Incapacity in Contract Act

Lack of eligibility to enter into Contract is called Incapacity. Incapacity arises due to the following reasons. Incapacity due to Status, Incapacity due to Mental Deficiency, Incapacity due to Unsound Mind

What is Incapacity to contract due to Status


Foreign Rulers: The effect of Contracts made with foreign rulers will differ from England law to Indian Law. According to England law, England citizens can enter into Contracts with their foreign rulers. In case where the foreign ruler breaches the Contract, England citizen can sue the foreign ruler only when such foreign ruler has given permission to Sue.

  • A case on this point is Mighel Vs Sulthan of Johore. In this case Ms. Mighel an England citizen. Sulthan of Johore is a foreign ruler. A marriage agreement has got formed between them. But Sulthan breaches that agreement. Mighel Sues. It is to be noted that she has filed the suit without permission from Sulthan. So her suit is striked off.

According to Indian law, Indian citizens can enter into contracts with foreign rulers. If that foreign ruler breaches the Contract and Indian citizen wants to file a suit, permission from Central Government is required.

Aliens: Aliens are foreign people who have obtained citizenship in one Country (other than their own) in accordance with the Constitutional law. The Contract made with aliens become Void when war breaks out, between the two Countries.

  • A case on this point is Metropolitan Water Board Vs Dick Kerr and Company. In this case Metropolitan water board is a municipality board. On one occasion, It wants to Construct a dam. In this Connection it enters into a Contract with engineers who are aliens. The Contract is breached. Afterwards War breaks out between the nations. Thereafter the water board files a suit and Court decides that their Contract has lost Validity. Soon after declaration of war.

Convicts: Convicts means prisoners. So long as they are in the Prison, they have no capacity to enter into a Contracts. After completion of Period of imprisonment, they can enter into Contracts. Contract made by them attain Validity when they are made at the time ticket of leave.

Insolvent Persons: Insolvent persons have no eligibility to enter into Contracts. Therefore Official receiver of the insolvent person enters into Contracts in Connection with Sale of insolvent persons property.

Professional Disqualification: In India there is no profession based Incapacity. Professional disqualification is seen in England. Physicians (doctors) from Royal medical College cannot enter into Contracts with their patients. Similarly barristers cannot enter into Contracts with their clients.

Married Woman: Married Woman has capacity to Contract. If that Contract is in connection with necessaries, She is capable of making her husband liable to sent the consideration concerned. If the Contract is related to luxuries, her husband is not liable.

Companies and Corporations: These are artificial persons created by law like a natural person, companies and corporations can enter into Contracts.

What is Incapacity to contract due to Mental Deficiency


Mental deficiency means lack of mental maturity. Minor suffer from mental deficiency. According to Indian law those persons who have not completed the age of 18 years and in England those who have not completed 21 years become minors.

What is Incapacity to contract due to Unsound Mind


The following persons suffer from Unsound mind.

Idiots: Idiots are the persons who suffer from Unsound mind from birth itself. Therefore they cannot enter into Contracts throughout their life. In such a way they suffer from permanent Incapacity.

Insane Persons: Insane persons will have two states namely; state of Sanity and State of Insanity. During state of Sanity, they can enter into Contracts. Thus they suffer from temporary Incapacity.

Drunkards: These persons also suffer from Unsound mind temporary after getting recovered from the effect, they can enter into Contracts.

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