BUSINESS LAW

Presented By:-Presented By:-

Sumit ChatterjeeSumit Chatterjee Sneha ChouhanSneha Chouhan Pranjali DangatPranjali Dangat Sunny D’souzaSunny D’souza Triveni RaoTriveni Rao

IntroductionIntroduction Indian Contract Act 1872Indian Contract Act 1872 is the main source of law  is the main source of law

regulating regulating contracts in  in Indian law, as subsequently , as subsequently amended.amended.

It determines the circumstances in which promise made It determines the circumstances in which promise made by the parties to a contract shall be legally binding on by the parties to a contract shall be legally binding on them. All of us enter into a number of contracts them. All of us enter into a number of contracts everyday knowingly or unknowingly. Each contract everyday knowingly or unknowingly. Each contract creates some right and duties upon the contracting creates some right and duties upon the contracting parties. Indian contract deals with the enforcement of parties. Indian contract deals with the enforcement of these rights and duties upon the parties.these rights and duties upon the parties.

The Indian Contract Act 1872 sections 1-75 came into The Indian Contract Act 1872 sections 1-75 came into force on 1 September force on 1 September 1872. It applies to the whole of . It applies to the whole of India except the state of Jammu and Kashmir.India except the state of Jammu and Kashmir.

Section 10 of the Contract Act requires that the parties Section 10 of the Contract Act requires that the parties must be competent to contract.must be competent to contract.

Section 11 of the Indian contract act states that every Section 11 of the Indian contract act states that every person is competent to contract, who is:-person is competent to contract, who is:-

Competency of the parties

competent to the contract.

the age of majority, who is of sound mind and who is not disqualified from contracting by law.

MINORITY

Idiot

UNSOUND MIND

lunatic

DISQULIFIED BY LAW

INCAPACITY

:

DRUNKED

ALIEN ENEMY CONVICTS CORPORATION

Following persons are incapable Following persons are incapable of competing to a contract:-of competing to a contract:-

A minor ,A minor ,

person of unsound mind and person of unsound mind and

person Disqualified by law cannot enter into person Disqualified by law cannot enter into contract Any contract with any such party contract Any contract with any such party will be void Ab intio.will be void Ab intio.

1. MINORS1. MINORS

1. MINORS1. MINORS A person who has not completed 18 A person who has not completed 18

years of age is called as minor. years of age is called as minor. 

In case a guardian to the person or In case a guardian to the person or property of the minor is appointed by the property of the minor is appointed by the court or the or the property of the minor court or the or the property of the minor is put under the charge of a court of is put under the charge of a court of wards, during the period of his minority.wards, during the period of his minority.

  Agreement with minor is VOIDAgreement with minor is VOID

decided case illustration decided case illustration In Mohiri Bibis case ,the minor had executed a In Mohiri Bibis case ,the minor had executed a

mortgage for the sum of Rs.20,000 out of which the mortgage for the sum of Rs.20,000 out of which the lender had paid the minor only about 8,000. The lender had paid the minor only about 8,000. The mortage filed a suit for the recovery of his mortgage mortage filed a suit for the recovery of his mortgage money and for sale of recovery of his mortgage money money and for sale of recovery of his mortgage money and for sale of the property in case of default .The and for sale of the property in case of default .The privy council held that an agreement by a minor was privy council held that an agreement by a minor was absolutely void as against him and therefore the absolutely void as against him and therefore the mortage could not recover mortage money nor could mortage could not recover mortage money nor could he have the minors property sold under his mortgagehe have the minors property sold under his mortgage

2. Person of 2. Person of Unsound MindUnsound Mind

Person of Unsound MindPerson of Unsound Mind

A person is said to be of sound mind A person is said to be of sound mind for the purpose of making a contractfor the purpose of making a contractif at the time when he makes it,if at the time when he makes it,he is capable of understanding it and he is capable of understanding it and of forming a rational judgment as to its of forming a rational judgment as to its effect upon his interests.effect upon his interests. A person A person who is usually of sound mind, but who is usually of sound mind, but occasionally of unsound mind, may not occasionally of unsound mind, may not make a contract when he is of make a contract when he is of unsound mind.unsound mind.

The idiot, lunatic and drunkards are The idiot, lunatic and drunkards are the person of unsound mind.the person of unsound mind.

Meaning of idiot, lunatic and Meaning of idiot, lunatic and drunkards and drunkardsdrunkards and drunkards

Idiot:Idiot: A person who is devoid of any faculties of thinking or rational A person who is devoid of any faculties of thinking or rational judgment is called an idiot . .all agreements other than those judgment is called an idiot . .all agreements other than those for necessaries of life, with idiots are absolutely void.for necessaries of life, with idiots are absolutely void.

Lunatics:Lunatics: A person whose mental powers are deranged is called a A person whose mental powers are deranged is called a lunatic. agreement made with lunatic ,except those made lunatic. agreement made with lunatic ,except those made during lucid intervals (period in which he is in his senses ) during lucid intervals (period in which he is in his senses )

For necessaries supplied to lunatic are valid. and the property For necessaries supplied to lunatic are valid. and the property of lunatic can be taken.of lunatic can be taken.

DrunkardsDrunkards: A person under the influence of drink or drugs : A person under the influence of drink or drugs stands on the same footing as lunatic. an agreement with stands on the same footing as lunatic. an agreement with drunker is void.drunker is void.

(a) A patient in a lunatic asylum, (a) A patient in a lunatic asylum, who is at intervals of sound mind, who is at intervals of sound mind, may contract during those may contract during those intervals.intervals.

(b) A sane man, who is delirious (b) A sane man, who is delirious from fever or who is so drunk that from fever or who is so drunk that he cannot understand the terms of he cannot understand the terms of a contract or form a rational a contract or form a rational judgment as to its effect on his judgment as to its effect on his interests, cannot contract whilst interests, cannot contract whilst

such delirium or drunkenness lastssuch delirium or drunkenness lasts..

illustrationsillustrations

3. Disqualified by law to 3. Disqualified by law to enter in contractenter in contract

Following are the people Following are the people disqualified by lawdisqualified by law

Alien enemyAlien enemy: A person who is not a citizen of : A person who is not a citizen of India is called an alien.India is called an alien.

ConvictsConvicts: convict is incapable of entering : convict is incapable of entering into contract .and the incapability ends when into contract .and the incapability ends when sentence expires or punishment  finish.sentence expires or punishment  finish.

CorporationCorporation: A company is artificial person : A company is artificial person created by law. it can only contract through created by law. it can only contract through its board of directors.its board of directors.

Section 11 of The Indian Contract Act specifies that every person is competent to contract provided:

He should not be a minor i.e. an individual who has not attained the age of majority i.e. 18 years.

He should be of sound mind while making a contract. A person with unsound mind cannot make a contract.

He is not a person who has been personally disqualified by law.