INTRODUCTION: Capacity to contract refers to the ability to lawfully enter into a deal. The capacity to contract binds the contracting parties with a vow to follow it. However, only a few people have the ability or competency to make a contract.
DEFINITION OF ‘INCOMPETENT TO CONTRACT’: Certain people are not eligible to sign a contract. People who do not have the ability to contract include the following:
Those who are mentally ill.
> Minors who have not yet reached majority age.
> Those who are unable to contract due to a contracting law disqualification.
1.) Minors– A minor is someone who has not reached the age of majority. The age of majority in India is 18 years. A person under the age of 18 has no legal power to engage in a contract. A minor’s contract or agreement is null and void from the start, and no one can sue them. The state provides civil and criminal immunity to minors. Furthermore, it is responsible for the minor’s well-being as well as his or her property. Minors are not allowed to enter into contracts because of these immunities. However, if a minor enters into a contract knowing his or her incapacity, that contract will operate independently of any other contract.
If one party is from India and the other is from a different nation, the contract will be governed by more than one law. TNS Firm v. Muhammad Hussain has established certain guidelines in such circumstances. For typical mercantile transactions, the age of majority will be determined by the law of the nation in which the contract is made. The age of majority for land transactions is determined by the law in the jurisdiction where the land is located.
Effects of a Minor’s Agreement:- If a minor enters into a contract by lying about his or her age, no one can prohibit him or her from telling the truth. The minor is not responsible for persuading another person to enter into a contract. Even if something goes wrong, he is not to blame. However, he will be held accountable in the event of certain mishaps. The minor can claim that he is too young to sign a contract. A minor’s agreement serves as a restitution doctrine. If a minor purchases a property while concealing his age, the property will be returned to him. However, if he has converted or sold them, the law will not be able to pursue him.
Minors Can Enter Contracts:- A minor can enter a contract if he is the contract’s beneficiary. A minor’s ability to be a promisee or payee in a contract is unrestricted. As a result, a minor can buy an immovable property and sue for the possessions if the money is tender. A specific performance versus a minor cannot be ordered.
Claim for Necessaries Given to Minors:- According to Section 68 of the Indian Contract Act of 1872, if a person does not have the capacity to enter into a contract, he or she may receive necessaries from another person. He has the authority to seek reimbursement from the incompetent. Despite the fact that section 68 holds minors responsible for the necessities, it does not specify the necessities. The requirements will be determined based on the circumstances. To be reimbursed for necessaries, the party providing them must demonstrate that they are good and reasonable. They must also confirm that the provided necessities are the minor’s only source of support and that they do not have an adequate supply on hand.
Agents:- The minor has the potential to become an agent. He is not, however, accountable to the principal. Apprenticeship contracts are service contracts that bind minors by giving them rewards. However, a parent or guardian must sign such an apprenticeship contract.
Negotiable Instrument:- The minor can draw, deliver, endorse, and negotiate negotiable instruments. This will tie everyone but him. Anyone who obtains items from a juvenile is required to pay for them. A minor can benefit from a partnership, but he or she cannot be a partner. A minor can become a member of a firm with fully paid shares. If a juvenile holds the shares through transmission, the minor’s guardian will be listed as a member.
2.) Person of Unsound Mind– The contract law uses the medical dictionary to define a person of unsound mind. The person’s mental impairment hinders them from comprehending the transactions and being aware of their consequences. Any agreement or contract made with someone who is mentally ill is null and invalid. However, such a person is not eligible for any of the contract’s advantages. Such a person’s property is always at risk. It is liable for the necessities he obtains, as well as anyone he is legally obligated to maintain. When a person is typical of unsound mind, but is occasionally of sound mind, he can contract. The lucid intervals are what they are called.
Intoxication:- When intoxication causes ineptitude, it is a mental disease. Only the drunkenness can be proven by the individual who makes the claim. In such a state of mind, a person who has consumed alcohol or other intoxicants cannot enter into a contract.
3.) Person Disqualified by Law– If a person is not allowed to enter into a contract by the law, he is unable to do so. A person’s qualification to be a part of a contract should be determined by the law.
Alien Foes:- The alien enemies are the inhabitants of other countries that live in India. Only during times of peace do such people have the ability to engage in a contract with the Indians. The government may also impose limits on such a contract. If a war is declared between his country and India, he will be considered an alien enemy, and he will be unable to engage in a contract. If a foreign national enters into a contract before the declaration of war, the contract will be suspended for the duration of the conflict. If the contract has not expired before the end of the conflict, it can be renewed.
Convict Serving Sentence:- A person who has been convicted of a crime and is currently incarcerated does not have the legal competence to enter into a contract. He is also barred from suing over contracts signed before his incarceration. After his term expires, he is free to file a lawsuit.
Insolvent:- A person who has been ruled insolvent can enter into certain sorts of contracts. The insolvent can get into debt, work, and buy a house, but he can not sell it. He can not be a magistrate, a company director, or a member of a local body since he is disqualified. Except for his property, the insolvent person possesses contracting capacity. Following the discharge order, he becomes a regular citizen.
CONCLUSION: A contract made by someone who lacks the mental capacity to comprehend the nature and consequences of the deal is null and void from the start. Contracts with lunatics or individuals under the influence of a narcotic, on the other hand, may or may not be void depending on the circumstances. When any of the disqualifications are removed, a person’s legal power to contract is restored.
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