According to section 10 of Indian Contract Act-1872, an essential ingredient of a valid contract is that the contracting parties must be “competent to contract’. Section 11 lays down that “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 is not disqualified from contracting by any law to which he is subject.” Thus the section declares that a person is incompetent to contract under the following circumstances:
· If he is a minor according to the law to which he is subject,
· If he is of unsound mind, and
· If he is disqualified from contracting by any law to which he is subject.
Thus minors, persons of unsound mind and persons disqualified by law are incompetent to contract.
Legal capacity
Not all people are completely free to enter into a valid contract. The contracts of the groups of people listed below involve problematic consent, and are dealt with separately, as follows:- people who have a mental impairment;
- young people (minors);
- bankrupts;
- corporations (people acting on behalf of a company); and
- prisoners.
- What is Free Consent?
- Effects of Undue Influence
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Competence to a contract
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