CAPACITY TO CONTRACT

SECTION 11: Who are competent to Contract

Every person is competent to contact who is of the age of majority according to law to which he is
governed and who is of sound mind, and is not disqualified from contraction by any law to which he
is subject.

Thus the section includes following persons to be incompetent to contract

1) Minors
2) Persons of Sound Mind
3) Persons disqualified by law to which they are subject

AGE OF MAJORITY

The age of Majority of a person is to be determined “according to the law to which he is subject”\

Why Minor’s Contract is Void?

A child may show poor judgement in making a particular contract and it is a protection against his
own ignorance and immaturity – not merely fraudulent manipulation by others that the law affords.
The general presumption that every man is the best judge of his own interests is suspended in the
case of children.

In England also the Infant’s Relief Act of 1874 declares the following categories of a minor’s
agreement to be “Absolutely Void”

 Contract for repayment if money lent or to be lent or,

 Contract for goods supplied or to be supplied, and
 Contract for Accounts Stated

EFFECT OF MINOR’S AGREEMENT

1) No estoppel against Minor

Suppose that a minor by misrepresenting his age induces another to contract with him, will there be
any estopple against him, or, in other words, will he be precluded from disclosing his true age in a
litigation resulting from the contract? This was answered in the case of GadigeppabhimappaMeti v.
BalangowdaBhimangowda where in it was held that “ The Court is of Opinion that where an infant
represents fraudulently or otherwise that he is of age and thereby induces another to enter into a
contract with him then in an action founded on the contract the infant is not estopped from setting
up infancy.

Therefore If a minor induces another to contract with him by misrepresenting his age, then he is not
estopped from setting up the defence of infancy
 2) No liability in contract or in tort arising of Contract

A minor is in law incapable of giving consent, and there being no consent, there could be no
change in the character or status of parties. In England it was laid down as early as 1665 in
Johnson v. Pye that

“ An infant who obtains a loan of money by falsely representing his age cannot be made to repay
the amount of the loan in the form of damages to deceit”

3) Doctrine of Restituion

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. This is known as doctrine of Restitution.

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.

LESLIE(R) LTD. V. SHEILL

An infant succeeded in deceiving some money lenders by telling them a lie about his age, and so got
them to lend him 400 Pounds on faith of his being an adult.

Their attempt to recover the amount of principle and interest as damages for fraud failed because
under the statute the principal which at common law relieved an infant from liability for a tort
directly connected with a voidable contract, namely, that it was impossible to enforce in a
roundabout way an unenforceable contract, equally forbids the courts of law to allow a proceeding
to enforce part of a contract, which the statute declares to be wholly void.

Minor seeking Relief, compellable to Restore

Where an infant revokes the aid of the court for the cancellation of his contract, the court may grant
the relief subject to the condition that he shall restore all benefits obtained by him under the
contract, or make suitable compensation to the other party( JagarNath Singh v. Lalta Prasad)

MOHIRI BIBI V. DHURMODAS GHOSE

The plaintiff, a minor, mortgaged his houses in favour of the defendant, a money lender, to secure a
loan of Rs. 20,000. A part of this amount was actually advanced to him. While considering the
proposed advance, the attorney, who was acting for money lender, received information that the
plaintiff was still a minor, subsequently the infant commenced this action stating that he was
underage when he executed the mortgage and the same should therefore be cancelled.

The relief of cancellation had to be granted as the plaintiff was entitled to it under section 39 of the
Specific Relief Act, 1877(Section 31 of 1963). The Money lender’s only request was that the relief
should be granted subject to the condition of the minor repaying to him the sum of Rs 10,500
advanced as part of the consideration for the mortgage. He first relied upon section 64 of the
contract act. According to this section a person who, having the right to do so, rescinds a voidable
contract, he shall have to restore to the other party any benefit received by him under the contract.
The Privy council held that this section applies only to voidable contract and cannot be applied to the
agreement of minor which is absolutely void.

Similalry no relief was allowed under section 65. Under this section, a party receiving any benefit
under a conract shall have to restore it if the contract becomes void or is discovered to be void. The
Privy Council said “that this section like section 64, starts from the basis of there being an agreement
or contract between competent parties and has no application to a case in which there never was
and never could have been, any contract.”

Finally, the money lender relied upon section 41 of specific relief act 1877 “On adjuging the
cancellation of an instrument the court may require the party to whom such relief is granted to
make any compensation to the other which justice may require”. Their lordship decide that under
circumstances of this case justice did not require them to order the return by the respondent of
money advanced to him with full knowledge of his infancy, and their lordship see no reason for
interfering with the discretion so exercised.

Khan Gul v Lakha Singh

The defendant while still a minor, by fraudulently concealing his age, contracted to sell a plot of land
to the plaintiff. He received the consideration of rs. 17,500 and then refused to perform his part of
the bargain.

The plaintiff prayed for the recovery of possession or refund of consideration. It was held that
since there can be no question of specific enforcement, the contract being wholly void.

Beneficial Contracts

The law declared by the privy council in the MohiriBibee Case that a minor’s agreement is absolutely
void.

But a minor is allowed to enforce a contract which is of some benefit to him and under which he is
required to bar no obligation

RaghavaChoria v. Srinivasa

In this case, a question was referred to the decision of full bench of the madras High Court “ whether
a mortgage executed in favour of a minor who has advanced the whole of a mortgage money is
enforceable by him or any other person on his behalf”
The Unanimous opinion of the full bench was that the transaction was enforceable by him or by any
other person on behalf of the minor.

Contract of Appenticeship

Roberts v. Gray

The defendant, an infant agreed with the plaintiff, a noted billiards player, to join him in a billiards
playing tour of the world. The Plaintiff spent time and money in making arrangements for billiards
matches, but the defendant repudiates the contract. The Plaintiff succeeded in recovering damages
for the breach of the contract.

The contract was held to be one for necessaries as it was for the Infant’s good teaching or
instruction whereby he may profit afterwards.

Ratification

A Person cannot on attaining majority ratify an agreement made by him during his minority.

Liability for necessity

Section 68 of the contract act provides for the liability for necessaries supplied to persons
incompetent to contract.

Section 68 in The Indian Contract Act, 1872

68. Claim for necessaries supplied to person incapable of contracting, or on his account.
—If a person, incapable of entering into a contract, or any one whom he is legally bound
to support, is supplied by another person with necessaries suited to his condition in life,
the person who has furnished such supplies is entitled to be reimbursed from the
property of such incapable person. 31 Illustrations

(a) A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled
to be reimbursed from B’s property.

(b) A suplies the wife and children of B, a lunatic, with necessaries suitable to their
condition in life. A is entitled to be reimbursed from B’s property.

NASH V. IMAM

An undergraduate in the Cambridge university, who was amply supplied with proper clothes
according to his position, was supplied by the plaintiff with a number of dresses, including eleven
fancy waistcoats, the price was held to be irrevocable.

Nature of Liability
There are 2 theories relating to the liability of minor’s estate for necessaries. According to one of the
theories the liability does not depend upon the minor’s consent. It arises because the necessaries
have been supplied to him and is therefore quasi contractual in nature.

An infant like a lunatic is incapable of making a contract of purchase in strict sense of the word but if
a man satisfies the needs of the infant or lunatic by supplying him necessaries the law will imply an
obligation against the estate of the infant or lunatic.(Nash v. Imam)

The other view of the liability in England is that it is contractual. An infant is not absolutely destitute
of contractual capacity. A contract for necessaries is just one of those categories of contract which
an infant is permitted to make.