V CAPACITY means competence of the parties
to enter into contract.
V Section11
defines the person who is
competent to contract:
a) has attained the age of majority.
b) is of sound mind
c) Not be disqualified by any law.
V In terms of Indian Majority Act1875,every
Indian attains majority on the completion of
18yrs. Of age.
V Contract with minor is absolutely VOID.
Mohri Bibi vs. Dharmodas Ghose
V Contract for necessaries of life.
V Minor·s contract for his benefits.
V Contract by parent·s or guardians of minor.
V Minor·s contract cannot be ratified on his
becoming a major.
V No refund of benefit.
V Minor as an agent.
V Minor as a partner.
V Position of minor in a limited company.
V Surety·s liability for minor.
V Position of minor in negotiable instruments.
V Minor·s right to hold property &interest
therein.
V Minor cannot be declared insolvent.
V Ifat the time of entering into contract is
capable of understanding & forming rational
judgment.
V Section 12 defines any person with unsound
mind is incompetent to contract:
a) idiot
b)lunatic
c)drunkard
V 1. Alien Enemy
V [Link] of India
V [Link] Ineligibility
V [Link] Sovereigns ,Diplomatic Staff.
V Section 13 defines, two or more persons are
said to consent when they agree upon the
same thing in the same sense.
V Consent is said to be free when it is not
caused by:
1. Coercion(Section 15)
2. Undue influence(section 16)
3. Fraud(section 17)
4. Misrepresentation(section 18)
5. Mistake(section20,21,22)
V Committing any act forbidden by IPC.
V Threatening to commit any act forbidden by
IPC.
V Unlawful detention of property.
V Threatening to detain property unlawfully.
V contract made by use of coercion is
voidable.
V the party can repudiate the contract or can
fulfill his obligation under the contract.
V Section16(1) defines,
one party is in a position to influence the
free consent of the other.
gain undue advantage over the other.
V one party holds real or apparent authority
over the other.
V Party stands in a fiduciary relationship.
V When the party makes contract with a person
whose mental capacity is temporarily /
permanent impaired.
V Effects: According to section 19(A)-
contract is voidable
V
°
[Link] Consent is obtained Consent is obtained
by use of force or by one party misusing
threat to use force his dominating
position,
2. Type Involves physical Involves only moral
force &sometimes pressure.
threat
[Link] of parties No definite relation Must be some kind of
relationship
[Link] Contract is voidable Contract is voidable
or court may set it
aside or enforce it in
a modified form.
VIn terms of section 17 of the act, fraud includes
any of the following act:
V active concealment of the fact
e.g. director of a company issues prospectus
containing misstatement knowing fully well
about it.
V Promise made without any intention of
performing it
V Act meant to deceive
V Any such act as to law specially declared to be
fraudulent
V Silence is also fraud
e.g. A sells his horse in an auction to B. A
knows that the horse is unsound, but he does
not say anything.
V Right to repudiate the contract.
V Right to affirm the contract.
V Claim for restitution.
V It is made up of two words Ú
which means false statement. Indian
Contract Act Classifies misrepresentation as:
V Fraudulent Innocent
þ
þ
V According to section 18 of the Indian
Contract Act:
1) By Positive statement -section 18(1)
2) By breach of duty without intention to
deceive - section 18(2)
3) Causing mistake by innocent
misrepresentation - section 18(3)
V Right to repudiate the contract
V Right to affirm the contract
V Right to restitution
V no right to damages
á
1. Intention To deceive the not to deceive
other party
2. Right of the a) Repudiate a) Repudiate the
aggrieved party the contract, b) affirm
contract, the contract
b) affirm the
contract, c)
claim the
damages.
3. Legality Cannot be a Deemed to be a
valid contract valid contract
4. Nature Intentional & Result of being
deliberate ignorant of fact or
facts.
V it is defined as wrong belief about
something.
V may be a mistake of law or a mistake of
fact.
V 1) mistake as to the law
D law of country
D foreign law
D private rights
V 2) mistake as to the fact
D unilateral mistake
D bilateral mistake
V According
to section 20, if the parties to an
agreement are mistaken about an essential
subject matter of the agreement, the
agreement is void.
