Contract Act 1872- Disqualified Persons

By Asok Nadhani

4.4 Disqualified Persons 

Persons not eligible to enter into a contract : Apart from minors and persons of unsound mind, the following persons are not eligible to enter into a contract in certain circumstances:

-        Alien Enemies,

-        Foreign Sovereigns,

-        Insolvents,

-        Body Corporate,

-        Convicts.

4.4.1 Agreements with Disqualified Persons 

1.     Aliens: Alien means a person of a foreign country.

a.     Alien friend : Contracts with alien friend (persons of a foreign country which is in peace with India) are valid subject to some restrictions.

b.    Alien enemy : Contracts with alien enemy (persons of a country which is in war with India) are void subject to following rules :

i.      Contracts made during war period: During war period (i.e., after the war is declared), an alien enemy can neither make a contract with an Indian, nor can sue in an Indian court, unless permitted by Central Government.

ii.    Contracts made before war:  Such contracts may be suspended (or dissolved if against public policy or it would benefit the enemy country). After the war is over, such pending contracts may be enforced unless they lapsed (time barred), or when permitted by Central Govt.

2.     Foreign Sovereigns: Diplomatic staff may enter into contract and can sue. They enjoy some special privilege and cannot be sued in Indian court unless they voluntarily submit to the court or when permitted by Central Government to be sued.

3.     Insolvents: Insolvent cannot enter into a contract. When a debtor is adjudged insolvent, his property is vested with the official assignee, who only can then enter into contracts relating to the property of the insolvent.

4.     Body Corporate: A Company or Body Corporate may enter into contract as permitted by its Memorandum of Association & Articles of Association.

5.     Convicts: A convict undergoing imprisonment cannot enter into a contract unless permitted by Central Govt. He can enter into a contract when he is lawfully at large, when he is pardoned or when his period of sentence expires. A contract already entered with a person who undergoes imprisonment cannot be enforced until the conviction is completed, unless permission from Central Government is obtained.

For more details, refer to Mercantile Law, by Asok Nadhani, BPB Publications, www.bpbonline.com, bpbpublications@gmail.com