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Chapter-4

Chapter-4. Parties competent to contract. I ntroduction. Acc. To section 10 of I ndian C ontract Act- “ All those agreements can be enforced by law , which are made by the person having contractual capacity.”

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Chapter-4

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  1. Chapter-4 Parties competent to contract

  2. 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.”

  3. Parties Competent • Major. • Person of sound mind. • Person disqualified by law.

  4. 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-Mohribibi 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.

  5. Legal position of Minor • An agreement with or by a minor is void- CASE-Mohribibi v/s DharmdasGhosh. • 2nd CASE-Shyamlal v/s Piaraylal- 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.

  6. 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.

  7. 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.

  8. 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.”

  9. 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.

  10. Other disqualified persons • Alien enemy. • Foreign sovereigns and ambassadors. • Convicts. • Insolvency.

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