Redefining contractual capacity in light of the CRPD

What is it about?

The UN Convention on the Rights of Persons with Disabilities (CRPD) advances the concept of universal legal capacity, understood as the ability of all to hold and exercise rights and duties. How can the incapacity defence in contract law coexist with this concept? The CRPD provides no clear guidance on the link between legal capacity and mental capacity and on the concept of contractual capacity. This article stresses the need to redefine contractual capacity in a manner that responds not only to economic interests (focused on holding parties to their agreements), but also to social interests (such as the protection of human dignity). The discussion insists that incapacity and disability must never be conceptually equated and calls for a definition of contractual incapacity that moves beyond the medical condition of individuals (whether this is known by or apparent to the other party) and which considers the circumstances of the transaction. These arguments are explored in the context of English contract law, focusing on whether a contract should be valid when a party lacked the mental capacity to understand the transaction and the other party was unaware of the incapacity and acted in good faith.

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Why is it important?

This article highlights social arguments for legal intervention in the case of grossly imbalanced contracts. Given the potential increase in the number of parties which may seek to rely on the incapacity defence, including due to an increased number of people who develop mental health conditions such as dementia, the discussion stresses the need for an appropriate response from contract law which considers wider social concerns. The discussion calls for a redefined vision of the incapacity defence which moves beyond the medical condition of individuals, considers the circumstances of the transaction and reflects social values such as respect for human dignity.