CAPACITY TO CONTRACT

Section 10

Section 10 of the Indian Contract Act requires that the

parties must be competent to contract.
 Section 11
WHO ARE COMPETENT TO CONTRACT
“Every person is competent to contract who is of the age

of majority according to the law to which he is subject,

and who is of sound mind, and is not disqualified from
contracting by any law to which he is subject.”
•Incompetent to Contract
•Minors
•Persons of Unsound Mind
•Persons disqualified by law
MINOR
AGE OF MAJORITY:

The age of majority is generally eighteen, except when a guardian of a minor’s

person or property has been appointed by the court, in which case it is 21 years.
It is defined under Sec.3 of the Indian Majority Act, 1875. It says every person
domiciled in Indian attains majority on the completion of 18 years of age.

Exception: - 21 years- in the following cases.

a. Where a guardian of a minor’s person or property is appointed under the
Guardian and wards Act, 1890.

b. Where minor’s property has passed under the superintendence of the court of
wards.
NATURE OF MINOR’S AGREEMENT:

i) An agreement with a minor is void-ab-initio –

S. 10 mandate that the agreement shall be between parties competent to contract. Section 11 indicates

that the minor is incapable of entering into a contract. But neither section provides as to the effect of

agreement entered into by a minor that whether, if a minor enters into an agreement, would it be

voidable at his option or altogether void.

Case – Mohori Bibee vs. Dharmodas Ghose (1903)

Facts – The plaintiff Dharmodas Ghose, while he was a minor, mortgaged his property in favour of

the defendant, Brahmo Dutt, who was a money-lender to secure a loan. At the time of the transaction

the attorney, who acted on behalf of the money-lender, had the knowledge that the plaintiff was a

minor.

The minor brought an action the money lender stating that he was a minor when the mortgage was

executed by him and therefore the mortgage was void and inoperative and the same should be

cancelled. By the time of Appeal to the Privy Council the defendant, Brahmo Dutt died and the

Appeal was prosecuted by his executors.

 The defendant (money-lender) amongst other points contended that –

The minor had fraudulently misrepresented his age, the law of estoppel should be applied against
him. He should not be allowed to plead that at the time of the transaction he was a minor and
therefore, no relief should be given to the minor in the case; and

If the mortgage is cancelled as requested by the minor, the minor should also be asked to refund
the loan of Rs.10,500 which he had taken.

Judgment – The Privy Council rejected the defendant’s contentions. It was held that the
minor’s agreement was void and that a minor could not be asked to repay the loan taken by him.
A minor’s agreement is void-ab-initio.

On the above stated points raised by the defendants, the matter was decided by the Privy
Council. It stated as follows –

The law of estoppel as given under section 115 of the Evidence Act was not applicable to the
case because the statements (about age) made to a person who knew the real facts and was not
misled by the untrue statement.
Section 64 which is for refund taken by the loan taken by him will not be
applicable as it is only applicable in case of a voidable contract. Minor’s
agreement being void, Sec.64 would not be applicable and therefore, minor could
not be asked to pay the amount.

The money-lender claimed the refund of the mortgage money under another
provision of Sec.41 of Specific Relief Act, 1877. It was held that the section
gives discretion to the Court to order compensation, but under the circumstances
of the case, justice did not require the return of the money advanced to the minor,
as the money had been advantaged with the full knowledge of the infancy of the
plaintiff. The claim for refund under the Specific Relief Act was disallowed.
 CAN A MINOR’S GUARDIAN ENTER INTO A CONTRACT ON THE MINOR’S

BEHALF?

Case – Mir Sarwarjan vs. Fakhruddin Mahomed Chowdhury (1912)

A contract to purchase certain immovable property was made by a guardian on behalf of a minor,

and the minor sued the other party for a decree of specific performance to recover possession. His

action was rejected. It was held by the Court that it is not within the competence either of the manager

of the minor’s estate or of the guardian of the minor, to bind the minor or the minor’s estate by a

contract for the purchase of immovable property; that as the minor was not bound by the contract,

there was no mutuality; and that consequently the minor could not obtain specific performance of the

contract.

Case – Sirkakulam Subramanyam vs. Kurra Subba Rao (1948)

The Privy Council overruled earlier decisions and entertained no doubt that it was within the powers

of the mother of a minor as a guardian to enter into a contract of sale for the purpose of discharging

his father’s debts.

