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Persons disqualified by law

  • Alien enemy: A person who is not an Indian citizen is called an alien. An alien enemy is a person whose country is at war with the Republic of India. A contract with an alien enemy is void, but a contract with an alien friend is valid. A contract entered with an alien friend during peace, will be rendered void on the outbreak of a war with that country. In certain cases (if chances of ending the war is within a short period), a contract made before the outbreak of the war may be suspended during the course of the war and shall be performed after the war is over. However, the government can put restrictions on the performance of such contracts if it considers it necessary, on the basis of national interest.
  • Foreign sovereigns and diplomats: Foreign sovereigns and diplomats have some special privileges and generally cannot be sued unless they, themselves surrender under the jurisdiction of our Court of law. They can enter into contracts and enforce those contracts in our Courts, but an Indian citizen has to obtain a prior sanction of the Central Government, in order to sue them in our Court of law.
  • Convicts: A convicted person, during the period of imprisonment, cannot enter into a contract. After the imprisonment is over, he becomes capable of entering into a contract. Sometimes, he is granted a ticket of leave termed as period of parole. During this period of leave, he can enter into a contract.
  • Insolvent: An insolvent is a person whose debts are more than his assets. When a person is declared as an insolvent, his property will vest with the Official Receiver or Official Assignee appointed by the Court. The Official Receiver/Assignee can sell the assets and distribute the sale proceeds among the creditors of the insolvent. The insolvent is disqualified from entering into a contract until he is discharged by the court. Once he is discharged from the liabilities, he can enter into a valid contract.
  • Corporations: A Corporation is an artificial person created by law. It has a separate legal existence. It can have a property in its own name, but it has no physical existence. Hence, it cannot enter into certain contracts such as contracts of personal nature. The contractual capacity of the Company and the Statutory Corporation is summarised as under:
    • In case of a Company its contractual capacity is determined by the ‘Object Clause’ of its Memorandum of Association
    • In case of a Statutory Corporation- its contractual capacity is determined by the statute creating it
Any act done in excess of the power given is ultra vires (i.e. beyond power), hence void.


Note: As Corporations are arti cial persons, they cannot enter into the contracts of personal nature. Example : Contract of marriage.

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