What is Capacity of Parties?
Indian Contract Act, 1872 is a central law, and it validates the Contracts or Agreements between various parties. Contract Act regulates and oversees all the business in case of any deal or an agreement. The Indian Contract Act, 1872 defines the term “Contract” under its Section 2(h) as “An agreement enforceable by law”. Hence, a Contract is anything that is an agreement and enforceable by the law of the land.
Geeky Takeaways:
- The parties to a contract should understand the concept of Capacity to Contract to make informed decisions and save themselves from any loss or damages due to the consequences that might occur by contracting with a party who is incapacitated to contract.
- The competency of parties to a contract is an important requirement to make an agreement valid, and the contract will be enforceable in a court of law only if the parties to the contract are competent.
- In the business world, corporations pay important considerations while entering into contracts with another party to safeguard their interests. Representation and Indemnification are the two most commonly used clauses to make sure that both parties are competent to contract.
Table of Content
- What Agreements are Contracts?
- Capacity to Contract
- Legal Requirements for a person entering into a Contract
- Conclusion
- Capacity of Parties – FAQs