IMPORTANCE OF CAPACITY TO CONTRACT

Introduction: -

A contract is defined by Section 2(h) of the Indian Contracts Act 1872 as a legally binding arrangement. The Act's Section 10 lays forth the conditions that must be met in order for the agreement to be enforceable. The ability of the parties to contract is one such requirement. Capacity to contract refers to the parties' ability to enter into a contract. The people who are competent to engage into a contract are defined in Section 11 of the Act. So, according to the Section, every person is competent to enter into a contract if he or she is of legal age, is not disqualified under the law to which he or she is subjected, and is of sound mind.

In a nutshell, minors, those of unsound mind, and people barred by law from contracting are incompetent. The ability to contract is essential because without it, the agreement is null and void. As a result, contracting capability receives more emphasis during the contracting process.


Competent to Contract: -

Only those of sound mind, who have reached the age of majority and who are qualified to deal under contracting law are entitled to sign a contract with a company or organisation.


Incompetent to Contract: -

People who do not meet the criteria for being able to sign a contract - such as those who are mentally ill, minors or unable to do so due to contracting law disqualification - may not be able to take part in the process of securing a new employment contract.


Minors: -

In India, a minor is someone who has not yet reached the age of majority. A person under 18 has no legal power to engage into a contract. No one may sue a kid since their contract or agreement is null and void from the start. The age of majority is determined by the law of the nation in which the contract is made. TNS Firm v Muhammad Hussain has established certain guidelines for such a contract.


Effects of a Minor’s Agreement: -

No one can prevent a minor from disclosing their age if they enter into a contract by misrepresenting their age. A reparation philosophy is based on a minor's agreement. If a minor buys a house while pretending to be older than he is, the house will be returned to him. The law will not be able to pursue him if he has converted or sold them.


Contracts Beneficial to Minors: -

A minor can be included in a contract if he is the contract's beneficiary. As a result, if the money is tender, a minor can acquire an immovable property and sue for the possessions. It is not possible to request a specific performance vs a minor. The ability to be a promisee or payee in such a contract is unrestricted.


Claim for Necessaries Supplied to Minors: -

Section 68 of the Indian Contract Act of 1872 holds minors responsible for necessities. The requirements will be determined based on the circumstances. To be reimbursed, the party providing them must demonstrate that they are good and reasonable. They must also confirm that the provided necessities are the minor's only source of support.


Agents: -

Apprenticeship contracts are service contracts that bind minors by giving them rewards, but a parent or guardian must sign an apprenticeship contract. Although the minor has the potential to become an agent, he does not have the same level of accountability to the principal as a senior staff member.


Negotiable Instrument: -

A minor can sign and deliver negotiable instruments that bind all parties except him. Anyone who acquires items from a minor must pay for them. Although a minor can benefit from a partnership, he or she cannot be a partner. A minor can join a company's fully paid shares as a member.


Person of Unsound Mind: -

An unsound mental person is not eligible for any of the contract's advantages. It is liable for the necessities he obtains, as well as anyone he is obligated to maintain. When a person is typically of unsound mind, but is occasionally of sound mind, he can contract.


Intoxication: -

If there is intoxication-related ineptitude, it is a mental disease. Only the person making the claim can substantiate his or her inebriation. A person who has drank alcohol or other intoxicants cannot engage into a contract in this state of mind.


Person Disqualified by Law: -

A person's qualification to be a part of a contract should be determined by the law. If the law does not recognise a person as a person, he lacks the legal competence to enter into a contract.


Alien Enemies: -

Foreigners living in India will be considered alien enemies if a war is declared between India and another country. Although the minor has the potential to become an agent, he does not have the same level of accountability to the principal as a senior staff member.


Convict Serving Sentence: -

A person who has been convicted of a crime does not have the legal competence to enter into a contract while in prison. He's also barred from suing over contracts signed before his sentence. After his term expires, he is free to file a lawsuit.


Married Women: -

A married woman lacks the legal capacity to enter into a contract involving her husband's property. However, if her husband fails to support her with the necessities, the woman might act as an agent for him and bind his property.


Insolvent: -

An insolvent who has been adjudicated has the ability to enter into certain types of contracts. After the order of discharge, he becomes a regular citizen. The bankrupt can take on debts, work as an employee, and purchase a home, but he cannot sell it.


Judges, Legal Practitioners or Officers: -

Judges, legal practitioners, and officers having a business interest in actionable claims do not have the legal ability to engage into contracts.


Officers and Employees of the Patent Office: -

During the duration of their appointment, patent officers and staff are unable to acquire rights to, obtain, or take an interest in patents issued by them.


Foreign Sovereigns and Ambassadors: -

Ambassadors and consular staff are in a privileged position, yet they are not deemed contracting competent. As a result, Indian laws are unable to enforce the contracts with them. They can sue the people who are supposed to carry out the contracts. But they can't sue them without the permission of the central government.


Mohori Bibee vs. Dharmodas Ghose: -

Dharmodas Ghose's mother filed a lawsuit alleging that his mortgage was void since he was under the age of 18. The executors of Brahmo Dutt filed an appeal with the Calcutta high court, which was brushed aside. An appeal to the Privy Council was then made.


Conclusion: -

One of the most basic prerequisites for an agreement to be legal and enforceable in a court of law is the parties' ability to contract. A contract made by someone who lacks the mental capacity to comprehend the nature and consequences of the deal is null and void from the start. Contracts with lunatics or individuals under the influence of a narcotic, on the other hand, may or may not be void depending on the circumstances.



This article is written by Parul Sagar of New Law College, BVP, PUNE.

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