Capacity of the Parties

7/28/2019 Capacity of the Parties

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CAPACITY OF THE

PARTIES


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SECTION 11

A PERSON IS COMPETENT TO

CONTRACT IF:

He is of the age of majority,

Who is of sound mind, and

Not disqualified from contracting

by any law in force in India


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The following persons are not competent to

contract

Minor

Person of unsound mind

Persons disqualified by anylaw to which they are subject


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MINOR

According to Indian Majority Act, 1875:

A minor is one who has not completedhis/her 18th year of age.

A person continues to be a minor until

he attains 21 years; Where, a guardian of a minors property

or person has been appointed underthe Guardians and Wards Act, 1890; or

The superintendence of minorsproperty is assumed by a court ofwards.


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Doctrine of mutuality

It is not within the competence either of the manager ofthe minors estate or of the guardian of the minor, to bind

the minor or the minors estate by a contract for the

purchase of immovable property. As the minor was not

bound by it, there was no mutuality, and consequently

the minor could not obtain specific performance of thecontract

[Mir Sarwajan v. Fakhruddin Mohd Chowdhary ]

A contract to purchase certain immovable property had

been made by a guardian on behalf of the minor, and theminor sued the other party for a decree of specific

performance to recover possession. His action was

rejected.


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In todays life it is not desirable for law to

adhere to the categorical declaration that a

minors agreement is always void ab

initio. A minor has to travel, to get his dress

tailored, cleaned, to visit cinema halls, to

deal with educational institutions and to

purchase so many things for the facility oflife and education.

Hence, the new law is that if thecontract is within the competence of

the guardian and if it is for the benefitof the minor, it is specificallyenforceable.


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Srikakulam Subramanyam v. Kurra Subba Rao

In order to pay off the promissory note and mortgage

debt of his father, the minor son and his mother sold apiece of land to the holders of the promissory note in

satisfaction of the note. He paid off the mortgagee

accordingly and the possession of land was given to

them. Afterwards, minor brought an action to recover the

land. It was held that he was not entitled to do so as thecontract was for his benefit and had entered into by the

guardian in his competency.


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Effects of a minors agreement

An agreement with or by a minor

is void ab initio

Beneficial contracts


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Whether a minors agreement is a void or

voidable one was debated for a long time.

Then in 1903, the Privy council in Mohoribibiv. Dharmodas Ghose resolved the conflictand declared that a minors agreement is

void.

A child show poor judgment in making aparticular contract, and it is a protectionagainst his own ignorance and immaturity-

not mere fraudulent manipulation by others-that the law affords. The general presumptionthat every man is the best judge of his owninterests is suspended in the case of

children.


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No ratification

A minors agreement is a void

agreement. Therefore, the minorcannot ratify the agreement onattaining majority.

Ratification relates back to the date

of the making of the contract and,therefore, a contract which was thenvoid cannot be made valid bysubsequent ratification.

But on attaining majority, if hemakes a new promise on a freshconsideration, then that agreementis binding.


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A minor borrowed a sum of money,executing a simple bond for it, and afterattaining majority executed a secondbond in respect of the original loan plus

interest. Held that the suit upon thesecond bond was not maintainable. the consideration which passed underthe earlier contract cannot be impliedinto the contract into which the minor

enters on attaining majority.


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Minor can be a promisee or

beneficiary

He can purchase a property, being

beneficiary or promisee

But he cant be a promisor. He cant sell

a property.

A contract executed in favour of a

minor can be enforced by him.

He could get a decree on mortgage

executed in his favour.


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NO ESTOPPEL AGAINST A MINOR

THE RULE OF ESTOPPEL IS NOT

APPLIED AGAINST A MINOR.

If he commits fraud and

misrepresentation and enters into a

contract, he cannot be made liable on

the contract but the court will ask him

to restore the benefit he has obtained

out of that fraud or misrepresentation.

He is not estopped from pleading hisinfancy so as to avoid the contract


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NO SPECIFIC PERFORMANCE

EXCEPT IN CERTAIN CASES

A minors contract is void ab initio.Hence he cannot be asked to performthe contract.

If the guardian of a minor enters into acontract of which he has no authority,the minor cannot be asked to performthe contract.

