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Contract Act-2

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Contractual CapacityPERSONS NOT COMPETENT TO CONTRACT

Minors Persons of unsound mind Persons disqualified by law to which they are subject Thus there may be flaw in the capacity of parties to contract. Flaw may be due to minority, lunacy ,idiocy, drunkenness,

drug addiction or status. If a party to a contract suffers from any of these flaws the

contract may not be a valid one.

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PERSONS NOT COMPETENT TO CONTRACT

Minors18 yrs & above – major( Indian majority

Act -1875Age of majority 21 yrs –If guardian is appointed or property

under supervision of court of wards

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Principles Governing Minor’s contract

Minors are protected by law- their rights & estates are preserved

Shortcomings & negligences are excusedMinor’s also assisted in pleadings –

Judges are their counsellors & law is their guardian

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Effects of Minor’s Agreement A Minors agreement is void ab initio No estoppel against minor- Minor made agreement

by misrepresenting his age , there is no estoppel against him

Minor is always allowed to plead minority and is not stopped to do so even where had procured a loan or entered into some other contract by falsely representing that he was of full age

No liability in contract or tort arising out of contract Minor - in law is incapable of giving consent

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Effects of Minor’s Agreement

A Minor made agreement by misrepresenting his age to obtain a contract can not be sued for deceit (Minor does not have liberty to cheat)

Contract can not be converted into Tort However if Tort is independent of contract then it

will not absolve minor of his liability

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Effects of Minor’s Agreement

Doctrine of Restitution-Minor obtains property or goods by

misrepresenting his age-He can be compelled to restore it but so long

as same is traceable in his possession.If Minor has sold goods , he can not be

made to repay value of goods because that would amount to enforcing a void contract

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Effects of Minor’s Agreement

When a Minor seeks aid of the court for cancellation of contract- court may grant relief subject to the condition that

Minor will restore all benefits obtained under the contract or

make suitable compensation to the other party But court will not compel any restitution by a minor

even if minor is a plaintiff.

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Effects of Minor’s Agreement

But court will not compel any restitution by a minor even if minor is a plaintiff,

Where the other party was aware of the infancy so that he was not deceived or where the other party was unscrupulous in his dealings with the minor

Minor - in law is incapable of giving consent

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Effects of Minor’s Agreement

Beneficial contracts Minor’s agreement is absolutely void- confined to cases where minor charged with

obligations & other party seeks to enforce it Minor allowed to enforce contract where he is

beneficiary & has no obligations

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Effects of Minor’s Agreement

Beneficial contractsMinor is capable of purchasing

immovable property & may sue to recover the possession

of property by tendering the purchase money

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Effects of Minor’s Agreement

Beneficial contractsMinor can be a beneficiary e.g. a

payee, an endorsee or a promisee under a contract.

A promissory note executed in favour of a minor is valid & can be enforced in a court

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Effects of Minor’s Agreement

Ratification Minor can not ratify a contract on

attaining majority-Fresh contract is to be made on

attaining majority – New contract requires fresh consideration

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Effects of Minor’s AgreementLiability for Necessities- Sec 68 Minor( Person incapable to contract ) liable for

necessaries supplied to them Person who supplies such necessaries to minor is to

be reimbursed from the property of such incapable person i.e. Minor

Liability attached to the estate of minor & not personal liability( minor can not be put in jail)

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Effects of Minor’s AgreementLiability for Necessities- Sec 68 Liability is only for necessaries Necessaries- Food , shelter, clothing, education,

medical & legal advice etc( not include car etc.) To make minor’s estate liable following conditions

must be satisfied:- Contract must be for goods & services necessary

for support of his life. Minor must not have already sufficient supply of

these necessaries.

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Persons of unsound Mind

A person is said to be of sound mind if he/she capable of understanding terms of contract & can take rational decisions to its effects upon

his/her interests Under Indian Contract Act – Agreement of a

person of unsound mind is absolutely void,A person of unsound mind may make a

contract when he was of sound mind( sec-12)

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Persons of unsound Mind A person of unsound mind may make a contract when he

was of sound mind( sec-12) Ex- A person is in a lunatic asylum. He is , at intervals, of

sound mind. He may contract during these intervals. A sane person, who is delirious from fever or who is so

drunk that he can not understand the terms of a contract or form a rational judgment as to its effect on his interest,

can not contract whilst such delirium or drunkenness lasts.

The liability for necessaries of life supplied to persons of unsound mind is the same as for minors.

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Persons of unsound Mind

A lunatic is a person who is mentally deranged due to some mental strain or other personal experience.

However , he has some lucid intervals of mind. As regards contract entered during lucid intervals he is

bound, however he is not liable for contracts entered when he is of unsound mind.

An idiot is a person who is per mentally of unsound mind. He does not have lucid intervals .

He is incapable of entering into a contract & therefore a contract with an idiot is void.

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