Parties competent to contract

Chapter-4

Introduction

Acc. To section 10 of Indian Contract Act- “ All those agreements can be enforced by law , which are made by the person having contractual capacity.”

Acc. To section11 of I.C. Act- “Every person is competent to contract which is of age of majority acc. to the law of which he is the subject , and who is of sound mind and is not disqualified by from contracting by any law to which he is subject.”

Parties Competent

Major. Person of sound mind.

Person disqualified by law.

minor Acc. To section 3 of Indian Majority Act- “

a minor is a person who has not completed eighteen yrs. of age.” but if a guardian of person or property or both has been appointed by a court of law , he attains majority on completion of 21 years . Any person entering into contract with a minor will have to suffer as contract is void ab- initio.

CASE-Mohri bibi v/s Dharam das Ghosh- In this case DG was a minor, mortgaged house for loan of 20,000 ,8,000 was given to minor, contract declared void.

Legal position of Minor

An agreement with or by a minor is void- CASE-Mohri bibi v/s Dharmdas Ghosh.

2nd CASE-Shyam lal v/s Piaray lal- Minor sold the shop but it could not be regd. courts said even money cannot be reclaimed .

Contract for necessaries of life- Minor’s contract for his benefits-Robert v/s

Grey, minor’s contract with billiard player.

Contd.

Contract by parents or guardian of the minor- Raj Rani v/s Premadip Pictures- a minor girl ,artist ,agreement with theatre company, later on co. employed other girl, courts declared , it is not for benefit of minor .

Minor’s contract cannot be ratified on his becoming major- Raghwa v/s Shriniwas- a minor gave a promissory note, on becoming major he gave another note which was declared void by courts as contract cannot be ratified on becoming major.

Contd.

Doctrine of estoppel does not apply against minor.

Minor as an agent. Minor as a partner. Minor as a shareholder. Surety liability for minor. Position of minor in negotiable instrument. Minor as a joint promisor. Liability of minor for torts. Minor cannot be declared insolvent.

Persons of unsound mind

Acc. To section 12- “ 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 forming a rational judgement as to its effects upon his interests.”

Persons of unsound mind

Idiot-born fools not having mental capacity.

Lunatic-person mentally affected due to age, illness or accident.

Drunken or Delirious person- A senile person-due to age-

effect.

Other disqualified persons

Alien enemy. Foreign sovereigns and ambassadors.

Convicts. Insolvency.