Unit 3: Formation of Contract — Capacity to Contract (Meaning; Incapacity by Minors, Persons of Unsound Mind, Disqualified Persons; Legal Consequences of Contract with Incapacitated Persons); Party Autonomy and Limitations on Freedom of Contract; Offer (Meaning; Rules of Valid Offer; Types; Communication including Electronic Communications and Emails; Revocation and Termination; Offer and General Invitation to Treat); Acceptance (Meaning; Rules; Communication Effectiveness: by Performance, Promissory Acceptance, Acceptance by Silence or Inaction, Electronic Acceptance; Revocation and Termination; Proposal Presented Before the Public); Consideration (Meaning and Nature — Nudum Pactum; Rules, Unlawful Consideration and Its Effect; Kinds and Adequacy; Doctrine of Privity of Contract and Consideration: Exceptions; Doctrine of Promissory Estoppel; Nepalese Provisions)
1. Capacity to Contract
Meaning: the parties’ legal competence to bind themselves — the Code 2074’s design (Section 506’s family): every natural person presumptively capable, with the three incapacity classes:
- Minors (below 18): the age-of-majority rule (the majority at 18 under the Code’s personality part); the minor’s contract: voidable/void by the Nepali design — the protection’s logic (the minor shielded, the adult party bearing the risk): the necessaries-supplied exception (the minor’s estate charged for necessaries — the quasi-contract of Unit 2); the restitution-and-no-profit rule (the minor’s enrichment returnable where the benefit remains — the justice balance);
- Persons of unsound mind: the lucid-interval doctrine (capacity’s fluctuation); the guardianship’s interface (Family Law, this semester, Unit 4); the necessaries exception’s parallel application;
- Disqualified persons: the insolvent’s property-disposition bar; the civil-rights-conviction consequences; the alien’s-and-foreign-state restrictions (PIL-I’s jurisdictional frame, Semester 3).
Legal consequences of incapacity-contracts: the void-or-voidable protection (the incapacitated party’s avoidance; the other party bound by the avoidance — the asymmetry deliberate); the restitution’s limits; the ratification question (the minor’s attaining majority — the fresh-contract requirement over the ratification of the void; the Code’s position stated functionally).
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