Ans.
DISQUALIFIED PERSONS
The
third type of incompetent persons, as per Section 11, is those who are
"disqualified from contracting by any law to which they are subject."
These are:
1. Alien enemies
An
alien (a person of a foreign country) living in India can enter into contracts
with citizens of India during peace time only, and that too subject to any
restrictions imposed by the Government in that respect. On the declaration of a
war between his country and India, he becomes an alien enemy and cannot enter
into contracts. Alien friend can contract but an alien enemy can't contract.
A
contract entered into with an alien enemy before the declaration of war shall
be suspended until the war is over. However, the existing contract can be
revived after the completion of war or with the approval of the central
government.
2. Foreign sovereigns and ambassadors
One has
to be cautious while entering into contracts with foreign sovereigns and ambassadors,
because whereas they can sue others to enforce the contracts. They cannot be
sued in the Indian Courts, except in the following two cases:
a. Where
they voluntarily submit themselves to the Court.
b. Where
the person intending to sue them obtains the approval of the Central
Government.
Thus
they are in privileged position and are ordinarily considered incompetent to
contract.
3. Convict
A
convict is one who is found guilty and is imprisoned. During the period of
imprisonment, a convict is incompetent (a) to enter into contracts, and (b) to
sue on contracts made before conviction. On the expiry of the sentence, he is
at liberty to institute a suit and the Law of Limitation is held in abeyance
during the period of his sentence.
4. Insolvent
An
adjudged insolvent (before an 'order of discharge') is competent to enter into
certain types of contracts i.e. he can incur debts, purchase property or be an
employee but he cannot sell his property which vests in the Official Receiver.
Before 'discharge' he also suffers from certain disqualifications e.g., he
cannot be a magistrate or a director of a company or a member of local body but
he has the contractual capacity except with respect to his property. After the
'order of discharge', he is just like an ordinary citizen.
5. Joint-stock company and corporation (Example:
LIC, RBI, SEBI, etc.)
A
company/Corporation is an artificial person created by law. It cannot enter
into contracts outside the powers conferred upon it by its Memorandum of
Association or by the provisions of its special Act, as the case may be. Again,
being an artificial person (and not a natural person) it cannot enter into
contracts of strictly personal nature e.g., marriage.
