Capacity to Contract

Presented By:
36 ± Nishit Saraya
37- Chetan Sawant
38- Sagar Sawant
Thakur Institute of Management Studies & Research 39- Vijay Sawant
MFM ± 1st Semester
September 05, 2010 40 ± Vikarant Sawant
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 mefinition of A Contract
What is A Contract ?
According to section 2(h) of Contract Act 1872,
³An agreement enforceable by law is a contract.´
It means :
A] an agreement between two or more person to do
or not to do something; and
B] an enforceability of such an agreement at law.

    


   

 

Competence of contracting parties
Section 10 of the Contract Act requires that the
parties must be competent to contract.

Section 11 of the Indian contract act states that every

person is competent to contract, who is the age of
majority ,who is of sound mind and who is not
disqualified from contracting by law

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Minority misqualified by law

(immature mind) Unsound mind (Status)

Idiot Lunatic mrunkard

Political Corporate Marital Legal

Status: Status: Status: Status:
a) Alien Enemy a) Company Married Insolvent
b) Alien Friend b) Statutory Women person
c) Foreign Sovereigns & Corporations
d) Ambassadors
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Following persons are incapable
of contracting
A minor
A minor ,person of unsound mind and person
misqualified by law cannot enter into contract
Any contract with any such party will be void
Ab intio
A person of
Unsound mind

A person disqualified
By law

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 MINOR
  A Person who has not Completed his 18th year of age
is considered to be a minor.
  In case a GUARmIAN to the person or property of
the minor is appointed by the court or the property of
the minor is put under the charge of a court of wards,
during the period of his minority.

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 Agreement with minor is VOIm
decided case
  In Mohiri Bibi¶s case ,the minor had executed a
mortgage for the sum of Rs20000 out of which the
mortagagee had paid the minor only about
Rs8000.The mortagagee filed a suit for the recovery
of his mortgage money and for sale of the property in
case of default .The privy council held that an
agreement by a minor was absolutely void as against
him and therefore the mortgagee could not recover
the mortgage money nor could he have the minor¶s
property sold under his mortgage.

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Introducing person of unsound mind

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Person of unsound mind
Section-12 Of Indian Contract act, 1872
Section-
  A person is said to be of   for the
purpose of making a contract if at the time
when he makes it, he is capable of
understanding it and of forming a rational
judgment as to its effect upon his interests.
  The idiot, lunatic and drunkards are the person
of unsound mind.
mind.

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 Meaning of idiot, lunatic
and drunkards
  Idiot: A person who is devoid of any faculties of thinking or
rational judgment is called an idiot .all agreements other than
those for necessaries of life,with idiots are absolutely void.
  Lunatics:A person,whose mental powers are deranged is called
a lunatic.agreement made with lunatic ,except those made
during lucid intervals (period in which he is in his senses )are
void
For necessaries supplied to lunatic are valid.and the property
of lunatic can be taken
mrunkards: A person under the influence of drink or drug
stands on the same footing as lunatic.an agreement with
drunker is void.

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 Introducing
person disqualified by law to enter into
any contract
I am declared disqualified
By law to enter into any contract

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 Following are the people disqualified
by law
  Alien enemy: A person who is not a citizen of India is called
an alien.
  Insolvents : When a debtor is adjudged insolvent, his property
vested in the official receiver or the official assignee. As such
the insolvent is deprived of his power to deal in that property It
is only the official receiver or the official assignee who can
enter into contract in respect of that property and can sue and
be sued on his behalf.
  Convicts: convict is incapable of entering into contract .and
the incapability ends when sentence expires or punishment
finish.
  Corporation: A company is artificial person created by law. it
can only contract through its board of directors. c
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