CAPACITY OF

PARTIES

Chapter # 4
By
Kamran Khalid
CAPACITY OF PARTIES
 As per law every person is competent to enter into the
contract, who is the age of majority and who is of sound
mind; and is not disqualified from contracting from law
to which he is subject.
 Following persons are incompetent to contract

1. Minor
2. Person of Unsound mind
3. Person disqualified by law
MINOR
 A person is consider minor who does not attain the age
of majority.
 In Pakistan age of majority is 18 years.

 In case of appointment of guardian of minor under

guardian and ward act, the age of majority is 21 years of
age.
NATURE OF MINOR AGREEMENT
1) Void Agreement
2) Minor and Ratification
3) Minor and Estoppel
4) Minor and Restitution
5) Minor and Necessaries
6) Agreement by Guardian on behalf of Minor
7) Minor can be promisee or Beneficiary
8) Minor as Agent
9) Minor as Partner
10) Surety for a Minor
NATURE OF MINOR AGREEMENT
11) Minor as Member of a company
12) Minor and Insolvency
13) Contract by Minor and Adult Jointly
14) Position of Minor’s Parents
15) Minor and Negotiable Instrument
VOID AGREEMENT
 As per Contract act 1872, a minor’s agreement is void
because a minor has no capacity to enter into a contract.
 Example:

A, a minor sold his house to B and received the payment,

later sale deed could not be registered because agreement
is void ab-initio and the amount was not recoverable.
MINOR AND RATIFICATION
 A minor's agreement is void ab-initio so it can not be
rectified by minor after attaining the age of majority.
 Example:

X a minor, issue a promissory note to Y, X can not be held

accountable for that particular note even after he/she
attain the age of majority. Neither Minor can rectified
such note after attaining the age of majority.
MINOR AND ESTOPPEL
 A person making false representation can be held
accountable by law.
 This law does not apply on minors.

 This law apply only on those who are competent to

contract.
 Example:

A, a minor fraudulently sell his car and received the

payment, later on refuse to transfer the car on the ground
that he is minor: in this case no action can be taken
against the minor.
MINOR AND RESTITUTION
 Minor can not be forced to pay back the money received
by him under any contract.
 As contract / agreement is void ab-initio.

 Example:

C a minor, received Rs. 50,000 in advance to sell a car to

D. Later, C refuse to perform the contract on the ground
of minority.
MINOR AND NECESSARIES
 A person who supply necessaries to the minor can
recover a reasonable value of such goods from minor
property.
 However, if no such property is there supplier will lose
the price of necessaries.
 Example:

A supplies necessaries to C, a minor for his life. A is

entitled to recover from C’s property. If C has no
property than A can not recover the values of services of
goods he provided.
AGREEMENT BY GUARDIAN ON
BEHALF OF MINOR
 Any contract made by the guardian for the sole benefit
and welfare of the minor is binding on the minor.
 While such contract is made within the authority.

 Example:

Sale of minor property for his/her benefit and welfare, may

be enforced by either party of the contract.
MINOR CAN BE PROMISEE OR
BENEFICIARY
 By law minor is capable to receive benefits .
 Any contract in which minor is not bearing any
obligation is valid.
 Example:

A promissory note executed in favor of minor is valid and

can be enforced in court.
MINOR AS AGENT
 Minor can act as agent but cannot be held responsible.
 However, minor can make Principal accountable in case
of any breach or obligation arise.
 Example:

A, a minor appointed as an agent by B. A make agreement

to sell B car make a valid agreement and bound B.
MINOR AS PARTNER
 A minor cannot become the partner of the firm.
 He can be admitted only in the benefits of the firm.

 Minor liability is limited to his investment in the

business.
 No role play in the management.

Example:
A B C are partners in a firm ask X the guardian of Z, to
make Z as a partner. Z can be admitted for the benefits of
the firm.
SURETY FOR A MINOR
 Guardian as a surety is responsible.
 Is responsible because he is directly involve in the
contract.
 Minor is not responsible as a surety.

Example:
Z a minor makes a contract X stands as a surety for Z.
Contract is valid.
MINOR AS MEMBER OF A COMPANY
 Is incompetent to contract cannot become member of a
company.
 In case of fully paid share minor can become shareholder
of the company.
 A has fully paid up shares in a company. He dies and
leave Z, a minor as legal representative. Company is
bound to transfer shares to Z.
MINOR AND INSOLVENCY
 Cannot be declared as insolvent.
 Even for the necessaries supplied.

 Not personally liable, only property in liable.

Example:
M a minor buy medicines from Z, M has no property
cannot be held liable for payment.
CONTRACT BY MINOR AND ADULT
JOINTLY
 Minor is not liable
 Only adult is liable

Example:
M, minor and A adult jointly enter into an agreement to
buy a car, contract is valid.
POSITION OF MINOR’S PARENTS
 Parents are not liable for the agreement made by the
minor.
Example:
F send his son M, a minor to buy goods from S. F is liable
for the payment.
MINOR AND NEGOTIABLE INSTRUMENT
 Minor can make, draw, endorse and deliver
 Bill of exchange

 Promissory note

 Cheques

To bind other parties except himself.

Example:
X draw bill on M, a minor, M accepts the bill. The bill is
invalid.