Contractual capacity means that a party has the legal capacity to enter into a contract. Legal capacity also means that a person must know the meaning of the law. A person`s ability to perform depends on whether or not they are of legal age and mentally capable of understanding the applicable terms of the contract. As a general rule, anyone under the age of 18 is considered incapable of entering into contracts. However, from a commercial point of view, there are a number of important exceptions to the law that prohibit minors from having the capacity to do so. A minor is allowed to enter into contracts – that is, to make purchases – for necessities such as food, clothing and housing. In addition, some states allow minors to obtain credit and bank accounts.
You are responsible for these accounts as if they were legally binding contracts. In Spain there is a special relationship with church and state. As a result, the Church is governed by elements of a particular Concordat: Article 37 of the Spanish Civil Code, which stipulates that companies enjoy « civil capacities ». If an agreement is entered into with a person who does not have the legal capacity to enter into a contract, that agreement or agreement will be deemed voidable. This means that the person who does not have legal capacity would have made a false statement, albeit unintentionally. The other party to whom the false declaration has been made may cancel the contract and all its conditions. This is called contract termination. Courts can also annul or cancel a contract if legal capacity is not met. Once the contract is invalid, it will no longer be binding and the court will try to bring the parties back to the situation they were in before the agreement was concluded.
This means returning money and goods as much as possible. According to the ultra-vires doctrine, a company cannot do anything beyond what its statement of objects allows. The ultra-vires doctrine was initially seen as a necessary measure to protect a company`s shareholders and creditors. This doctrine has led to the so-called constructive notice rule, which states that any third party who has entered into a contract with another company must have been familiar with that company`s object clause. Jeremy Bradley works in education consulting and business administration. Er hat einen Master of Business Administration. . . .