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 estoppel 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 Gadigeppabhimappa Meti 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 Restitution

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.

Similarly no relief was allowed under section 65. Under this section, a party receiving
any benefit under a contract 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
adjudging 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 decided that under the 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 Mohiri Bibi 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

Raghava Choria v. Srinivasa

In this case, the question was referred to the decision of the 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 Apprenticeship

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 necessities 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 supplies 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 necessities. 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.