People who lack capacity to make legal agreements
Someone who lacks capacity to manage their money will still need to use the services of others. Anyone providing care and support to someone who lacks capacity to manage their own finances needs to be clear how that person’s money is managed. (Part 26: People who lack capacity to manage their money)
If someone has a Lasting Power of Attorney (Property and Affairs) or a Court appointed deputy (Property and Affairs) or an Enduring Power of Attorney in place, that person can make decisions about the person’s money and sign contracts on their behalf, acting as if they are that person. (Part 19: Lasting Powers of Attorney)
If the person has made a contract before they lost capacity, for instance a tenancy agreement signed before the person developed dementia, the contract will continue.
If someone who lacks capacity needs to make a legal contract and no LPA or deputy is in place, it may be necessary to go to the Court of Protection for a determination for the decision.
If it is clearly in the person’s best interests (as determined using the best interests checklist MCA section 4) to spend the person’s money this will be covered by section 5. This means there is legal protection for the person who spends the money of the person who lacks capacity to make that decision. (Code of Practice 6.58) (Part 8: Best interests decisions)
The Sale of Goods Act 1979 indicates that if someone who lacks capacity enters into a contract and the person providing the goods or services is aware that the person lacks capacity, the contract is not valid. However, MCA section 7 modifies this. The person providing goods or services can claim a reasonable sum, regardless of the validity of the contract, if the goods or services are ‘necessary.’ (Part 26: People who lack capacity to manage their money)
People who lack capacity can be vulnerable to people selling things at the door or on the phone. If someone who lacks capacity is persuaded to agree to spend money on something inappropriate consider if the seller was aware of their lack of capacity. It might be that either the seller was aware of the lack of capacity or it could be concluded that they did not make suitable efforts to ensure that the terms of the agreement were understood. It is then appropriate to consider if the goods are ‘necessary’. Does the person need double glazing or an encyclopaedia? There is no protection in law unless the goods can be shown to be necessary.
There is some confusion about how the law applies to people who may lack capacity to sign a tenancy and how agreements about their housing can be made. It is vitally important that any decisions are made on the basis of valid capacity assessments and that all decisions are fully recorded. If there is clear evidence of why decisions are made and actions taken it will be possible to justify that actions are taken in good faith, even if it is later found that the actions are unlawful. (Part 6: How to assess capacity) (Part 8: Best interests decisions) (Part 10: How to record decisions)
If someone who may lack capacity needs to make a tenancy agreement, be clear whether they have capacity to make this particular decision. A tenancy agreement can be a long and complex legal document – but the essential points are that it relates to where the person will live, that they agree to pay their rent and to look after their home, while the landlord agrees to see to repairs. Some people who may not be able to make some other decisions may be helped to understand this and will then be able to sign their own tenancy agreement. There are Easy Read tenancy agreements available.
If there is a Lasting Power of Attorney (Property and Affairs) or an Enduring Power of Attorney or a court-appointed Property and Affairs Deputy, that person should sign the tenancy agreement. The tenancy will be between the landlord and the person who lacks capacity. (Part 19: Lasting Powers of Attorney)
The landlord should never sign a tenancy agreement on behalf of the person who lacks capacity. This is not a valid tenancy. Family members should only sign a tenancy agreement if they have a valid and applicable LPA, EPA or have been appointed as deputy.
The local authority has no general power to sign tenancies for people who lack capacity. The local authority can only sign the tenancy agreement if appointed as deputy for Property and Affairs.
Under the common law ‘doctrine of necessaries’ it may be possible for someone who lacks capacity to hold a tenancy where there is no written agreement. If the person is able to maintain the tenancy – paying the rent, caring for the property, not acting in a way to cause nuisance – common law indicates that the ‘tenant’ owes suitable compensation to the landlord for occupying the property. However, this does not give the tenant legal protection; only the Disability Discrimination Act could protect the person if the landlord sought unreasonably to evict them. Recent case law (Whychavon District Council v EM ) shows that it is possible to claim Housing Benefit for an unsigned tenancy.
An unsigned tenancy or a tenancy signed by someone who lacked capacity to sign will be presumed to be valid unless it is ‘avoided’. A tenancy is ‘avoided’ either by the person regaining capacity, or a Deputy, EPA or LPA withdrawing from the agreement, or by the person not maintaining the conditions of the tenancy. The Disability Discrimination Act could offer the person who lacks capacity some protection in this case.
Anyone living in rented property needs to fulfil their obligations – to pay rent, to care for the property, not to sublet and not to use the property for illegal purposes. If someone does not have a formal tenancy agreement they do not have the protection of the law if they break these agreements.
If there is no-one who can sign the tenancy agreement, and it has been decided that it is not suitable or possible for the person to live with an unsigned tenancy, the only option is to go to Court of Protection for a decision.