{"id":3919,"date":"2020-03-11T15:38:43","date_gmt":"2020-03-11T15:38:43","guid":{"rendered":"https:\/\/commerceiets.com\/?p=3919"},"modified":"2020-03-11T15:38:43","modified_gmt":"2020-03-11T15:38:43","slug":"capacity-to-contract","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/capacity-to-contract\/","title":{"rendered":"CAPACITY TO CONTRACT"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/capacity-to-contract\/#CAPACITY_TO_CONTRACT\" title=\"CAPACITY TO CONTRACT\">CAPACITY TO CONTRACT<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/capacity-to-contract\/#CONCLUSION\" title=\"CONCLUSION\">CONCLUSION<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"capacity-to-contract\"><span class=\"ez-toc-section\" id=\"CAPACITY_TO_CONTRACT\"><\/span><strong>CAPACITY TO CONTRACT<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Capacity to contract refers to the legal competence of parties to enter into a valid <a href=\"https:\/\/commerceiets.com\/indian-contract-act-1872\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"contract (opens in a new tab)\">contract<\/a>. The capacity of parties is an essential element which satisfies the requirements of a valid contract.&nbsp;<\/p>\n\n\n\n<p>Under&nbsp;<strong>section 11<\/strong>&nbsp;of the\nIndian Contract Act 1872, any person is competent to contract are as follows:<\/p>\n\n\n\n<ul><li>A person who attained the age of majority and is not a\nminor.<\/li><li>A person of sound mind.<\/li><li>A person who has not been disqualified by law or declared\nas insolvent\/bankrupt<\/li><\/ul>\n\n\n\n<p><strong>PERSONS NOT ELIGIBLE FOR CONTRACT<\/strong><\/p>\n\n\n\n<p>If a person falls in any of the following categories, he\/she will be declared as an incompetent party to a contract:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/PARTIES-NOT-ELIGIBLE-TO-CONTRACT-1.jpg\" alt=\"\" class=\"wp-image-3921\"\/><\/figure>\n\n\n\n<p class=\"has-green-background-color has-background has-larger-font-size\"><strong>MINORS<\/strong><\/p>\n\n\n\n<p><strong>Section\n3 of the Indian Contract Act, 1872 <\/strong>states\nthe definition of a minor.<br \/>\n\u201cAny person who is a citizen of India and is under the age of 18 years is a\nminor.\u201d<br \/>\nAn agreement with a minor is null and void that means it cannot be enforceable\nby law.<br \/>\nFurther, even if the minor attains the age of majority that is age above 18\nyears, still the agreement cannot be enforced afterwards.<\/p>\n\n\n\n<p><strong>CASE: MOHIRI BIBEE VS DHARMODAS GHOSH<\/strong><\/p>\n\n\n\n<p>A landmark case held in the year\n1903 in which the court held that a minor\u2019s agreement is void-ab-initio that\nmeans any agreement with a minor is void from the very beginning itself.<br \/>\n<strong>Facts of the case<\/strong>\u2013 Dharmodas Ghosh being a minor\nmortgaged his immovable property to a money lender Brahmo Dutt and secured a\nloan of Rs.20,000 at 12% interest rate per year. Later on, the plaintiff only\npaid Rs.8000 and refused to pay the rest of the amount. His mother(legal\nguardian) took the defence that his son being a minor was not liable for his\nactions and not bound to pay the sum.<br \/>\n<strong>Judgment<\/strong>&nbsp;\u2013 The Privy Council held that a\nminor is incompetent to contract (section 10) and an agreement with such a\nperson cannot be enforced. Thus, Brahmo Dutt\u2019s appeal was dismissed as there\nwas no contract between the parties.<\/p>\n\n\n\n<p><strong><em>CONSEQUENCES OF ENTERING INTO AN AGREEMENT WITH A MINOR<\/em><\/strong><\/p>\n\n\n\n<p><strong>Ratification\nof minor\u2019s agreement<\/strong>:\nAn agreement with a minor is void and hence cannot be ratified even if the\nminor attains the age of majority.<\/p>\n\n\n\n<p><strong>Minor\nas a beneficiary<\/strong>: If a contract benefits a minor,\nthen such an agreement is valid and enforceable by law. Thus, he is permitted\nto act as a beneficiary for a contract.<\/p>\n\n\n\n<p><strong>Role\nof estoppel against a mino<\/strong>r:\nEven if a minor by misrepresenting his age, induced a person to enter into a\ncontract with him then also he cannot be made liable for such an act. Thus\nthere can be no estoppel against a minor.<\/p>\n\n\n\n<p><strong>No\nspecific performance<\/strong>:\nAs a contract with a minor is void, he cannot be asked for specific performance\nof the contract. But the contract can be specifically enforced only if it falls\nunder these exceptions.<\/p>\n\n\n\n<ul><li>If the guardian enters into a contract on behalf of the minor.<\/li><li>If the minor is being benefited from the contract.<\/li><\/ul>\n\n\n\n<p class=\"has-green-background-color has-background has-larger-font-size\"><strong>PERSONS OF UNSOUND MIND<\/strong><\/p>\n\n\n\n<p>Under&nbsp;<strong>Section 12 of\nthe Indian Contract Act 1872,<\/strong>&nbsp;persons\nof sound mind can be defined as the people who while entering into a contract\nare capable of understanding the nature of it and therefore can form a rational\njudgment regarding the same.