chapter  1
Capacity in French law is an essential condition of a contract (CC, Art 1108). However, in English law, with one main exception, incapacity usually makes a contract only voidable. Was there, accordingly, any real necessity for s 3 of the 1987 Act? Did not equity have the power to order the transfer of property so as to avoid unjust enrichment? 2 The one main exception to the voidable principle is a contract that turns out to be ultra vires because one party did not have the capacity to make such a contract. An ultra vires contract is void. Does this mean that any property transferred under such a non-existent contract remains in the ownership of the transferor? 3 Does one need a contract in order to transfer ownership in property? When might such a (non-contractual) transfer give rise to an unjustified enrichment on the part of the transferee? (f) Illegal contracts
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This was a successful action in equity for relief against forfeiture of a deposit.

Lord Browne-Wilkinson: This case raises the question whether a deposit in excess of 10% paid under a contract for the sale of land can be lawfully forfeited by the vendor in the event of a failure by the purchaser to complete on the due date…

In general, a contractual provision which requires one party in the event of his breach of the contract to pay or forfeit a sum of money to the other party is unlawful as being a penalty, unless such provision can be justified as being a payment of liquidated damages being a genuine pre-estimate of the loss which the innocent party will incur by reason of the breach. One exception to

this general rule is the provision for the payment of a deposit by the purchaser on a contract for the sale of land. Ancient law has established that the forfeiture of such a deposit (customarily 10% of the contract price) does not fall within the general rule and can be validly forfeited even though the amount of the deposit bears no reference to the anticipated loss to the vendor flowing from the breach of contract.