Mental Health Legal Centre Inc.

Liability for Contracts When You are Unwell

In certain circumstances – such as where you’ve been undergoing a manic or psychotic episode, you may have entered into a contract, which you may not have entered into if you had been well. Later on you may wonder about your rights.

You may be able to get out of the contract because it is unenforceable against you, depending on the circumstances.

Capacity to Contract

If you were so unwell that you had no idea that what you were signing was a contract, it may be that you had no ‘capacity to contract’. The contract may be unenforceable. Keep in mind, however that incapacity to contract is difficult to prove.

Unconsionability

A contract may be set aside where it is ‘unconscionable’. This might be the case where the person with whom you made a contract knew or ought to have known that you were in a position of ‘special disadvantage’ because of your mental illness, and it would be unfair for them to be allowed to take advantage of that.

Misleading or Deceptive Conduct

A contract may be set aside where a trader has engaged in misleading or deceptive conduct – where they have been dishonest about the product you’re buying.

Unfair terms

If the contract is a consumer-trader contract, and includes terms which cause a substantial imbalance in the rights of the parties to your detriment, the parts of it which cause the imbalance might be void.

Provisions in the Consumer Credit Code, the Trade Practices Act and the Fair Trading Act might provide you with some protection. So also might the fact that you had an administrator (such as the State Trustees) looking after your affairs at the time you signed the contract.

If you have problems with contracts or debts, you should contact the Mental Health Legal Centre on 96294422 or the Consumer Action Law Centre on 96296300 as soon as possible.

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