How can the incapacity defence in contract law coexist with the concept of universal legal capacity advanced by the UN Convention on the Rights of Persons with Disabilities (CRPD)? In the absence of clear guidance from the CRPD on the link between legal capacity and mental capacity, and given the silence of this Convention 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 (eg upholding the security of transactions) but also to social interests (including the protection of values such as 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 contracting party) and which considers the circumstances of the transaction. These arguments are explored in the context of English contract law, focusing on the question of contractual validity 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.
Eliza Varney, ‘Redefining contractual capacity? The UN Convention on the Rights of Persons with Disabilities and the incapacity defence in English contract law’, Legal Studies. First published: 17 April 2017. DOI: 10.1111/lest.12166.