Legal Capacity

02 Jul Legal Capacity

In order to validly execute a document such as a contract, deed or Will, a person must have the Legal Capacity to do so. This means that a person must have the ability to understand the nature of the document he or she is signing, and the consequences that will flow from doing so.

Legal Capacity is time and issue specific. Thus, whilst a person may be very unwell a good deal of the time, they may well have lucid intervals during which they are perfectly capable of understanding the document they are signing and the consequences of doing so.

The level of understanding required of a person can vary significantly depending on what it is he is doing. Generally, the level of understanding required of a person is highest if he/she is making a Will. Thus, in one case, an elderly man who married and made a new Will, both on the same day, was found by the Court to have had the necessary Legal Capacity to marry on that day, but not to have the necessary Legal Capacity to make a Will. On that basis, the Will was overturned.

It is the ability or otherwise of a person to fully understand what he or she is doing which is the key factor in deciding whether that person had the necessary Legal Capacity to validly execute a particular document or carry out a particular action, or not. In other words, just because many might feel that the course of action a person is taking is odd or otherwise is not a sufficient basis on which to decide that the person does not have the necessary Legal Capacity.

Capacity can also be affected by the person’s circumstances, particularly where the person is vulnerable or under the influence of a stronger personality. If a Court finds that a document was executed by a person who was under duress, i.e. being obliged to sign a document because of a fear for the consequences if he/she didn’t do so, or is subjected to undue influence, where the person is under the influence of another to such a degree that he/she can no longer make up their minds freely and independently as to what they want to do, that document will be deemed null and void by the Courts.

Wills may be challenged on the basis of lack of testamentary capacity, in other words, the high level of legal Capacity required of a person making a Will. Less frequently, contracts are also challenged by a person who claims they were not in their right mind, when entering into the contract, or did so under duress or undue influence. This can happen, for instance, where an elderly or vulnerable person transfers an asset to someone else and it is believed that the transfer constituted and “unconscionable bargain”. Where a Court makes such a finding that transfer will be set aside.