But if the guardian or manager hasauthority to enter into a contract onbehalf of the minor,

For the minors benefit; Then minor can be sued for specific

performance.


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LIABILITY FOR TORTS

Minor can be held liable for tort unlessthat tort is a breach of contract.

Minor was rented certain instrumentsfor his use and handed over it to his

friend. It was lost. He can be sued forthe tort.

The principle is that you cannotconvert a contract into a tort to enableyou to sue an infant.


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Burnard v. Haggis

The defendant a Cambridge universitystudent and minor, hired a horse for thepurpose of riding, expressly stated thathe did not want a horse for jumping.

The defendant let the horse to a friend,who used it for jumping, with the resultthat it fell and was injured. Thedefendant held liable on the ground thatthe act was outside the contract and

not an abuse of the contract.


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NO INSOLVENCY

A minor cannot contract a debt.

Hence he cant be declared insolvent or

pauper

He is not personally liable


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PARTNERSHIP

He cant be a partner.

But he can reap out the benefits of a

partnership


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AGENT

Minor can act as an agent

But he will not be liable to the principal.

A minor can draw, deliver and endorse

negotiable instruments without himselfbeing liable


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MINOR CANT BIND HIS PARENTS

OR GUARDIAN

Minor cant make his parent or guardian

liable for his acts even if it for his

necessaries.

He can make them liable only when he

acts as their agent


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In the case of a joint contract by a

minor and an adult, the adult will be

liable but not the minor.

In the contract of guarantee, when an

adult stands surety for a minor, the

adult will be liable to the third party.

A minor cant be a shareholder.


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SECTION 68: MINOR CAN BE HELD LIABLE

FOR THE NECESSARIES SUPPLIED TO HIM

No personal liability on the minor

Only his property will be held liable.

A minor liable for the value of necessaries

supplied to his wife


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Conditions to make minors estate liable for the

necessaries supplied to him

The contract should be for goods

reasonable necessary for his supportin his station in life

The minor must not have already a

sufficient supply of these necessaries


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A supplies B a minor with necessaries

suitable to his life. A is entitled to be

reimbursed from Bs property.

Things necessary are those without

which an individual cannot reasonable

exist. Food, raiment, lodging and the

like.

What are necessaries has to be

determined with reference to the

fortune and circumstances of the

particular minor. Articles therefore that

to one person might be mereconvenience or taste may in another

case be the necessaries for yet another

person.

Doctrine of restitution


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Doctrine of restitution

If an infant obtains property or goods by

misrepresenting his age, he can be compelled to

restore it, as long as the same is traceable in his

possession. This is known as the equitable doctrine of

restitution.

Restitution stopped where repayment began. Where

the infant has sold the goods or converted them, he

cannot be made to repay the value of the goods,because that would amount to enforcing a void

contract

The doctrine of restitution is not applicable if the infant

has obtained cash instead of goods. Leslie ( R) Ltd. v. Sheill: in this case, an infant

succeeded in deceiving some money lenders with a lie

about his age, and so got them to lend him 400 pounds

on the faith of being adult. Their case to recover the


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PERSONS OF UNSOUND MIND

SECTION 11 & 12

PERSONS OF UNSOUND MIND ARE

INCOMPETENT TO CONTRACT

SUCH TYPE OF CONTRACTS ARE

VOID

A person is said to be of sound mind

for the purposes of making a contract,

if, at the time of making the contract, he

is capable of understanding it and of

forming a rational judgment as to theeffects of that contract upon his

interests.


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A person usually of unsound mind but

occasionally of sound mind is

competent to contract when he is of

sound mind. e.g.insane

A person usually of sound mind but

occasionally of unsound mind cannot

contract when he is of unsound mind.

E.g. drunkard


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UNSOUNDNESS OF MIND

Idiocy- lack of capacity to understand

the terms of the contract and its effects

Lunacy/ Insanity- disease of the brain-

can enter into contract at times when

he is sane

Drunkenness- temporary incapacity-

same as lunatic

Hypnotism- temporary- artificially

induced sleep

Mental decay- on account of old age


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PERSONS DISQUALIFIED UNDER

LAW

ALIEN ENEMIES

FOREIGN SOVEREIGN &

AMBASSODORS

INSOLVENTS

CORPORATIONS- ONLY THROUGH

AGENTS

Documents

Capacity of the Parties