Capacity

Article 9

Article 9

The parties shall, when making a contract, have corresponding capacity for civil rights and civil conduct.

A party may, in accordance with the law, entrust an agent to make a contract.

Article 47

A contract entered into by a person with limited civil capacity may become valid only after ratification by his legal agent. However, a contract of such kind which is purely

profit-making or the making of which is compatible to the age, intelligence and mental

health of the person concerned needs no ratification by his legal agent.

The counterpart may urge the legal agent to give ratification within one month. Where

the legal agent does not respond, the non-response shall be deemed a refusal of

ratification. Pending the ratification, the bona fide counterpart has the right to rescind.

The rescission shall be made by a notice.

§ 12 Capacity to Contract (1) No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties. Capacity to contract may be partial and its existence in respect of a particular transaction may depend upon the nature of the transaction or upon other circumstances. (2) A natural person who manifests assent to a transaction has full legal capacity to incur contractual duties thereby unless he is (a) under guardianship, or (b) an infant, or (c) mentally ill or defective, or (d) intoxicated.

§ 13 Persons Affected by Guardianship

A person has no capacity to incur contractual duties if his property is under guardianship by reason of an adjudication of mental illness or defect.

§ 14 Infants

Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the person's eighteenth birthday.

Article 171. Invalidity of Transaction Concluded by Citizen Deemed to Lack Active Capacity

1. A transaction concluded by a citizen deemed to lack active capacity as a consequence of mental disorder shall be null.

Each of the parties to such a transaction shall be obliged to return to the other everything received in kind, and if it is impossible to return that received in kind, to compensate its value in money.

The party having active capacity shall be obliged, in addition, to compensate the other party for the real damage incurred by it, if the actively capable party knew or should have known about the incapacity of the other party.

2. In the interests of a citizen deemed to lack active capacity as a consequence of mental disorder, the transaction concluded by him may, at the demand of his trustee, be deemed by a court to be valid if it was concluded to the advantage of this citizen.

Article 172. Invalidity of Transaction Concluded by Minor Under Fourteen Years of Age

1. A transaction concluded by a minor who has not reached fourteen years of age (youth) shall be null. To such transaction shall apply the rules provided for by Article 171(1), paragraphs two and three, of this Code.

2. In the interests of the youth, a transaction concluded by him may at the demand of his parents, adoptive parents, or trustee be deemed by a court to be valid if it was concluded to the advantage of the youth.

3. The rules of this Article shall not extend to petty domestic and other transactions of youth which they have the right to conclude on their own in accordance with

Article 28 of this Code.

Article 173. Invalidity of Transaction of Legal Person Exceeding Limits of Its Legal Capacity

A transaction concluded by a legal person contrary to the purposes of activity expressly limited in its constituent documents, or by a legal person not having a license to engage in the respective activity, may be deemed by a court to be invalid upon the suit of this legal person, its founder (partner), the State agency effectuating control or supervision over the activity of the legal person if it is proved that the other party to the transaction knew or knowingly should have been aware of the illegality thereof.

Article 174. Consequences of Limitation of Powers to Conclude Transaction

If the powers of a person to conclude a transaction have been limited by a contract or the powers of an organ of a legal person by its constituent documents in comparison with those as determined in a power of attorney, in a law, or which may be considered obvious from the situation in which the transaction was concluded, and when concluding it such person or organ exceeded these limitations, the transaction may be deemed by a court to be invalid upon the suit of the person in whose interests the limitations were established only in instances when it can be proved that the other party to the transaction knew or knowingly should have been aware of the said limitations.

Article 175. Invalidity of Transaction Concluded by Minor from Fourteen to Eighteen Years of Age

1. A transaction concluded by a minor from fourteen to eighteen years of age without the consent of his parents, adoptive parents, or guardian in the instances when such consent is required in accordance with Article 26 of this Code may be deemed by a court to be invalid upon the suit of the parents, adoptive parents, or guardian. 

If such transaction has been deemed to be invalid, the rules provided for by Article 171(1), paragraphs two and three, of this Code shall apply respectively.

2. The rules of this Article shall not extend to transactions of minors who have come to have full active capacity.

Article 176. Invalidity of Transaction Concluded by Citizen Limited by Court in Active Capacity

1. A transaction relating to the disposition of property concluded without the consent of the guardian by a citizen limited by a court in active capacity as a consequence of alcohol or drug abuse may be deemed by a court to be invalid upon the suit of the guardian.

If such transaction has been deemed to be invalid, the rules provided for by Article 171(1), paragraphs two and three, of this Code shall apply respectively.

2. The rules of this Article shall not extend to petty domestic transactions which a citizen limited in active capacity has the right to conclude on his own in accordance with Article 30 of this Code.

Article 177. Invalidity of Transaction Concluded by Citizen Not Capable to Understand the Purport of His Actions and Directing Them

1. A transaction concluded by a citizen, although having active capacity but at the moment of concluding it being in a state when he was not capable to understand the purport of his actions or to direct them, may be deemed by a court to be invalid upon the suit of this citizen or other persons whose rights or interests protected by law have been violated as a result of the conclusion thereof.

2. A transaction concluded by a citizen who is subsequently deemed to lack active capacity may be deemed by a court to be invalid upon the suit of the trustee if it can be proved that at the moment of concluding the transaction the citizen was not capable of understanding the import of his actions or directing them.

3. If a transaction is deemed to be invalid on the grounds of this Code, the rules provided for by Article 171(1), paragraphs two and three, of this Code shall apply respectively.

Article 178. Invalidity of Transaction Concluded under Influence of Delusion

1. A transaction concluded under the influence of delusion having material significance may be deemed by a court to be invalid upon the suit of the party which acted under the influence of delusion.

Delusion as to the nature of a transaction, the identity, or such qualities of its subject which considerably reduce the possibility of using it for its purpose shall have material significance. Delusion as to the motives of a transaction shall not have material significance.

2. If a transaction is deemed to be invalid as concluded under the influence of delusion, the rules provided for by Article 167(2) of this Code shall apply respectively.

In addition, the party upon whose suit the transaction was deemed to be invalid shall have the right to demand from the other party compensation for real damage caused to it if it is proved that the delusion arose through the fault of the other party. If it not proved, the party at whose suit the transaction was deemed to be invalid shall be obliged to compensate the other party at its demand for real damage caused to it even if the delusion arose through circumstances beyond the control of the deluded party.