CAPACITY OF THE
PARTIES
Muhammad Junaid
Lecturer Department Of
Law
The University Of
Faisalabad
CAPACITY OF THE PARTIES TO THE
CONTRACT
Section 11 of the contract Act requires that
the parties to the contract must be competent
to contract.
Now what is competency in the contract…?
Competency in Contract law
According to section 11 of the contract Act
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 not disqualified from
contracting by any law to which he is
subject.
Following person are competent to be a party
to a contract.
Major
Mentally Sound Person
Persons not disqualified by law
Persons who are not qualified to Enter into
the Contract
According to Section 11 the following
persons are incompetent to be the party to a
contract.
Minors
Person of Unsound Mind
Person disqualified by Law
MINORS
So who is minor…?
And who is major ..?
According to the Majority Act 1875:
Age of majority according to the majority Act
1875,a minor is a person who has not attained
the age of 18 years.
According to the Guardian and Ward Act
1890:
According to the Guardian and Ward Act, when
the Guardian Court appoints the guardian for
the minor in that situation the minor will attain
the age of majority at the age of 21 years and
not 18years.
Appointment of Guardian for the minor.
Guradian is a person who looks after the
movable or immovable property of the minor
and care and well being of a minor.
Natural guardian ;
Father is the natural guardian of the minor
but not mother.
Legal guardians
Guardian appointed by the court are known as legal guardian
in the following sequence first.
Legal Guardians
Father executor
Father father
Executor of father father.
In absence of the above mentioned legal guardian mother
may come to be the legal guardian of the child. Any close
relative on mother side or father side may come to be the
legal guardian of the child in the absence of the natural
guardian and listed legal guardians, which the court think fit
to be good for the welfare the minor.
De-facto guardian; which is neither natural nor appointed
by court.
AFFECT OF THE AGREEMENT WITH MINOR
According to Contract Act 1872, a minors
agreement is absolutely void from the
beginning, because minor has no legal
capacity to enter into a contract with other
party.
Question:
Where a minor is made responsible to
perform his part of the agreement, by the
other party, in the court of Law…can the
other party do so….?
Solution
A minor is not liable for what he has promised
to the other party because those agreements
have no legal status. Minor does not have the
capacity to judge what is good and what is bad
for him. The minor even can not be compelled
legally to give back the consideration what is
paid to him by the other party.
Case Scenario
A the minor makes an agreement with B for
selling his immovable property inherited to
him from his father side , A receives some
amount as well from B…? No A refuse to
perform the contract..?
B comes to court for the breach of
contract, specific performance of the
contract, recovery of his already paid
money, damages..?
Can the court be able to give any of the
above remedies to the plaintiff B…?
Minor and Ratification
A minor agreement being void from the vary
beginning has no legal value and validity in
the eye of Law and is void from the
beginning.
So the void agreement from the very
beginning can not be made valid by the minor
on attaining the age of Majority.
It means when the agreement is void from
the beginning it is void once and for all it can
not be ratified or get valid at later stage.
Minor and Estoppel
Estoppel is a well known principal which means
that if anybody makes a false statement to others,
and the other believe it to be a true statement and
act accordingly, later on the defendant can not go
back/revert back on his statement that It was just a
fun statement or that I was joking, the statement I
said earlier was a false statement, the defendant is
stopped by law not to go back from his earlier
statement.
But the above rule does not apply to the minor, if
the minor by fraud believing the other to be major
and contract is signed with other party, the minor
can argue in court that I was minor at the time of
signing a contract to avoid the contract liability.
Minor and equitable Relief
Minor as a general Rule can not be
compelled by the court to pay back the
amount already received by him/her in
advance…but the court may compel as the
natural justice demands to restore the money
taken by the minor fraudulently to the
plaintiff.
But if the minor does not wish to return the
money taken he can do so.
Minor and Necessaries
According to Section 68 of the Contract Act, a
person who supplies necessaries to a minor, the
supplier is entitled to recover the expanses for those
supplies and goods from the property of the minor.
If the minor owns no property, the supplier will lose
the case.
Minor will not be personally liable to those expanses
of necessaries, it is the property only which is liable.
Now what is necessaries….?
Necessaries
Necessaries are the basic requirement of
life….like food,clothes,shelter expenses,
medical expenses etc
Example
A is a minor orphan, his father has died in a
road accident and the mother has died soon
after delivered him…B takes the
responsibility for his necessaries….for almost
15years…now B has had enough of his
necessaries…B wants back his expenses of
necessaries provided to A. B has no remedy
against A Personally ,but if A has any
property A can recover the expenses from
that property.
