PERSON DISQUALIFIED FROM CONTRACTING

Determine the validity of the contract in the given cases. Also, support your answer with reason.

1. Country ‘X’ is at war with India. ‘A’ (resident of Country X) enters into a contract with an Indian citizen ‘B’.

2. ‘C’ was held liable for committing the offence of murder and sentenced to imprisonment. After serving the term of imprisonment he was released from the jail. Afterwards, he entered into a contract with ‘D’ for the sale of the property.

According to Section 11 of the Indian Contract Act if a person is a Major, Sound mind and not disqualified by law then he is considered to be competent to Contract.

Persons disqualified by law include alien enemies, convicts, insolvents, joint companies and corporations and foreign sovereigns and ambassadors.
In light of the above provision-

1. An alien enemy refers to an individual whose country is at war with India. Such a person is disqualified by law from entering into a valid contract. In the given case, ‘A’ is an alien enemy and incompetent to enter into a contract. Thus the contract entered by him is a void contract and cannot be enforced in the court of law.

2. A person who has been convicted and sentenced by a competent court to death or imprisonment is disqualified from entering into contracts while serving their sentence. However, once their sentence is over or they are granted a pardon, their competency is restored.

In the given case, ‘C’ being a convicted person is incompetent to contract while serving the sentence. But after serving the sentence the competency of ‘C’ is restored and disqualification is lifted. Thus the contract entered between ‘C’ and ‘D’ is valid and enforceable.