Capacity to Contract

1
Capacity to Contract

• Sec.10 12 of ICA,1872

2
Section 10

• Parties to the contract must be competent to
  contract

3
Who are competent to contract

• Section 11
• Age of majority
• Sound mind
• Not disqualified from contracting by any law to
  which he is subject

4
INCAPACITY
Disqualified by law (Status)
Minority (immature mind)
Unsound mind
Idiot
Lunatic
Drunkard

• Political
• Status
• Alien Enemy
• Alien Friend
• Foreign Sovereigns
• Ambassadors

• Corporate
• Status
• Company
• Statutory
• Corporations

Marital Status Married Women
Legal Status Insolvent person
5
MINORITY

• Sec. 3, of Indian Majority Act,1875

6
Minors contracts

• A contract with or by a minor is void a minor
  therefore can-not bind himself by a contract.1
• A minor can be a promisee or a beneficiary
• A minors agreement can-not be ratified by the
  minor on his attaining majority2

7

• If a minor has received any benefit under a void
  contract,he can-not be asked to refund the same3
• A minor is always allowed to plead minority4
• A minor can-not be a partner in a partnership
  firm
• A minors state is liable to a person who
  supplies necessaries of life to a minor5
• A minor can act as a agent

8
Minors parents/guardians are not liable to a
minors creditor for the breach of contract by
the minor
9
Mental Incompetence Sec.12 Test of soundness of
mind Soundness of mind of a person depends on
two Facts

• His capacity to understand the terms of the
• contract
• ii) His ability to form a rational judgement as
• to its effect upon his interest