Capacity to Contract Sec.10 – 12 of ICA,1872

Parties to the contract must be competent to contract Section 10 Parties to the contract must be competent to contract

Who are competent to contract: Section 11: Age of majority Sound mind Not disqualified from contracting by any law to which he is subject

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

Sec. 3, of Indian Majority Act,1875 MINORITY Sec. 3, of Indian Majority Act,1875

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

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 minor’s state is liable to a person who supplies necessaries of life to a minor5 A minor can act as a agent

Minor’s parents/guardians are not liable to a minor’s creditor for the breach of contract by the minor

Sec.12 : Test of soundness of mind 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