Capacity conundrum

In English law, a contract made by a person lacking capacity is valid unless the other party to the contract knew, or ought to have known, that he lacked capacity, in which case the contract is voidable. But things become more complicated when that contract is an agreement to compromise litigation, particularly litigation relating to the personal injury which caused the lack of capacity in the first place.

Protecting vulnerable claimants

In any piece of litigation—a personal injury claim is the most common example—the Civil Procedure Rules (CPR) dictate that a claimant who lacks capacity should be represented in the proceedings by a litigation friend, and that any settlement should be approved by the court. These provisions of CPR are designed to protect vulnerable claimants who cannot sensibly understand or consent to settlements being reached on their behalf. That need to protect the vulnerable claimant trumps the need for finality in litigation: if a settlement is void because of capacity issues, the case can be re-opened.

So