Capacity to conclude a contract in Nepal

1. Capacity to
Conclude a Contract
Presented by: (Group 2)
Anamol Sapkota ● Ista Maharjan ● Jasmine Nakarmi
Pradeep Adhikari ● Shailsuman Singh ● Sujan Acharya
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2. Outline
 Contract
 Who are capable/incapable?
 Rules Regarding Minors agreement
 Legal Provisions of India and Nepal
 Who are capable?
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Tuesday, March 14, 2017

3. Contract
 Nepal: Section 2 (a) of Contract Act, 2056 (2000) defines
contract as:
 'Contract' means an agreement enforceable by law concluded
between two or more parties for performing or not performing
any work.
 India: Section 2 of Contract Act 1872 defines contract as:
 ‘Contract’ is an agreement enforceable by law.
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4. Contract (Contd.)
 Salmond: “Contract is an agreement creating and defining
obligation between the parties.”
 F. Pollock: “A contract is a promise or set of promise for the
breach of which law provide remedy.”
 Elements for a contract: Two or more parties, Agreement,
Enforceable by law, Condition (do or not)
 Set of Promise + Some consideration = Agreement
 Agreement + Enforceable by law = Contract
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5. Who are Capable/Incapable?
A person can conclude a contract who is:
 Section 3: a. Above 16 years of age
b. Of sound mind i.e. not insane
 Qualified to enter into a specific contract under the prevailing law
 Guardian of an incompetent under Section 3 on his/her behalf in
his interest
 Incompetent person under Section 3 (if prevailing law provides a
provision to conclude a contract on any specific matter)
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6. Who are Capable/Incapable? (Contd.)
Minor Why not?
 Generally minor could not enter into a valid contract and
contract with minor is void ab initio as per section 13 of NCA
2056. The principle behind this is:
 a. They don’t know the result of their act
 b. They can’t analyse the benefit and loss
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7. Who are Capable/Incapable? (Contd.)
 But there are certain circumstance where contract with and
by minor is valid. Those are governing by the rules regarding
minor agreement/contract. The rules governing minor
agreement/contract are based on two fundamental
principles:
 1. The law must protect the minor against his inexperience
 2. The law should not cause unnecessary hardship to an adult
who deals fairly with minors.
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8. Rules Regarding Minors
agreement
 An agreement with or by minor is void ab initio
 The ratification after attaining the age of majority is not valid
 Principle of estoppel doesn’t apply to the minor
 Minor can be beneficiary or promise
 A minor cannot be a partner but can be admitted to the benefits of
partnerships
 A minor can be a agent
 Minor can be liable for necessaries
 A lawful guardian may make a contract for the benefit of minor
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9. Legal Provision of India and Nepal
 Who are capable?
 India: Age of majority by the law (age not mentioned)
 Nepal: Mentions above 16 years of age
 India: Sound mind (defines sound mind; person usually of
unsound mind, but occasionally of sound mind, may make a
contract when of sound mind but who is usually of sound
mind, but occasionally of unsound mind, may not make a
contract when he is of unsound mind.)
 Nepal: Sound mind (does not define sound mind)
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10. References
 Contract Act, 2056 (2000) of Nepal
 Contract Act, 1872 of India
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