BUSINESS AND LABOR LAW
IQRA National University Peshawar
CAPACITY OF PARTIES
PRESENTED BY: MAHAM SHAH
CAPACITY OF PARTIES
Competent to contract
The contracting parties must be competent to
A minor is a person who has not attained 18
years of age
NATURE OF MINOR’S AGREEMENTThe 15 rules regarding minor’s agreement are:
1. Void Agreement
2. Minor and Ratification
3. Minor and Estoppel
4. Minor and Repayment
5. Minor and Necessaries
6. Agreement on Behalf of Minor
7. Minor as beneficiary
8. Minor as Agent
9. Minor as Partner
10. Surety for Minor
11. Minor as Member of Company
12. Minor and Insolvency
13.Contract by Minor and Adult
14.Liability of Minor’s parent
15.Minor and Negotiable Instruments
• An agreement with minor is void.
• A minor is not liable to perform any act.
Minor and Ratification
• It means the acceptance of an act which is
Minor and Estoppel
• The rule of estoppel does not apply on the
Minor and Repayment
• Minor has to repay if the court orders
Minor and Necessaries
• A person who supplies necessaries to a minor
or his dependents can recover reasonable
value from his property
Agreement on Behalf of Minor
• An agreement can be made by the guardian
on behalf of a minor
Minor as Beneficiary
• Any contract is valid if it is made for the
Minor as Agent
• Minor can make his principal responsible to
Minor as Partner
• A minor can’t become a partner of a firm.
Surety for Minor
• When an adult stands surety for a minor in
contract of agreement.
Minor as a Member of Company
• He cannot directly buy shares of a company
because he is not competent to contract.
Minor and Insolvency
• A minor cannot be declared insolvent.
Contract by Minor and Adult
• When a minor and an adult jointly enter into a
contract with another person
Liability of Minor’s Parents
• Parents of a minor are not liable for
agreement made by the minor.
Minor and Negotiable Instruments
• A minor can make and deliver bill of
Person of Unsound Mind
For a valid contract it is necessary that each
party to the contract must have sound mind.
A person must be able to understand the nature
of contract. When he makes it, he is capable of
understanding it and of forming a rational
judgment as to its effects upon his interests.
Effect on Agreement
An agreement by a person of unsound mind is
void but he can get benefits under it.
Burden of Proof
Burden of proof can be define the duty upon a
party to prove or disprove a disputed fact.
The following persons are disqualified from
1)Joint Stock Company
A joint stock company cannot enter into a contract
outside the powers given to the company by its
Memorandum of Association.
The diplomatic agent means the staff of diplomatic
mission of a foreign country in Pakistan.
An alien whose country is at war with Pakistan is an
An insolvent person cannot enter in to a
contract with any one
A convict is a person who is imprisoned by the
court. During the period of sentence, he cannot
enter into a contract.