lecture-07 - Learning Outcomes LESSON 7 CAPACITY OF PARTIES...

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Learning Outcomes In today’s lecture we shall study about capacity of a party to a contract. · In particular we shall do today · Nature of minor’s agreement · Effects of minor agreement · Persons of unsound mind · Other persons incompetent to contract Intoduction Today we will discuss what exactly is meant by competence to enter into a contract According to section 10 an essential ingredient of a valid contract is that the contracting parties must be “competent to contract’. Section 11 lays down that “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.” Thus the section declares that a person is incompetent to contract under the following circumstances: · If he is a minor according to the law to which he is subject, · If he is of unsound mind, and · If he is disqualified from contracting by any law to which he is subject. Thus minors, persons of unsound mind and persons disquali- fied by law are incompetent to contract. We shall now discuss them one by one in detail. I. Minor First of all let us understand who is a minor According to section 3 of the Indian majority Act 1875, a person domiciled in India, who is under 18 years of age is a minor. Accordingly every person who has completed the age of 18 years becomes a major. But minors of whose person or property or both a guardian is appointed by a court, and minors of whose property superintendence has been assumed by a court of wards, attain majority at the age of 21 years. However, by an amendment in 1999 in the Indian Majority Act1875, the age of majority is fixed as 18 years for every person (irrespective of the fact of appointment of a guardian.) Section 11 expressly provides that the age of majority of a person is to be determined “according to the law to which he is subject.” The courts of law used to decide the age of majority (competency to contract) by the law of domicile and not by the law of the place where the contract is entered into (Kashiba Vs Shripat). But the later trend of law for determining the age of majority is: In the case of contracts relating to ordinary mercantile transac- tions, the age of majority is to be determined by the law of the place where the contract is made, and In the case of contracts relating to land, the age of majority is to be determined by the law of the place where the land is situated. Thus, where a person aged 18 years, domiciled in India, endorsed certain negotiable instrument in Ceylon, by the laws of which he was a minor, he was held not to be liable as an endorser. Minor’s Agreements The law regarding minor’s agreements may be summed up as under: An agreement by a minor is absolutely void and inoperative as against him. Law acts as the guardian of minors and protects their rights, because their mental faculties are not mature – they don’t possess the capacity to judge what is good and what is
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lecture-07 - Learning Outcomes LESSON 7 CAPACITY OF PARTIES...

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