<br \/>\nThus, from the above statement, it can be concluded that people of&nbsp;<strong>unsound mind<\/strong>&nbsp;are:<\/p>\n\n\n\n<ul><li>Incapable of\nunderstanding the nature of their act while entering into a contract.<\/li><li>Unable to\nform a rational judgment.<\/li><\/ul>\n\n\n\n<p>As per&nbsp;<strong>Section 11<\/strong>, any contract with a person of unsound mind\nwill be declared as void.<br \/>\nPersons of unsound mind can be bifurcated into following heads \u2013<\/p>\n\n\n\n<ul><li>An idiot<\/li><li>Lunatic<\/li><li>Intoxicated\nperson&nbsp;<\/li><\/ul>\n\n\n\n<p><strong><em>An Idiot<\/em><\/strong><\/p>\n\n\n\n<p>An idiot is a person who is\npermanent of unsound mind that is being of unsound mind by birth. Such a person\ncan never understand the nature of the act and form a rational judgement about\nthe same. Thus, contracts with such a person are&nbsp;<strong>void-ab-initio.<\/strong><\/p>\n\n\n\n<p><strong><em>Lunatic<\/em><\/strong><\/p>\n\n\n\n<p>Lunatics are the ones who are not\npermanently of unsound mind but are also of sound mind during a specific period\nor interval. Such people are allowed to enter into a contract only when they\nare of sound mind.<br \/>\nA person occasionally of sound mind but generally of unsound mind can enter\ninto a contract at the time when is of sound mind.<br \/>\nA person occasionally of unsound mind but generally of sound mind cannot enter\ninto a contract when is of unsound mind.<\/p>\n\n\n\n<p><strong><em>Intoxicated person<\/em><\/strong><\/p>\n\n\n\n<p>A person when intoxicated or\ndrunk is usually not capable of making a rational judgment. Thus if such a\nperson enters into a contract, it will result in a void contract.<\/p>\n\n\n\n<p class=\"has-green-background-color has-background has-larger-font-size\"><strong>Persons disqualified by law<\/strong><\/p>\n\n\n\n<p>Following are the people\ndisqualified by law:<\/p>\n\n\n\n<ul><li>Alien Enemy<\/li><li>Foreign Sovereign<\/li><li>Convict<\/li><li>Insolvent<\/li><\/ul>\n\n\n\n<p><strong><em>1) Alien Enemy<\/em><\/strong><\/p>\n\n\n\n<p>An\n\u201cAlien\u201d is the one who is an outsider or the one not belonging to our country.\nIf the state where the person is an alien and the state where he belongs is at\nwar, then such a person will be an alien enemy to the other state.<br \/>\nA contract can be entered with an alien enemy only with the approval of the\ncentral government. Any contract without the approval of the Central Government\nwill result in an unenforceable contract.<\/p>\n\n\n\n<p><strong><em>2) Foreign Sovereign<\/em><\/strong><\/p>\n\n\n\n<p>The\nforeign sovereigns can enter into a valid contract and such contracts are only\nenforceable in the Indian Courts when the contracts were made with the prior\napproval of the Central Government. A suit cannot be filed in the Indian Courts\nregarding the contract if there is no sanction of the Central Government.<\/p>\n\n\n\n<p><strong><em>3) Convict<\/em><\/strong><\/p>\n\n\n\n<p>A\nconvict is incapable of entering into a contract only during the period of his\nimprisonment but still, he can enter into a contract if the central government\npermits.<br \/>\nThus a convict is incapable only for a specific period of time as at the time\nof his acquittal, he again becomes capable of entering into a contract.<\/p>\n\n\n\n<p><strong><em>4) Insolvent<\/em><\/strong><\/p>\n\n\n\n<p>When\na person is declared insolvent by the court, that means his property vests in\nthe receiver, and therefore he is unable to enter into a contract relating to\nproperty as his power has already been taken away by the court.<br \/>\nSuch a person can again become capable of entering into a contract when\ndischarged by the court.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"conclusion\"><span class=\"ez-toc-section\" id=\"CONCLUSION\"><\/span><strong>CONCLUSION<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>From the above discussion, it can be concluded that the capacity to contract is the legal competence to contract. A person declared as incompetent to contract is the one who is incapable of entering into a contract, and a contract with such a person is unenforceable by law. Further, such persons are also divided into categories such as minor, unsound mind and persons disqualified by law. Any person if falls in any of these categories will be declared as an incompetent person to contract, making his contract void or voidable in certain circumstances. <\/p>\n\n\n\n<p><strong>JOIN THE CHANNEL ON TELEGRAM<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/t.me\/commerceiets\" target=\"_blank\">https:\/\/t.me\/commerceiets<\/a><\/p>\n\n\n\n<p><strong>CONNECT