ISLAMIC UNIVERSITY IN UGANDA

Faculty of law
Unit: :Bachelor of laws
Year: 2024
Lecturer’s name Mr. Bifammengo Yusuf

GR0UP 6 SREAM C CONTRACTUAL CAPACITY.

QUESTION:
CONTRACTUAL CAPACITY

1. AMONGIN FIONA 224-053011-25952

2. NANYONGA FATUMA 224-053011-29005

3. NAMUKASA ANISHA 224-053011-28897

4. NAKAWUKI LETICIA 224-053011-28754

5. AGABA JAMES 224-053011-28956

6. BARAZA RHINNAL MARIE 224-053011-28929

7. LULE AKRAM 224-053011-28707

8. WALAKIRA ELIJAH 224-053011-28740

9. SSEBAGGALA GIDEON 224-053011-28896

10. NAKATO IMMACULATE FAVOUR 224-053011-29000

GR0UP 6 SREAM C CONTRACTUAL CAPACITY.

Contractual capacity 1refers to the legal ability of a person to enter into a valid contract or

agreement with full consent.

Capacity to contract is an element that makes up a valid contract.

According to the contract2, a person has capacity to contract where he or she is eighteen (18)

years and above.

The act further provides that a person of sixteen(16) years or above has the capacity to

contract as provided under article 34(4)and(5) of the constitution 3

A person to contract also must reach the following ingredients.

 Be of sound mind:

The person must not be mentally incapacitated

 Be of legal age:

The majority and typically of eighteen years of age

 Not disqualified by law4:5

Persons with certain mental disabilities and those under state of bankruptcy.

Categories of contractual capacity6

a. Full capacity:

These are person with sound minds and have no legal disabilities hence are able to make

valid contracts.

b. Partial capacity:

These include minors, intoxicated persons, or those people with mental disabilities although

they may have some limited capacity.

1
Principles of law by professor Ben
2
Contract Act CAP 284 Section 10
3
Constitution of the republic of Uganda article 34 (4)
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Law made easy.org
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Studoc.com
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Scribe.org
 c. No capacity:

These also may include persons with serve mental disabilities, unconscious individual or co-

operations (they must go through agents).

Factors affecting contractual capacity.78

 Legal disabilities; eg persons under the state of bankruptcy, also persons that are legally

prohibited by the laws.

Mental health; persons with poor and unstable mental health also affect the process of making

a valid contract according to the supreme law of the land.

Coercion or undue influence; This refers to the

Intoxication; This refers to the

 Age; This refers to the legally accepted age at which a person should go into forming a

valid contract by the law and according to the Ugandan constitution those below the age

of eighteen are not allowed to go into forming contracts unless of some circumstances

provided by the law. Those who are not allowed to contract due to age are called minrs.

Consequences of lacking contractual capacity. 9

Void contracts;

This refers to contacts that are not consistent with the law and are considered null and invalid

according to the Ugandan constitution.

Voidable contracts;

These are contracts that are valid but can be annulled or cancelled according to the contracts

act CAP.284.

Contracts made by minors10

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Learning the law England
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Scribe.org
A minor refers to a person who is under the age of eighteen, except for the constitution article

34(4) and (5).

The general rule at common law was that contracts made by minors or infants were voidable

at his or her option. In other words a contract made by minors were valid and binding unless

he or she repudiated it.

There are also exceptions on the contracts made by the minors as they are supported by the

general rule above and are the following;

1. Incase or Under contracts of necessaries;

The common law defined necessaries as goods and services that were capable of maintaining

the life of the minor or any other essential good to the life of a minor.

A minor is liable to these contracts of necessities of life, and the minor is compelled to pay a

reasonable price.

2. Incase of beneficial contracts;

These are contracts that are beneficial to the minor in their lives such as apprenticeship or

contracts for their education.

3. Ratification;

A minor can also engage into a contract after reaching the age of majority or maturity that is

eighteen years (18) and above.

4. Under the parent or guardian’s consent

Here a parent may have influence over the contract of the minor with his or her consent as the

law provides in the Ugandan constitution and the contracts act CAP.284.

5. Under special statutes;

A country may have special laws that may lead minors into contracting like those related to

employment or military service may allow minors to contract.

