Capacity To Contract Notes Pdf – Indian Contract Act 1872

• An agreement with or by a minor is void-ab-inito. (case study- Mohiri bibi vs. Dharmadas ghose. There is mohiri bibi is plaintiff and Dharmadas ghose Defendent.)
• A minor cannot be a promisor but he can be promisee or beneficiary.
• Law of Restitution (restore) applies to minor.
• If the minor is in a position of benefit in specie then he is liable to return or refund the benefit.
• A minor can always plead a minority.
• A minor can not ratify his act on attaining the age of majority.
• Minor’s parents or guardians are not liable for minor’s agreement.
• A minor can be an agent. Because the agent does not enter into contract or agreement of his own name.
• A minor can not be declared as insolvent.
• A minor can liable for civil torts.
• Minor can not be a partner in firm, but he can be admitted to the benefits of a partnership. A partnership is created by an agreement, and a minor can not be entered into an agreement so that, minor can’t be a partner in a firm. Minor can become a beneficiary partner.
• A minor can liable for necessaries supplied to him.

Necessary: 

• Any person supplying necessary to the minor or to any person dependent to on minor. He can claim Reimbursement of his.
• But the minor is not personally liable only minor’s assets are liable.

2. A Person of Unsound Mind:

• This situation is to be tested at the time of entry in an agreement.
• A person who is usually of sound mind but occionally becomes unsound mind. So that he can not enter into an agreement when he is in unsound mind. 
• EXAMPLE of Unsond mind person.

1. Idiots:- An idiots is a person who has completely lost his mental faculties of thinking. Such a person is completely incapable of forming a rational judgement.
2. Lunatics:- A lunatic is a person whose mental faculties of thinking are deranged(disordered) due to some mental strains or some other resons.
3. Intoxicated person or Drunken:- A drunken or intoxicated person is one who is so drunk or intoxicated that he is incapable of understanding the terms of agreement, and to form a rational judgement as to the effects of the term of the agreement.

• Under the english law, an agreement with a person of unsound mind is not void, but voidable at the option of the person of unsound mind.

3. A person who are Expressly dis-qualified by law:

• No agreement with citizen of any country with whome person of other country which are at a war. (i.e. called Alien enemy.).
• An agreement enter into before war and not oppose to public policy will be suspended during war. and will be suspended during war. And will be revived after the war is over.
• But, if the an agreement may before war and it is oppose to public policy. Then the agreement is void or squashed.(cancelledL
• Any nation with which are at a war.
• No agreement can be enter into between the citizen two country which are at a war.

2. Corporations & companies:

• Corporations:- Formed (created) under a special Act.
• Company: Regulated by companies Act 2013.
• Corpo. & Comp. can’t enter into any agreement which are uotside the purview (limit) of their Act. (statute).
• Companies also can’t enter into any agreement which are outside or against it’s object close.

3. Embassies, Consulates & Trade Representatives:

• Any citizen of indian

  can’t enforce any contract or any embassies, consulates & Trade representatives without the previous approvels of a Central Government.

4. Convicts:

• A person who is undergoing impresentment can’t enter into any agreement.

• A person who is declare insolvents can not enter into any agreement during the proceeding of insolvency.