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Competency of

Persons
PUTTU GURU PRASAD
INC GUNTUR
Validity of Contracts
 Competency of persons
 Major ( Indian majority Act-1875- 18 Yrs
other law may be 21 yrs – Guardians and
Wards Act,1890
Mohiri bibi V Dharmodas Ghosh
Raj Rani V Prem Adibm ( Film Producer)
 Sound Mind- Idiot-Lunatic- Drunkard
 Persons disqualified by Law
Not to be declared to be insolvent by any
law within the subject matter of law, alien
enemy, Convict
Effects of Minors
Contracts
 Void abinitio
 No Estoppel (The Indian Evidence Act, 1872)
 Application of Doctrine of Restitution
(Principle of Traceability)
 No Ratification
 No Liability for contracts as well as torts
 Beneficial contract ----Minor liable
 Marriage Contract
 Contract of service and apprenticeship
( Apprenticeship Act 1850)
 Parents and Guardian liable only if the
minor acts as an agent
Continued………
 Surety ( Liable)
 Minor as an agent ( Not liable) but
can bind the others ( principal)
 Specific performance of Contract
 Can make other’s liable for the
negotiable instrument (can endorse,
draw, deliver, negotiate)
 Cannot be declared insolvent
 Cannot be shareholder of a company
 Cannot enter as a partner under the
Partnership Act,1932
Persons of Unsound Mind
 Can be permanent and temporary
 Idiot –Lunatics ( permanent) Void
But can make contract during the
lucid intervals
 Drunkard ( voidable)
Disqualification Under
the Law
 Alien enemy
 Convict
 Insolvency- inability to discharge his
liabiltiy
 Applies to the court either by himself
or by his creditors
 Can enter into contract if the “ Order
of discharge” has been made by the
court
Consideration
 Ex nudo pacto non oritur actio
(An agreement made without consideration
is void)
 Consideration is price paid for a
promise
 Consideration can be :

Past
Present ( Executed)
Future (Executory)
Exceptions to the Rule
 Love and affection (Rajlukhy V
Bhootnath)
 Voluntary Services (Upton Rural
District council case)
 Time barred debt (Tulsi Ram case)
 Gift
 Agency
 Charitable subscriptions
Unlawful object and
Consideration
 Sec 23- talks about the illegality of
object and consideration

 Forbidden by law

 Defeats the provisions of law

 Object and consideration are fraudulent

 Injurious to any person or property

 Immoral
 Against Public Policy-
What is public policy?
1.Interference with the court of justice,
2.Agreement in restraint of
prosecution,
3.Agreement of Maintenance and
champerty
(Valid in India except – when it is unreasonable or
unjust
to other party- or when it is made with a
malicious
intention)
4.Marriage brokerage contract
5.Unfair and unreasonable dealings