Although to keep in mind that these circumstances may vary depending on the jurisdictions

and specific laws, hence contracts involving minors are subject to close scrutiny to ensure

fairness and protection of the minors interests.

For one to hold a minor liable for breach of contract, he or she must prove that the goods

supplied to the minor were necessaries for example food, medical care, clothings.

The plaintiff must prove that at the time of sale and delivery the minor had been supplied

such items forexample in the case of Robert v Gray, the defendant an infant who wished to

learn and be a billiard player, made contract with the plaintiff a leading professional by which

the parties agreed to accompany each other on a world tour and play matches together in the

principle counter the plaintiff spent much time and made a lot of money in making necessary

preparations and later defendant repudiated the contract.

Issues raised

 Whether the service provided by the plaintiff was necessary

 Whether there was a valid contract

Holding

o Issue 1:

Any form of education to a minor is a necessary since its essential to the life of a minor

o Issue 2

There was a valid contract offer acceptance, consideration. The fact that professional billiard

player acceptance to train a minor makes it a valid contract.

In this case the minor was held liable for breach of a contract and was to pay 1500 pound to

the billiard player.11

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[1913]KB520CA
It should be noted that any adult willing to make a contract with a minor an adult must make

sure the terms of the contracts are favorable on the minor and short of this the contract is

void.eg

Fawcett v Smethurst (1914)

A minor hired a car inorder to transport a luggage , the contract for hire was necessary

however it was held to be void because the minor was subjected to harsh terms which

included any damage on the way, fuel such expenses were to be paid by the minor.

At common law a minor may be bound to a contract of apprenticeship or service such as

education, employment and others.

Also in the case of Ryde v Wombwell, it was held that a pair of cufflinles worth 25 pounds an

antique goblet are worth could not amount to necessaries, the plaintiff couldnot succeed such

a case.

Beneficial contracts of service12

Under the common law, infants were bound by a contract of apprentice or service, as it was

his or her benefit. In such a contract a minor would be held liable incase of breach of the

terms, if in case the conditions were favorable to the minor. In the case of Francesco v

Barnum, the defendant was subjected to to harsh conditions in a contract as it was made

between Francesco (Plaintiff) to and Barnum the defendant was to be taught stage dancing,

it was agreed that during the training period which was seven (7) years the defendant was

not allowed to be married, she would be paid little money, and would not accept

professional agreements without the plaintiff's consent.

The court found that the girl was at absolute disposal of the contract of the plaintiff and

held at the contract was was hard and and on this it was Inforceable.

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Contracts made by passions of and sound mind According to the contracts act a person is

said to be of sound mind if at the time of entering the contract that person must be capable

of understanding the contract and and able to form a rational judgment.

The mental treatment act (MTA), CAP.279. define a person of unsound mind as an idiot or a

person who is suffering from mental derrangement. The language used by the ACT

undermines the dignity of persons with mental disabilities whose rights are recognized by

the Constitution of the Republic of Uganda undercover 35 the persons with disabilities Act,

2006 and convention on the rights of person of disabilities (CRPD). The constitutionality of

the derogatory words in MTA and other laws has not been successfully tested in quotes in

the center for you for human rights and development and another v Anthony general

constitutional petition number 64 of 2011 the constitutional Court held that the word idiot

and imbecile used in section 130 of the Penal code Act to describe women and girls with

mental disabilities dehumanly and degrading since they violet article 24 of the United

Constitution person who is usually of unsound mind but occasionally of sound mind he or

she may enter into a contract during periods when he or she is of sound mind. Similarly a

person who is usually of sound mind but occasionally of unsound mind he or she may not

enter into a contract during the times when he or she is of unsound mind.

A contract that is made with and unsound mind were the other party or person is aware of

the incapacity such a contract is said be voidable at the option of the incapacitated party. In

such a contract the burden of proving that the incapacitated person did not understand the

contract contents lies on the incapacitated person, if the capacitated person proves to the

court that he or she was incapacitated at the at the time when the contract was being made

then he or she is acquitted. Similarly persons of unsound mind are also liable for
13
necessaries. The sale of goods and supply of services act 2017 14provides that where

necessaries are sold and delivered delivered to a person who by reason mental incapacitate

incapacity or drunkenness is incompetent to enter a contract he or she must pay reasonable

price for the necessaries.

