(New Zealand Court of Appeal) The Board reversed the decision which had rescinded an agreement for the sale of land by a vendor aged eighty-three years and of unsound mind. In rejecting a submission that the transaction constituted an unconscionable bargain, the Privy Council accepted the purchaser was innocent of any wrongdoing and had no means of knowing or cause to suspect the vendor was a lunatic, his solicitors having proffered the terms of sale.
In order to establish a lack of mental capacity, a party needs to show that:
(a) s/he was unable to understand the general nature of any agreement entered into; and
(b) the other party knew of her/his unsound mind at the time.
A contract made by a person who was ostensibly sane could not be set aside simply because it was unfair but only if there was equitable fraud which would also avail a sane person.
Lord Brightman
[1985] UKPC 17, (1985) 82 LSG 2658, [1985] 3 WLR 214, [1985] 2 All ER 880, [1985] 1 NZLR 159, [1985] AC 1000
Bailii
England and Wales
Citing:
Cited – McLaughlin v Daily Telegraph Newspaper Co. Ltd 15-Jul-1904
(High Court of Australia) The court considered the law on the effect of mental incapacity on a contract in the two cases Imperial Loan, and Molton v Camroux: ‘The principle of the decision seems, however, to be the same in both cases, which, in our . .
Cited by:
Cited – Dunhill v Burgin SC 12-Mar-2014
Lack of Capacity – Effect on Proceedings
The Court was asked ‘First, what is the test for deciding whether a person lacks the mental capacity to conduct legal proceedings on her own behalf (in which case the Civil Procedure Rules require that she has a litigation friend to conduct the . .
Lists of cited by and citing cases may be incomplete.
Updated: 14 September 2021; Ref: scu.443667