ON LINKEDIN<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noopener\">https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/<\/a><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study:&nbsp;<\/strong><\/td><td><strong>Also Study:&nbsp;<\/strong><\/td><td><strong>Also Study:&nbsp;<\/strong><\/td><td><strong>Also Study:&nbsp;<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/indian-contract-act-1872\/\">Indian contract act, 1872<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/offer-or-proposal-its-valid-essentials\/\">Offer or proposal and its valid essentials<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/important-kinds-of-offer-or-proposal\/\">Kinds of offer or proposal<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/valid-essentials-of-acceptance\/\">Valid essentials of acceptance<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/valid-consideration\/\">Valid Consideration<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/revocation-of-offer-and-acceptance\/\">Revocation of offer and acceptance<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/lapse-of-an-offer\/\">Lapse of an offer<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/no-consideration-no-contract\/\">No consideration no contract<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/stranger-to-contract\/\">Stranger to contract<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/capacity-to-contract\/\">Capacity to contract<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/free-consent-in-contract\/\">Free consent in Contract<\/a><\/td><td><a href=\"http:\/\/v\" target=\"_blank\">Coercion<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/remedies-for-breach-of-contract\/\">Remedies of breach of contract<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/undue-influence\/\">Undue Influence<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/coercion-vs-undue-influence\/\">Coercion vs Undue Influence<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/fraud\/\">Fraud<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/misrepresentation\/\">Misrepresentation<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/mistake-in-contract-law\/\">Mistake<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/fraud-vs-misrepresentation\/\">Fraud vs misrepresentation<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/discharge-of-contract\/\">Discharge of contract<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/contract-of-indemnity\/\">Contract of Indemnity<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/contract-of-guarantee-notes\/\">Contract of Guarantee Notes<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/surety\/\">Surety under contract act<\/a><\/td><td><a href=\"http:\/\/v\" target=\"_blank\">Difference between Indemnity and guarantee<\/a><\/td><\/tr><tr><td><a href=\"http:\/\/v\" target=\"_blank\">Contract of bailment<\/a><\/td><td><a href=\"http:\/\/v\" target=\"_blank\">Contract of pledge<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-pledge-and-bailment\/\">Difference between Bailment and pledge<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consumer-protection-act-1986\/\">Consumer Protection Act 1986<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/limited-liability-partnership\/\">Limited Liability partnership<\/a><\/td><td><a href=\"http:\/\/v\" target=\"_blank\">Difference between LLP and Partnership<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/contract-of-agency\/\">Contract of agency<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/contract-of-sale-of-goods\/\">Contract of sale of goods<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>CAPACITY TO CONTRACT Capacity to contract refers to the legal competence of parties to enter into a valid contract. The capacity of parties is an essential element which satisfies the requirements of a valid contract.&nbsp; Under&nbsp;section 11&nbsp;of the Indian Contract Act 1872, any person is competent to contract are as follows: A person who attained&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/capacity-to-contract\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;CAPACITY TO CONTRACT&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":3920,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3919"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=3919"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3919\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/3920"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=3919"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=3919"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=3919"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}