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  • CAPACITY Means Competence of The Parties To Enter Into Contract

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    Nitika Arora
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    V CAPACITY means competence of parties to enter into a contract. The Indian Contract Act defines who is competent to contract and lists exceptions. A person must have attained the age of majority (18 years in India), be of sound mind, and not be disqualified by law. Minors' contracts are void except for necessaries. A person must also be capable of understanding and rational judgment to have capacity. The Act also lists those with unsound mind and certain groups like alien enemies as incompetent to contract. Consent must be free of coercion, undue influence, fraud, misrepresentation or mistake for a valid contract.

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    V CAPACITY means competence of parties to enter into a contract. The Indian Contract Act defines who is competent to contract and lists exceptions. A person must have attained the age of majority (18 years in India), be of sound mind, and not be disqualified by law. Minors' contracts are void except for necessaries. A person must also be capable of understanding and rational judgment to have capacity. The Act also lists those with unsound mind and certain groups like alien enemies as incompetent to contract. Consent must be free of coercion, undue influence, fraud, misrepresentation or mistake for a valid contract.

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    123 views22 pages

    CAPACITY Means Competence of The Parties To Enter Into Contract

    Uploaded by

    Nitika Arora
    V CAPACITY means competence of parties to enter into a contract. The Indian Contract Act defines who is competent to contract and lists exceptions. A person must have attained the age of majority (18 years in India), be of sound mind, and not be disqualified by law. Minors' contracts are void except for necessaries. A person must also be capable of understanding and rational judgment to have capacity. The Act also lists those with unsound mind and certain groups like alien enemies as incompetent to contract. Consent must be free of coercion, undue influence, fraud, misrepresentation or mistake for a valid contract.

    Copyright:

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    of 22

    V CAPACITY means competence of the parties

    to enter into contract.

    V Section11
    defines the person who is
    competent to contract:
    a) has attained the age of majority.
    b) is of sound mind
    c) Not be disqualified by any law.
    V In terms of Indian Majority Act1875,every
    Indian attains majority on the completion of
    18yrs. Of age.
    V Contract with minor is absolutely VOID.
    Mohri Bibi vs. Dharmodas Ghose
    V Contract for necessaries of life.
    V Minor·s contract for his benefits.
    V Contract by parent·s or guardians of minor.
    V Minor·s contract cannot be ratified on his
    becoming a major.
    V No refund of benefit.
    V Minor as an agent.
    V Minor as a partner.
    V Position of minor in a limited company.
    V Surety·s liability for minor.
    V Position of minor in negotiable instruments.
    V Minor·s right to hold property &interest
    therein.
    V Minor cannot be declared insolvent.
    V Ifat the time of entering into contract is
    capable of understanding & forming rational
    judgment.
    V Section 12 defines any person with unsound
    mind is incompetent to contract:
    a) idiot
    b)lunatic
    c)drunkard
    V 1. Alien Enemy

    V 2.President of India

    V 3.Professional Ineligibility

    V 4.Foreign Sovereigns ,Diplomatic Staff.


    V Section 13 defines, two or more persons are
    said to consent when they agree upon the
    same thing in the same sense.
    V Consent is said to be free when it is not
    caused by:
    1. Coercion(Section 15)
    2. Undue influence(section 16)
    3. Fraud(section 17)
    4. Misrepresentation(section 18)
    5. Mistake(section20,21,22)
    V Committing any act forbidden by IPC.
    V Threatening to commit any act forbidden by
    IPC.
    V Unlawful detention of property.
    V Threatening to detain property unlawfully.
    V contract made by use of coercion is
    voidable.
    V the party can repudiate the contract or can
    fulfill his obligation under the contract.
    V Section16(1) defines,
    one party is in a position to influence the
    free consent of the other.
    gain undue advantage over the other.
    V one party holds real or apparent authority
    over the other.
    V Party stands in a fiduciary relationship.
    V When the party makes contract with a person
    whose mental capacity is temporarily /
    permanent impaired.

    V Effects: According to section 19(A)-


    contract is voidable
    V
    ° 
     
        
    
    1.Meaning Consent is obtained Consent is obtained
    by use of force or by one party misusing
    threat to use force his dominating
    position,
    2. Type Involves physical Involves only moral
    force &sometimes pressure.
    threat
    3.Relation of parties No definite relation Must be some kind of
    relationship
    4.Effect Contract is voidable Contract is voidable
    or court may set it
    aside or enforce it in
    a modified form.
    VIn terms of section 17 of the act, fraud includes
    any of the following act:
    V active concealment of the fact
    e.g. director of a company issues prospectus
    containing misstatement knowing fully well
    about it.

    V Promise made without any intention of


    performing it
    V Act meant to deceive
    V Any such act as to law specially declared to be
    fraudulent
    V Silence is also fraud
    e.g. A sells his horse in an auction to B. A
    knows that the horse is unsound, but he does
    not say anything.
    V Right to repudiate the contract.
    V Right to affirm the contract.
    V Claim for restitution.
    V It is made up of two words Ú  
     
    which means false statement. Indian
    Contract Act Classifies misrepresentation as:

    V Fraudulent Innocent

    þ  
      
    þ  
    V According to section 18 of the Indian
    Contract Act:

    1) By Positive statement -section 18(1)


    2) By breach of duty without intention to
    deceive - section 18(2)
    3) Causing mistake by innocent
    misrepresentation - section 18(3)
    V Right to repudiate the contract
    V Right to affirm the contract
    V Right to restitution
    V no right to damages
    á      
    
    
    1. Intention To deceive the not to deceive
    other party
    2. Right of the a) Repudiate a) Repudiate the
    aggrieved party the contract, b) affirm
    contract, the contract
    b) affirm the
    contract, c)
    claim the
    damages.
    3. Legality Cannot be a Deemed to be a
    valid contract valid contract
    4. Nature Intentional & Result of being
    deliberate ignorant of fact or
    facts.
    V it is defined as wrong belief about
    something.
    V may be a mistake of law or a mistake of
    fact.
    V 1) mistake as to the law
    D law of country
    D foreign law
    D private rights

    V 2) mistake as to the fact


    D unilateral mistake
    D bilateral mistake
    V According
    to section 20, if the parties to an
    agreement are mistaken about an essential
    subject matter of the agreement, the
    agreement is void.

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