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Capacity To Contract

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Anoop R
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18 views8 pages

Capacity To Contract

Uploaded by

Anoop R
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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I.

Capacity to contract

According to sec. 11 “every persons is


competent who is of the age of majority according
to the law to which he is suject ,and who is of
sound mind,and is not disqualified from contracting
by any law to which he is subject”.

As per the capacity to contract definition, we have


two parties which are:

A. Parties Competent to contract


B.Parties Incompetent to contract

 Party Competent To Contract


The party that meets these three conditions for
capacity to contract has the capacity to enter into
a contract. The conditions are:

The person has attains the age of majority (18 or


above)
The person is a sound mind
He is not disqualified by law from entering into
the contractParty

 Incompetent To Contract
For the formation of a valid contract, the given
people are not eligible because they do not have
the capacity to contract:

Minor who has not attained the age of 18 or


above
The person in unsound mind
The person is disqualified by the law
 Minor
As per the Indian majority act, a person who has
not attained the age of 18 shall be considered a
minor. A person who is below the age of 18 years
has no capacity to contract. It means a contract
with minor is a null and void contract. The person
has no right to sue the minor in contract in case of
breach of contract done by a minor.
II. Contract by Guardian
Under certain circumstances, a guardian of a
minor can enter into a valid contract on behalf of
the minor. Such a contract, which the guardian
enters into, for the benefit of the minor, can also
be enforced by the minor.
III. Insolvency
A minor cannot be declared insolvent as he
cannot avail debts. Also, if some dues are pending
from the properties of the minor and he is not
personally liable for the same.
IV. Contract Benefiting The Minor Is Valid
Though the contract with the minor is a void
contract if a person makes the minor as a partner
just to enjoy the benefits, the contract will be a
valid contract. But, this contract cannot make the
minor liable to pay the loss incurred to the
company.
V. A Minor Can Be An Agent
A minor can be an agent in a contract but he will
not be liable to his principle.
VI. Use Of Negotiable Instrument By Minor
A minor can draw, endorse and deliver cheques of
any other negotiable instrument. It only binds the
other party to fulfil their part not minor. This
means, if a minor has sold goods to the person
who is competent to contract, has to pay the
money for it.

Person Of Unsound Mind

A person who is an unsound mind cannot enter


into the contract. According to contract law, the
mental incapacity of a person prevents the person
to understand the consequences of the contract
and he is unable to fulfil his liabilities in the
contract. A contract with an unsound mind person
is a void contract and not enforceable by law.
 Idiot
A mental stage of person where the ability of
brain becomes as less than 3 years old child

 Lunatic
A person who is a sound mind for a certain
time and after that, he becomes unsound
mind, such person is called lunatic. It is the
form of an unsound mind. The contract
done by him in the condition of sound
mind is valid whereas the contract made
during the time of his unsound mind is a
void contract.
 Intoxication
Intoxication is the stage where the person
is drunk or consumed intoxications and
becomes incapable to understand the
nature of the contract which he is doing.
The contract made in thecondition of
intoxication is a void contract.

A Person Disqualified By Law


1) Alien Enemies
The citizen of another country that is in the
condition of war with India is known as an alien
enemy. The contract with these people at the time
of peace is a valid contract. But if the government
declares war during the time of the performance
of the contract, the contract will remain
suspended till the end of the war.

2)Married Women
A married woman does not have the capacity to
enter into a contract that is related to her
husband’s property. She can be the agent for that
property.
3) Insolvent
The insolvent person has the capacity to contract
except for his own property. He is capable to
purchase the property but he does not have the
right to sell his own property.

4) Judges, Legal Practitioners Or Officers


The judges, public prosecutors and other legal
practitioners are incapable to enter into the
contract related to the property or actionable
claim in which they have connections.

For example, a judge is dealing with the case of


property owned y another person. The case is in
proceedings. The judge cannot make a contract
with that person to buy that property.
5. Body Corporate– Corporations (which
include
registered corporations and municipal bodies) can
buy and sell property, do business, and sue and be
sued, but they can’t do so without their seals. A
corporation’s powers are limited by its Charter or
Memorandum of Association, which dictates what
it may and cannot do. All such contracts, save
those that are reasonably ancillary to the objects,
are ultra vires and hence null and invalid. Such
contracts cannot be ratified by a resolution passed
at the company’s general meeting.

6 Convicts–

A convict refers to a criminal who has been


sentenced or pronounced ‘guilty’ by a decision
of a judge in a court of law. A convict cannot
engage into a legal contract or sue while serving
his or her sentence. However, when his term
expires or he

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