Facts[]
Jack O'Connor sold a farm to Hart. Jack was 83 and of unsound mind, but Hart did not know this and was fair in his negotiations with Jack's solicitors. Hart occupied and improved the land. When one of the Jack's brothers (Joseph O'Connor, the respondent) took over as trustee of the estate he sought to set aside the contract. O'Connor was successful at trial, which Hart appealed.
Issue[]
- Is the contract void for unconscionability?
Decision[]
Appeal allowed.
Reasons[]
The court finds that Jack O'Connor clearly lacked contractual capacity. They accepted the principle that a contract made by a party of unsound mind – but who appears to be of sound mind – with another party (having no knowledge of the unsoundness) is valid. There is no unfairness that can be imputed to the party having no knowledge of the other’s incapacity, unless the contract is so unfair that it amounts to equitable fraud (which would have allowed voiding even if the other party was sane). In the case at bar, there is no equitable fraud, and thus the contract is valid.
Ratio[]
A contract which is negotiated in good faith, with no knowledge (or reasonable knowledge) of incapacity on the part of the other party, is not voidable for unconscionability.