In the case of imperial loan company limited v Stone for the nine (1892) queens bench page

599. In this case the defendant signed a promissory note as surely but later found it to be a

lunatic, it was alleged that by the time the defendant sign the note he was so insane and

able of understanding what he was doing and there were further alligators that Insanity of

the defendant was known to the plaintiff. In this case the burden of proof lies on a

defendant to prove that at the time of contracting, he was insane and that the plaintiff was

aware of his incapacity respects the contract voidable. A person of unsound mind is deemed

incable of managing his or her own affairs including property accommodation. According to

the administration of estates of persons open sound mind act the property of the unsound

mind falls under the court where a person is certified as being of unsound mind. The high

court May appoint a manager to administer his or her estates.

CONTRACTUAL CAPACITY. 15Contractual capacity refers to a person is legal ability to enter

into a binding contract with all the necessary requirements of a valid contract. The following

are the general terms and requirements for contractual capacity. Age: This refers to the

orecognizable a person is considered to be of worth to make a decision on his or her own. In

Uganda the age is 18 years.

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MTA.CAP279
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Sale of goods Act(Cap82)section 2
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Contract Act(CAP23):section2-5
Sound mind: This refers to that mean to capacity of a person to understand the contents

and terms of the contract that he or she is bound to.

Undue influence: This is where a person is free from intoxication, coercion or any undue

influence at the time of contracting. Factors that affect contact capacity.

Age; yeah a person should be over a reasonable age that is recognized by the Constitution

and he or she must be able to understand what he or she is is contracting to and the

constitution of Uganda provides that a person to to be the guy accepted the contract he or

she must be over 18 years and above.

Mental health: 16yeah a person must be in the state of understanding what he or she is

doing without being forced by the other party into a contract as he or she must be of clear

understanding of the contact with the contents that are needed.

Intoxication: this is the state of impaired mental or physical faculties due to consumption of

substances such as alcohol drugs or any other intoxicants.

Legal disabilities: this is where a person maybe legally restricted into forming abiding

contract and a certain circumstances that are provided by the law or by the statutes of a

state that he or she is living in for example he or she may be declared bankrupt.

Consequences of lacking contractual capacity.

As a result of lacking the capacity to contract the parties may suffer of fall into void and

voidable contracts as stated in contract law, the terms "void" and "voidable" refer to

different statuses of a contract.

Void Contract: 17These are contracts that are considered to be invalid by the supreme law of

the land to be invalid from the start and all parties must be aware of the consequences to

fall up on them.
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Ugandan Penal Code Act(Cap128):section 45-47 protection of persons with mental incapacity
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 1. A contract that is invalid from the start (ab initio).

2. Has no legal effect or binding force.

3. Cannot be enforced by either party.

4. Considered as if it never existed.

Examples:

 Contracts involving illegal activities

 Agreements between parties without capacity (e.g., minors)

 Contracts with impossible or unlawful objectives

Voidable Contract: 18

1. A contract that is valid but can be annulled or cancelled.

2. Can be enforced until it's challenged or annulled.

3. May be ratified or affirmed by the parties.

4. Can be declared void by a court or by one party.

Examples:

 Contracts entered into under duress, coercion, or undue influence

 Agreements involving misrepresentation or fraud

 Contracts where one party lacks capacity (e.g., intoxication)

 Contracts with uncertain or ambiguous terms

Key differences:

 A void contract is invalid from the start, while a voidable contract is valid until

challenged.

 A void contract cannot be enforced, while a voidable contract can be enforced until

annulled.

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Ugandan Contract Act (CAP284)
  A void contract is considered nonexistent, while a voidable contract exists until

declared void.

 Restitution

Restitution, in law, refers to the act of restoring something to its rightful owner or

compensating someone for losses or unjust enrichment. Types of Restitution: 19

1. Legal Restitution: Court-ordered restoration of property or rights.

2. Equitable Restitution: Remedies based on fairness and justice.

3. Monetary Restitution: Compensation for the financial losses gained.

Drunkards: I drank at the first to a person that is under influence of alcohol and other

beverages that are considered to be of harm to the brain and functionality of the person is

mental abilities. The drunkards fall under the category partial capacity no capacity any times

of contractual capacity.

