AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Capacity of parties (Section-11)

Capacity means-competence of the parties to enter into a valid contract u/s 10 an agreement becomes a contract if it is entered into between the parties who are competent to contract. Acc to sec11 every person is competent to contract who -is a major -is of sound mind -is not disqualified by any law to which he is subject

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Sec 11 declares the following persons to be incompetent to contract: 1.Minors 2.Persons of unsound mind 3.Persons disqualified by law

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

MINORS
ACC TO SEC 3 OF THE INDIAN MAJORITY ACT A MINOR IS PERSON WHO HAS NOT COMPLETED 18 YEARS OF AGE. In the foll. 2 cases he attains majority after 21 yrs of age -where a guardian of a minors person or property has been appointed under the guardians and wards act,1890 -where the superintendence of a minors property is assumed by a court of wards (in other words in pursuing the above object the law should not cause any hardship to persons who deal with minors)

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Minors agreements
An agreement with a minor is void and inoperative ab initio e.g.. Mohiri bibi v dharmodas ghose[ A a minor borrowed rs.20000 from B and as a security for the same executed a mortgage in his favor. he became a major after a few months later and filed a suit for the declaration that the mortgage executed by him during his minority was void and should be cancelled, it was held that the mortgage by a minor was void and B was not entitled to repayment of money He can be a promisee or beneficiary eg. M aged 17,agreed to purchase a second hand scooter for rs. 5000 from s. he paid s rs 200 as advance and agreed to pay the balance the next day ,when he came with the money next day s told him that he changed his mind and oferred to return the advance.s cannot avoid the contract though M may if he likes

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

His agreement cannot be ratified by him on attaining the age of majority-eg. M a minor borrows rs 5000 from l and executes a promissory note in favor of l .after attaining majority, he executes another promissory note in settlement of the first note. the second promissory note is void for want of consideration

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

-if he has received any benefit under a void agreement he cannot be asked to compensate or pay for it -he cannot enter into a contract of partnership -he cannot be adjusted insolvent because he is incapable of incorporating debts -he can be an agent-as after bringing the third party and the principle together the agent can be drooped out -his parents /guardians are not liable for the contract entered into by him.

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Persons of unsound mind

a person is said to be of sound mind 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. A person who is usually of unsound mind but occasionally of sound mind may make a contract when he is of sound mind Vic versa

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Contracts of persons of unsound mind

Lunaticshe suffers from intermittent intervals of sanity and insanity, he can enter into contracts during the period when he was of sound mind Idiots-a person who has completely lost his mental powers ,idiocy is permanent whereas lunacy denotes periodical insanity ,an agreement with an idiot is void Drunken or intoxicated persons-he suffers from temporary incapacity to contract .

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Other persons
Persons disqualified from contracting by any other law 1.Alien enemy-during peace time they can enter into contract but not during the war time 2.Foreign sovereigns and ambassadors-these persons have the right to contract but can claim the privilege of not being sued. 3.insolvents-an insolvent cannot enter into a contract as his property vests in the offficial receive.

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

4.convict-a convict while undergoing imprisonment is incapable of entering into a contract 5.corporations-is an artificial person recognized by law. it exists only in the eyes of law. it is competent to enter into a contract only through its agents 6.Married women-can enter into a contract 7.Professional persons-doctors and advocates are included in this class.