HI6027 Week 3Sample questions and answersCapacity to enter into contractAnn, aged 14, signed a three-year contract with Ted in order to learn ballet dancing.The terms of the contract stated that:a Ted would teach Ann ballet dancing to the best of his ability free of charge;b during the three-year period, Ann could not accept stage engagements otherthan those under Ted; andc Ted could employ Ann to perform on stage, but was not bound to do so.Ann accepted a stage engagement from Bill, as her income from Ted’s employment wasinsufficient for her support. Ted wishes to sue Ann for breach of contract. Advise him.Suggested answerThis question is concerned with capacity to contract and, in particular, whether or not aninfant is automatically bound in the case of a beneficial contract of service.A beneficial contract of service is a contract of employment, apprenticeship, training or education.In these types of contracts, the courts will examine the contract as a whole, weigh the onerousterms against the beneficial terms and decide if the balance is in favour of the infant.This means that a contract can still be valid even if it contains some clauses that aredisadvantageous. In Hamilton v Lethbridge (1912) 14 CLR 236, the contract taken as a wholewas enforceable, even though it contained an onerous restraint of trade clause.From the facts in the question, the contract, on its face, appears to be quite reasonable until onecomes to the question of remuneration. The income Ann was receiving was insufficient for hersupport and this is a clear detriment. This detrimental aspect of the contract cannot be severedbecause the contract would then make no provision for a wage for Ann and this would alter theoverall intention of the agreement. Therefore, the contract is unenforceable against Ann. Shemay leave Ted’s employment without having to worry about any action being brought for breachof contract.Legality of object of contractBrass hired a roulette table, with all the ancillary equipment needed to play roulette, fromACME Hire. When they entered into the contract, neither party was aware of theprovisions of the Gaming and Betting Act that made the game unlawful, but didn’tprohibit it. When Brass discovered the Act, he refused to pay the hire price. Can ACMEHire recover the hire charges?Suggested answerThis question is concerned with the effect of statutory illegality on the formation of a contract.The courts may treat a contract as struck down by a statute even though it is not of a classexpressly mentioned in the Act. Such a case occurred in JM Allan (Merchandising) Ltd v Cloke(1963) 2 QB 340, the facts of which are substantially similar to this case, where the court held thatthe contract evidenced an intention to use the roulette table and ancillary equipment— that is, thesubject matter of the contract—for an unlawful purpose. As each party participated in thatpurpose, the contract becomes illegal in its inception. The parties’ ignorance of the law is noexcuse.On that basis, ACME HIRE will be unable to recover the hiring charges.
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