CAPACITY TO CONTRACT

S.10 requires that the parties must be competent to contract. S.11

defines who are competent to contract. Every person who has
attained majority and of sound mind and not barred by law is
competent. Thus, minors, persons of unsound mind and persons
disqualified by law are incompetent to contract. The age of the
majority is 18, but where a guardian is appointed, it is 21.
MINOR PERSONS1
Neither s.10 nor s.11 makes it clear whether, if a minor enters into an
agreement, it would be voidable at his option or altogether void.
However, after the decision in Mohoribibi case, it is now well settled
that a minor’s agreement is absolutely void. A minor cannot make a
promise enforceable in law (Raja Rani case). The ‘specific
performance’ of a contract (actual carrying out of the contract as
agreed) is not possible in the case of an agreement by a minor.
The rationale behind this: the general presumption is that every man
is the best judge of his own interest. However, it is suspended in case
of children. The law acts as the guardian of minors and protect their
rights, because their mental faculties are not mature.
However, if a parent or guardian of a minor can contract on behalf of
the minor. If the contract is withing the competence of the guardian
and it is for the benefit of the minor it is specifically
enforceable(Subrahmanyam v Rao 1949). The minor will be bound
with such contract and could obtain specific performance of the
contract.
In modern circumstances, it is impossible to categorically declare that
a minor’s agreement is always “absolutely void”. Today, minors are

1
Explain the law relating to minor’s Agreements
“minority can only be claimed as a shield but not as a sword.” Explain the statement and mention the
situations when a minor is liable under the law of contract.
frequently involved in contractual transactions e.g. travel, education,
shopping, entertainment, etc.
A minor’s agreement being void, ordinarily it should be wholly devoid
of all effects(except where the contract is for the benefit of minor). As
there is no contract, all the effects of a minor’s agreement must be
worked out independently of any contract.
1. No estoppel against Minor
As per s.115 of Evidence act, a matter represented as true
cannot be denied in any further proceedings. When a minor
misrepresents himself as a major, does the law of estoppel in
s.115 prevent him from alleging that he was a minor when the
contract is made?
It is now well settled that there is no such estoppel against the
minor even if he has acted fraudulently. The minor is not
estopped from setting up the defence of minority. There can be
no estoppel against a statute which has declared a minor’s
contract to be void. (sadiq Ali v Jai Kishore 1928)
2. No liability in contract or in Tort arising out of contract
A minor may be liable in tort generally. However, he will not be
liable for a tort arising out of contract, for the reason that such
liability is an indirect way of enforcing his agreement.
3. Doctrine of restitution
As per English law: if the minor has unjustly enriched himself,
equity demands that such property or goods be restored. In
Leslie v Sheill, the court laid down 3 propositions of this
doctrine:
a. If an infant obtains property or goods by misrepresenting his
age, he can be compelled to restore it, but only so long as the
same is traceable in his possession.
b. Where the infant has sold the goods or converted them, he
cannot be made to repay the value of goods, because that
would amount to enforcing a void contract.
c. The doctrine of restitution is not applied where the infant has
obtained cash instead of goods, for ‘restitution stopped
where repayment began’. Since it is difficult to identify money
and to prove whether it is the same money or different one,
the doctrine.
Indian law: the same is applicable in India with some
modifications:
Mohiribibi v Dharmodas 1903 – a minor executed a mortgage
for 20k. the mortgagee filed a suit for recovery of his money and
sale of property in case of default. Held, agreement by a minor
is absolutely void. Therefore, neither money can be recovered or
property can be sold.