According to the Indian Contract Act, 1872, section 11 explains the capacity to contract.
SECTION 11- WHO ARE COMPETENT TO CONTRACT
“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.”[1]
INCAPACITY THROUGH STATUS
Contractual incompetency may come from, Professional status, artificial status, marital status, Political status, etc. Persons who lacked capacity, due to their status are wholly or partially under section 11 of the Indian Contracts Act, disqualified from entering into a contract. Besides, minors and persons of unsound mind, persons disqualified by law, are also barred from contracting depending upon which they are subject.
POLITICAL STATUS
- ALIEN ENEMY
An alien is a person who belongs to a country other than India. There will be either an alien friend or an alien enemy. An alien friend belongs to the country which is at peace with India and those people usually have the contractual capacity to make contracts with Indian citizens. However, some limitations exist. The alien enemy is from a country at war with India. The contractual position of such a person may be divided into two categories: contracts made during wartime and contracts made before wartime. In the first case, he cannot enter into the contract with Indian citizens and even he cannot suit regarding the contracts with Indians in Indian courts, except only in the case of possessing a license from the central government. Contracts made before the outbreak of the war are either dissolved or suspended.
Contracts that do not violate public policy are simply barred from performing for the period of conflict and resurrected only after the completion of the war, supposing those shouldn’t already become time-barred under the law of limitations. It should be noted that a citizen of India who deliberately settles or does business in an enemy country would be viewed as an alien enemy.
- AMBASSADORS AND FOREIGN SOVEREIGNS
Foreign sovereigns and ambassadors have certain advantages. They will not be able to be sued in Indian courts if they consent to surrender to our jurisdiction. They could agree and execute them in Indian courts, although they cannot be brought to trial in our courts besides the Centre’s permission. This indicates protection persists even if he engages in trading. Nonetheless, if a non-resident of India, for example, engages in a deal with an Indian representative, the contract holds the agency liable. The situations when the Central Government might provide authority to suit an ambassador were stated in Engelke vs. Musmann, 1928. They are first, when the individual had filed a lawsuit against the one who wants to sue him secondly when he had explicitly or implicitly relinquished the privileges. Thirdly, when he conducts trade under the court’s jurisdiction or is a trade of immovable property and he is to be prosecuted in relation to that.
FINANCIAL STATUS
- INSOLVENTS
When a borrower declares bankruptcy, his/her property is turned over to the Judge appointed “Official Receiver or Official Assignee.” He/she is not allowed to be involved in real estate transactions or lodge a suit against his/her representation. When he is relieved, his restriction is removed.
LEGAL STATUS
- FELONS AND CONVICTS
A felon is not qualified to enter during the continuance of the term of imprisonment he is undergoing through. After the punishment period has expired, this restriction will end. Even on parole or after pardoning by the law, a convicted criminal can enter into or sue on a contract.
ARTIFICIAL STATUS
- CORPORATIONS
A corporation or a firm is an artificial person. It has existed in the eyes of the law, and its competence to contract is specified by its constituent memorandum. The statutory corporation’s contractual ability is specifically defined in the Act that established it. The objectives clause of a company’s memorandum of association determines its contractual competence under the Companies Act. Any conduct performed more than the authority granted in the memorandum is null and invalid.
MARTIAL STATUS
- MARRIED WOMEN
A married woman lacks the legal competence to engage in a contract involving her husband’s property. Nevertheless, if her husband fails to supply her with the necessities, the woman might act as his agent and bind the husband’s property.
Author’s Name: KVS Varsha (Damodaram Sanjivayya National Law University, Visakhapatnam)
[1] Indian Contract Act 1872, section 11.