Partial capacity. This is where a person has some understanding of the terms and conditions

of the contract and is in full capacity to form a valid contract. Show capacity in contract has

some characteristics and include the contract may be available, limited according to contact

forms, capable of making informed decisions.

No capacity; This is where a person is incapable of entering into a valid contract and this

contracts are considered to be void hands are not verified by any law. Some of the parties

that have low capacity to contract include minus, mentally incapacitated individuals,

intoxicated persons and others.

Drunkard: 20As stated above and drunkard is a person who is intoxicated or under the

influence of alcohol and is typically to the point of impairment or loss of control and in

contact law and drunk and reversed an individual who enters into a contract while in a state
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of intoxication. Also a drunk a partial capacity or no capacity to contract he or she may may

also contract understands that include the following.

Mild intoxication: This is where a person is mildly intoxicated I'm still able to understand

he's surrounding and also the nature of the contact that he or she is trying to make.

Ratification when sober: In case a person later ratifies ( approves) the contract when he or

she a sober and I didn't clear state of understanding.

Necessities: Also in case the contract is for necessities like food shelter or men to treatment

a person also may be allowed to go into a valid contract in case of intoxicatio. Unaware of

the intoxication: In case the other party had no idea to know that the individual was under

intoxication or intoxicated at the time of making a contract.

Undue influence: In case the other party didn't always take advantage of the state of

intoxicity over the other person at the time of contracting. Capacity to understand: In case

the person still has the ability to understand the contents and terms of the contract he or

she is bound to a valid the contract.

Compliance with legal requirements: In a case the person contracting has all the legal

requirements that are required to form a valid contract at the time of contracting he or she

is also bound to form a valid contract with the other party.

Not extremely intoxicated: In the case the person is not on the full control of the drugs or

alcohol he or she is also bound for my value contact since he or she still has the ability to

understand the terms and conditions of the contract.

Voluntary actions: In case a person that is said to be under intoxication really goes ahead to

do the actions without being forced he or she is also bound to form a valid contract. And

intoxication is seen in a number of cases for example. Gore v Gibson 21Gore went a head to
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Gore v Gibson(1843)13 M&W 628:intoxication affects contractual capacity
Imperial Loan Co v Stone[1892]1 QB599
sell off his piece of land but later realize that he was under influence of alcohol and so he

went to beg for his piece of land

Capacity of co-operations.22

The term co-operation refers to statutory organization and companies. Statutory co-

operations are established by an act of parliament or other legislation. There are statutory

companies are usually owned by the government such as UNRA, NSSF and URA like other

companies c-operate can sue and be sued they can enter contract through natural persons

such as directors.

However the doctrine of ultra vias limited companies from entering into certain contracts

for example the objective clause of the memorandum of association defined the powers of

companies were not to perform activities that were not in the objective clause for example

in the case of Ashbury Railway Carriage Co v Richie the company was to carry on business as

engineers and to make all kinds railway , this company later signed a contract with Richie to

con tract a railway in Belgium later the company terminated the contract. It was ultra vires,

Riche went to court however the court ruled in favour of the railway carriage company.

Some of the effects of ultra vires doctrine, protects shareholders by halting the companies

from acting out side their jurisdiction. This minimizes risks that would have negative effects,

promotes accountability hence this doctrine holds company directors accountable for their

actions, protection of investers, when companies are subjected towards performing

according to there objectives, this assures investors absence of unnecessary competition

thus encouraging investment.

Reefrences:

“The Ugandan Contract Act” (CAP23)-1950

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“The Sale of Goods Act” (CAP82)-1950

“The Ugandan Penal Code” (CAP128)

“The Commercial Law “by J.O.Kwesiga(2013)

“Contract Law” by E.K.Mwanga(2018)

11. AMONGIN FIONA 224-053011-25952

12. NANYONGA FATUMA 224-053011-29005

13. NAMUKASA ANISHA 224-053011-28897

14. NAKAWUKI LETICIA 224-053011-28754

15. AGABA JAMES 224-053011-28956

16. BARAZA RHINNAL MARIE 224-053011-28929

17. LULE AKRAM 224-053011-28707

18. WALAKIRA ELIJAH 224-053011-28740

19. SSEBAGGALA GIDEON 224-053011-28896

20. NAKATO IMMACULATE FAVOUR 224-053011-29000