Competent Parties for Valid Contract

To be valid contract, the parties to the contract should have contractual capacity according to law. Here the term contractual capacity denote the “capacity recognize by the law to do the contract.”

Every person is presumed to be competent to enter into the contract, and if any one claims exemptions from liability on the ground of incapacity to contract he must strictly prove such capacity.

 

In context of Nepal

The Nepalese Contract Act 2056 Section 3 mention “Any person other than those mentioned below may conclude contract.

1. One who has not attained 16 years of age
2. One who is of unsound mind

“But the guardian of minors and insane may, in their interest, conclude contracts on behalf of minor and insane”

3. One who is disqualified by law – Like Foreign Enemy, Married Women, and criminal who is taking punishment, insolvent.

Minor

Generally, in Nepal person who less than 16 years is treated as the minor and According to NCA 2056 Section 3 they are not competent to enter into the contract.

But if we look into the provision of India and UK person under 18 years of old is minor. Here the nature of law i.e. law varies place to place plays a role.

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

1. They don’t know the result of their act
2. They can’t analyze the benefit and loss.

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 i.e.

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.