Page 50 - DMGT102_MERCANTILE_LAWS_I

Mercantile Laws-I

Notes Illegal consideration: Renders a contract void.

Lunatic: It is a person who is mentally deranged due to some mental strain or other personal
experience.
Restrictive trade agreements: Trade combinations and restrictive trade practices are not treated
as void simply because they restrain some party or the other from freedom of occupation.
Service agreements: An agreement of service by which a person binds himself during the term
of the agreement not to take service with anyone else or directly or indirectly take part in or
promote or aid any business in direct competition with that of his employer is valid.

3.8 Self Assessment

Fill in the blanks:
1. A ............................. cannot be a partner in a partnership fi rm.
2. ............................. provides that a minor’s estate is liable to a person who supplies necessaries
of life to a minor, or to one whom the minor is legally bound to support, according to his
station in life, not on the basis of any contract, but on the basis of an obligation resembling
a contract.
3. A minor’s estate is ............................. not only for the necessary goods but also for the
necessary services rendered to him.

4. A person adjudicated as ............................. is incompetent to contract until he obtains a
certificate of discharge from the court.

5. An ............................. made without consideration is valid if it is expressed in writing and is
registered under the law relating to registration of documents and is made an account of
natural love and affection between parties standing in a near relation to each other.

6. ............................. renders a contract void.
7. An agreement which ............................. with morals of the time and contravenes any
established interest of society is void as being against public policy.
8. ............................. provides that “every agreement by which any one is restrained from
exercising a lawful profession, trade or business of any kind is, to that extent, void”.
9. Every person has a right to have recourse to the usual ............................. .
10. Section 28 renders void another kind of agreement, namely, whereby an attempt is made
by the parties to restrict the time within which an action may be brought so as to make it
shorter than that prescribed by the ............................. .

3.9 Review Questions

1. Who is competent to contract?
2. What determines enough maturity to make a contract?

3. Can anyone enter into a contract?
4. When does mental incompetence prohibit a valid contract? Is minor competent to
contract?
5. “A minor’s estate is liable for necessaries of life supplied”. Comment.

6. “Insufficiency of consideration is immaterial but an agreement without consideration is
void”. Comment.

44 LOVELY PROFESSIONAL UNIVERSITY