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Determining capacity – the importance of guidelines

Determining capacity – the importance of guidelines

By Steven Sapountsis


Next Tuesday, 6 December, the Law Institute is launching its “Revised Capacity Guidelines”, a tool that will assist practitioners to make an assessment about their client’s capacity to give instructions, or to participate in a court or alternative dispute resolution process. Concerns about capacity of a client to enter into legal transactions is not new, nor is the acceptance that capacity is issue-specific and that incapacity is not static and can change. The High Court recognised this in Gibbons v Wright [1954] HCA 17 when, after reviewing some relevant 19th Century decisions, it said: The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation. … [in considering the case of Ball v. Mannin [1829] EngR 165; and others] … The principle which the case supports ….., appears to us to be that the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained.

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