Agreement of the guardian on behalf of a
minor
If the Agreement is made by the guardian with the
permission of the guardian court, on behalf of
minor ward for the benefits of minor, the
agreement is enforceable against the minor
through his guardian. Sec section 28 and 29 of the
guardian and ward act 1890.
For example:
A the guardian makes a sale agreement for B
(MINOR) with C by receiving 25% of the
consideration in advance and later on A refused to
sell the house….B can file a suit in the civil Court
for specific performance of contract against minor
Minor as a partner in firm
A minor cannot personally become a member
of a firm, but through his guardian with the
consent of the other partners.
The guardian may inspect the accounts and
books of the firm on behalf of the minor.
Surety/guarantor for a minor to other party by the
guardian
If any agreement which is done through
guardian for the benefit of minor, the
guarantor may take the responsibility for the
minor to third party, in case minor has not
fulfill his obligation to the other party, the
surety or guarantor will be liable to the other
party for the minor refusal or default.
Example
B minor promises to sell his bicycle to C
through guardian and guarantor D, the
guarantor takes the responsibility of B, that
just in case B refuses to sell his bicycle D will
be responsible for any loss to C… B takes the
advance payment from C AND then refuses to
sell his bicycle….? In this particular case D
the guarantor will be responsible to B for the
recovery of the advance money through his
own pocket and guarantor can later on claim
from B personal property.
Minor and insolvency
Insolvency means unable to pay his bills,
debts or any money owe to someone. It is
also known as bankruptcy.
For example:
A the minor bought a Honda Oreal 2018
model through guardian from B for the
consideration of pkr 35 lacs.A paid pkr 30
lacs through guardian, but pkr 5 lac is still
outstanding against A, A gets insolvent.
What remedy does B Have against A…?
solution
B has no personal remedy against A, but
against the property of B through guardian
to enforce his recovery suit in the court to
point out to the court the property of A for
sale, through a proper suit in the court of
civil judge.
If A has no property, payment of 5 lacs can
not be recovered from A as the insolvency
procedure does not applicable to minors.
Person of Unsound Mind to make
contracts
Unsound person Is a person who does not
understand his act. He is not capable of
understanding while making a contract.
Unsound persons are further divided into two
categories.
Permanently of unsound mind like mentally
retarded and lunatic persons who have mental
health conditions.
Secondly are those person who are temporary
of unsound mind under the influence of drugs
while making contract.e.g like drunk or
alcoholic while making contracts and are not
sound mentally for the time being.
Person of unsound mind(Continued)
Now the person first category of permanent
unsound mind can not make a contract
because they do not understand what is
beneficial for him and what is not beneficial
for him.
As far as the second category is concerned
they can not make contract during that
temporary period of incapacity because of
incapacity of understanding. however they
can make contract when they become normal.
Effect of contract formed by unsound mind
persons
What would be the nature of that contract
which is formed by the unsound mind
person….?
Contract made of unsound mind person will
be void like the agreement made by the minor
and would be inoperative against the
unsound mind person
Causes of Temporary Unsound mind
….???
Causes of temporary Unsoundness of
mind
drugs,
Very old Age
alcoholic
permanent Unsoundness of Mind
IDIOCY
INSANE
MENTALLY RETARDED.
Disqualified Person
Disqualified person are those person which
are disqualified by different Laws prevailing
in Pakistan to enter into contract.
Convict
Foreigners
Insolvent
Ambassadors' and diplomats
EFFECT OF ALL THE CONTRACT
MENTIONED HERE WOULD BE VOID
AND ILLEGAL CONTRACT
Convict
Convict is a person who is found guilty by the
court of law and has been imprisonment
under the jail. During that period of time the
convict can not enter into the contract with
another party. once his duration of
imprisonment is expired he can enter into
legal and valid contract with other parties.
Effect of the contract will be illegal and
void.
Foreigner
Foreigner can not enter by his own with the
citizen of Pakistan for any contract like
import and export but with the permission
of the Pakistani Government.
Effect of the contract with be void and illegal.
Insolvent
When a person can not pay his bills and debt
is insolvent and he can not enter into a valid
contract with another person. Usually
insolvent is declared by the court and only
court can discharge through an order of
discharge to make an insolvent a solvent
person.
ONCE HE BECOME SOLVENT THROUGH
COURT ORDER HE CAN BECOME LEGALLY
ENTER INTO A VALID CONTRACT.
