CAPACITY TO CONTRACT

  

                                CAPACITY TO CONTRACT

INTRODUCTION

Capacity to contract means the competency to enter into a valid contract. Section 2(h) of the Indian contract Act, 1872 defines contract, according to this section contract means an agreement which should be enforceable by law. Section 10 of the contract act requires that the parties must be competent to contract in order to be the contract valid. One of the most essential to make contract is the competency of contract. Section 11 of the Indian contract act, 1872 defines the capacity to contract. According to Section 11, every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject. So from section 11 of the Act three aspects of competency to contract are:

1. Age of majority.

2. Person of Sound mind.

3. Person should not be disqualified by law.

So from section 11 we can also found the three category of people who are incompetent to enter into a contract they are, minors, person of unsound mind and person disqualified by law.

AGE OF MAJORITY

According to Indian Majority Act, 1875 the age of majority in Indian is 18 years. A contact with a minor is void ab initio. The term minor is explained in section 3 of Indian Majority Act, 1875, according to the section, a minor is a person who has not completed 18 years of age. A contract with a minor is void, the famous case of minor contract is Mohri bibi vs Dharmodas Ghosh (1903). The fact of the case is that, a minor borrowed Rs. 20,000 from B and security executed a mortgage in his favour. He became major 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 a mortgage by a minor was void and B was not entitled for recovery of money. But a minor can be a beneficiary of contract. Minor can make contract through agents but in this case the minor is not liable for the act.

SOUND MIND PERSON

According to Section 12 of Indian contract act, for the purpose of entering into a contract the person must be of sound mind to understand the contract and effects of the contract. It is important to note that a contract made by a lunatic is valid if the contract is made when he is in sound mind (in lucid intervals). No person can enter into a contract if he is in unsound mind. If a person make contract if he is intoxicated the contract is invalid because he is not in a position to understand the consequence of entering into a contract.

PERSONS NOT DISQUALIFIED BY LAW

The third important capacity to enter into a contract is the person should not be disqualified by law. The reasons for the disqualifications by law can be, alien enemy, convict, insolvent, foreign sovereign, diplomatic staff and accredited representation of foreign states.

CONCLUSION

Capacity to contract is important factor for the essentials of valid contract. If any of the person who are incompetent to contract enter into any contract it will be void contract. Section 11 of the contact act gives that who all are competent to contract. 

By, 

Asha Sebastian