The ability of the parties to sign a contract denotes their competence. This article discusses the fundamental elements required for someone to be qualified to establish a contract.
The ability to make a legally binding agreement is known as the capacity to contract. The ability to contract obligates the contract’s parties to uphold their end of the bargain. However, only a select few people have the knowledge or ability to enter into a contract.
Who is Competent to Make a Contract?
Only specific people are eligible to make a contract. The following individuals are capable of contracting:
- Those who are mentally sound
- Those who can contract because they meet the requirements of the contracting legislation
- those who have reached the age of majority.
Who is Not Eligible to Make a Contract?
Certain persons cannot make a contract. The following individuals cannot enter into contracts:
- Those who lack mental stability
- Youths who may not have reached majority age
- Those who are prohibited from contracting by the contractual legislation.
Who is a Minor?
A minor is somebody who is under the age of majority. 18 is considered to be the majority age in India. Anyone under the age of eighteen is not legally able to sign contracts. A minor cannot be sued, and any contract with them is void. The State grants Minor legal protections in both civil and criminal matters.
Additionally, it assumes responsibility for the minor’s property and overall well-being. These protections prevent minors from signing contracts. However, if a kid signs a contract while aware of his or her limitations, that deal will take precedence over all other contracts.
The contract will be governed by more than a law if one party is an Indian and the other is from a foreign nation. The TNS Firm v. Muhammad Hussain had established precise standards for such cases. The law of the nation where the contract is made will determine the legal majority age for simple mercantile transactions. Depending on the local laws where the property is located, the majority age for landed properties will vary.
Effects of a Minor’s Agreement
No one may prevent a minor from revealing their age if they sign a contract by falsely stating their age. Inducing another person to enter into a contract releases the minor from liability. Even if something goes wrong, he is not to blame. He will, however, be responsible for it in some accidents. The minor may use his infancy as an excuse to break a commitment. A minor’s agreement serves as the basis for the reparation doctrine. While the purchased item will be refunded if a youngster buys a property while pretending to be older. However, the law cannot bring a case against him, whether he has transformed or sold them.
Contracts Beneficial to Minors
If a minor is the contract’s beneficiary, it is possible to include him in the agreement. There is no prohibition on a minor being an easier-to-predict or payee under a contract. As a result, a youngster can present money to buy an underlying asset and then litigate for the contents. A specific performance cannot be ordered against a minor.
Claim for Necessaries Supplied to Minors
According to Section 68 of the Indian Contract Act of 1872, if a person cannot enter into a contract, they may acquire necessities from another person. He has the authority to demand compensation from the disabled person. Section 68 holds minors responsible for the necessities, although it doesn’t specify those necessities. The case will determine the necessities. The party providing the necessities must demonstrate that they are reasonable enough to be reimbursed. They must also attest that the minor will only be supported by the necessities provided and that they cannot keep an adequate supply.
Agents
A minor may work as an agent. He does not, however, answer to the principal. The apprenticeship agreement is a service contract that binds minors by giving them advantages. However, a parent or legal guardian makes such an apprenticeship contract.
Negotiable Instrument
Minors can draft, present, sign, and negotiate negotiable instruments. This will bind all parties involved besides him. Anyone who obtains things from the minor is required to pay for them. A minor may benefit from a partnership but cannot become a partner. A youngster may sign up to join a firm that has fully paid shares. If a juvenile acquires ownership of the shares by transmission, the minor’s guardian will be listed as a member.
A Person of an Unsound Mind
An unsound mental individual is defined in contract law using medical terminology. The person’s mental disability hinders them from comprehending the transactions and being aware of their implications. Any contract or agreement with a person of unsound mind remains null and invalid. However, they are not eligible for any contract benefits in this case. Such a person’s possessions are always liable. It is accountable for the necessities he receives or for anyone whose help he is required by law to provide. An individual who is occasionally of a sane mind but typically of an unsound mind can contract. The lucid intervals are like this.
Intoxication
If intoxication causes ineptitude, it refers to a mental disorder. Only the intoxication may be proven by the one making the allegation. A person who has consumed alcohol or any other intoxicant is not in a sound enough state of mind to enter into a contract.
A Person Disqualified by Law
A person lacks the power to sign a contract if the law does not recognise him as a legal entity. A person must meet legal requirements to be included in a contract.
Foreign Enemies
The foreign enemies are the nationals of other countries who reside in India. Only during times of peace are these people able to make a deal with the Indians. Governmental limitations likewise bind such an agreement. He will become an enemy of a foreign country if war is declared between his nation and India, making it impossible for him to sign a contract. An agreement made by a citizen of a foreign country before the start of hostilities will remain suspended throughout the conflict. If the contract has kept the time restriction, it can be reactivated once the war ends.
Convict Serving Sentence
A person who has been convicted and is serving time in jail is not able to sign a contract.
Additionally, he is ineligible to pursue legal action regarding any contracts signed prior to his conviction. He can file a suit once his sentence has run its course.
Married Women
The ability to sign a contract involving her husband’s property is not available to married women. However, if her husband neglects to give her the necessities, the wife might act as his agent and bind his property.
Insolvent
A person who has been declared insolvent can make some kind of contracts. The insolvent may accrue debts, work as an employee, and buy real estate, but he is not permitted to sell it. He is ineligible to hold certain positions, such as magistrate, director of a firm, or member of a municipal body. Except for his property, the insolvent person can enter into a contract. When the discharge order is issued, he becomes a regular citizen.
Pardanashin Women
If someone is wearing a veil or parda and leaving the house, that individual is being unfairly influenced. She cannot contract since she does not comprehend the ramifications of the contracts.
Corporation Incorporated under a Special Act and Joint Stock Company
A firm or corporation of this nature is a legal fiction. It cannot enter into contracts outside the scope of the Special Act or the Memorandum of Association.
Judges, Legal Practitioners or Officers
The ability to engage in a contract is not available to judges, attorneys, or other officers connected to the subject of the actionable claims.
Officers and Employees of the Patent Office
The patent office’s officers and staff cannot acquire any rights to the patents they have issued during their tenure or have an interest in them.
Foreign Sovereigns and Ambassadors
Foreign consulate personnel and ambassadors are granted diplomatic immunity under international law. This means the contracts cannot be enforced against them under Indian law. They cannot be sued without permission from the Central Government, but they can sue the people who work with them to carry out the contracts. As a result, although in a privileged position, ambassadors and consular staff members must be considered qualified to enter into contracts.
Conclusion
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