CAPACITY

to
CONTRACT
 CAPACITY TO
CONTRACT
Everyone is competent
(i) who is of the age of majority;
(ii) who is of sound mind; and
(iii) who is not disqualified from
contracting by any law.
Contracts by a
Minor

- A ‘minor’ is a person who has not

completed the age of 18 years. Under
the Indian law a minor in not
competent to contract.
- In some cases, majority comes after
21 years of age.
Minor’s agreements :
Points of discussion

1. A minor’s contract is absolutely void

ab initio
Case:Mohori Bibi v. Dharmodas Ghose

2. He can be a promisee or a
beneficiary.
e.g : minor bought a scooter, major
cannot refuse.
3. His agreement cannot be ratified by
him on attaining the age of majority.

Case:
Smith v. king
(short sell on
stock exchange-debt)
4. If he has received any benefit under a void
agreement, he cannot be asked to compensate or
pay for it. (Mohiri Bibi case)
5. He can always plead minority.
(in case of misrepresentation, tort and fraud too,
not liable but he has to restore the benefit))
6. There can be no specific performance of the
agreements entered into by him as they are void
ab initio.
Exception : contract by guardians for minor’s benefit.
7. He cannot enter into a contract of partnership.
(but can be receive benefits)
8. He cannot be adjudged insolvent.
9. He is liable for necessaries.
(not personally but out of his property)
- loans incurred to obtain necessaries.
10. He can be an agent.
11. His parents/guardians are not liable for the
contract entered into by him, even though the
contract is for the supply of necessaries to the
minor.
- parents/guardians liable if minor is acting as
an agent for them.
12. A minor is liable in tort. (but not out of a
contract)
 Problem
• A minor bought 11 fancy coats from Rahul. He
was at that time adequately provided with
clothes.
• Is minor liable to pay for any of the 11 coats?
 Problem
• A executed a promissory note in favor of B
while he was a minor. The promissiory note
was renewed by A in favor of B when he
attained the age of majority.
• B brings a suit in against A on the basis of
second promise. Will he succeed ?
 Persons of Unsound Mind
A person is said to be of sound mind for
the purpose of making a contract if, at
the time when he makes it,
he is capable of understanding it and
of forming a rational judgement as to
its effect upon his interests.
Contd…
1. Lunatics
2. Idiots
3. Drunken/ Intoxicated persons
 Persons disqualified by law
1. Alien enemies
- contracts made during the war
- Invalid
- contracts made before the war.
-Valid
2. Corporations
3. Insolvents
4. Convicts
5. Married Women
6. Foreign Ambassadors