Capacity of Parties

Hello my reader friends. This is one more blog in the series of Law of Contract. This blog is discussing about "Capacity of Parties". Please read this blog till the end and share it with all law students. These are the notes for preparing exams of Law degree. 

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Capacity of Parties:

An agreement is enforceable only if it is entered into by parties who possess contractual capacity. It means that the parities to an agreement must be competent to contract.

Section 11 of Indian Contract Act, 1872 reads as, “Who are competent to contract.—Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject. —Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject."

Let us see these qualifications in detail:

(i) that the person must be at least 18 years old or more.

(ii) that the party or the person should be able to fully understand the terms or promises of the contract at the time of the formulation of the contract.

(iii) that the party should not be disqualified by any other legal ramifications. For example, if the person is a convict, a foreign sovereign, or an alien enemy, etc., they may not enter into a contract. A person is not disqualified from contracting by any Law to which he is subject, want of capacity may thus arise from minority, lunacy, idiocy, drunkenness etc. If any of the party to a Contract suffers from such a disability the agreement is not enforceable excepting perhaps in some special cases.

Case Law:

Must attain the age of majority an agreement with a minor is void ab initio – Mohri bibi v. Dharmodas Ghose,1903 )

Example:

1. M, a person of unsound mind, enters into an agreement with S to sell his house for Rs.2 lac. It is not a valid contract because M is not competent to contract.

2. A, aged 20 promises to sell his car to B for Rs.3 Lac. It is a valid contract because A is competent to contract.

3. A person who is at the age of sixteen years old could not stay at a hotel. The hotel staff would not allow having the person who is sixteen years old to stay at the hotel since that person is not eighteen years old or above. For the person to stay at the hotel, he or she must have a guardian who is above eighteen years old or a parent to accompany him or her to stay in the hotel.

Here we are discussing about one of the essentials of a valid contract, listed as follows. All essential features of a valid contract are as follows.

1) Two parties

2) offer and acceptance.

3) Intention to create legal relations

4) Lawful consideration

5) Capacity of parties

6) Free & Genuine consent

7) Lawful objects

8) Writing & registration - legal formalities

9) Certainty

10) Possibility of performance

11) Not expressly declared void.

Thanks for reading till the end. The underlined part in this article is the most important part of this subject and you must write atleast this part in the exam. Also relevant case laws will give you more advantage and an example is must in answer. Please share this blog with all the law students.