Case – Gopalkrishna Govind vs. Tukaram Narayan (1956)

ii) If a minor has received any benefit under a void contract, he cannot be asked to return the
same.

iii) Contracts entered into by minors are void-ab-initio. Hence no specific performance can be
enforced for such contracts.
EFFECTS OF MINOR’S AGREEMENT:

i) No estoppel against minor –

⚫ When a minor misrepresents at the time of contract that he has attained the age of majority, the law of
estoppel against him will not be applicable.

⚫ Sec.115 of the Indian Evidence Act, lays down as follows –

“When one person has, by his declaration, act or omission, intentionally caused or permitted
another person to believe a thing to be true and to act upon such belief, neither he nor his
representative shall be allowed, in any suit or proceeding between himself and such person or his
representative, to deny the truth of that thing.”

⚫ According to rule laid down under section 115 it means that if a person makes a statement today
which misleads another person, he/se is not allowed to deny the statement tomorrow when the
question of liability arises.

⚫ From the various decisions of the different High Courts, it can be interpreted that the law of estoppel
does not apply against a minor. He is allowed to plead minority as a defence to avoid the liability
under an agreement even though at the time of making the statement he falsely stated that he has
attained the age of majority.
⚫ Case – Vaikuntarama Pillai vs. Authimoolam Chettiar (1915)

The Madras HC held that a minor being incompetent to contract is incapable of

incurring any liability for any debt, the law of estoppel cannot overrule this provision to
make him liable.

⚫ Case – Lakhwinder Singh vs. Paramjit Kaur (2004)

The plaintiff-respondent, a daughter of one Avtar Singh, now deceased, inherited a part
of his property constituting land. While minor, she executed general power of attorney in
favour of her mother, who executed a sale-deed of land belonging to her daughter in
favour of defendant-appellant.

Finding that the plaintiff respondent was a minor at the time of execution of power of
attorney nor her mother obtained specific permission from the District Court, sale of land
share by the mother was held void. The Punjab & Haryana HC held that the contention
that the transferee was a bona fide purchaser would not be available since he did not make
all reasonable and diligent enquiries regarding the capacity of the transferor and the
necessity to alienate the estate of the minor.
ii) 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 the parties.

⚫ Case – John vs. Pye (1665)

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 for deceit. The Court pointed out that if infants were held liable

on their contracts by means of actions in tort, all infants of England would be ruined. Hence, the minor

cannot be held responsible for anything which would be indirect way of enforcing his agreement.

⚫ A contract cannot be converted into a tort to sue an infant. Minor is not liable for tort connected with

contract and is a means of effecting it and is a parcel of the same transaction.

⚫ Where the tort is independent of the contract, a minor is not absolved from liability.

⚫ Case – Ballet vs. Mingay (1943)

An infant was held liable for failure to return certain instruments which he had hired and then passed on

to a friend.
⚫ Case – Burnard vs. Haggis (1863)

The defendant who was a Cambridge undergraduate and an infant, hired a horse
for the purpose of going for a ride, expressly stating that he did not want a horse
for jumping. The defendant let the horse to a friend, who used it for jumping, with
the result that it fell and was injured. The defendant was liable on the ground that
the act resulting in the injury to the horse was one which was outside the contract,
and could not be said to be an abuse of the contract.

⚫ Case – Jennings vs. Rundall (1799)

The defendant, an infant hired a horse to be ridden for a short journey and took
it on a much longer journey, with the result that it was injured, the court held the
defendant was not liable upon the ground that the action was founded in contract
and the plaintiff could not turn what was in substance a claim in contract to one in
tort.
iii) Doctrine of restitution –

⚫ According to English Law, if a minor has obtained under benefit in any transaction, he is

required to restore back the benefit received by him, under the equitable doctrine of
restitution. Under this doctrine he is asked to restore back the exact things taken by him.

⚫ It is only applicable to goods or property received by the minor so long as they can be

traced, and are still in his possession . Where the infant has sold the goods or converted
them, he cannot be made to repay the value of the goods, because that would amount to
enforcing a void contract. The doctrine cannot be applied where the infant has obtained
cash instead of goods.

⚫ Case – Leslie vs. Sheill (1914)

The defendant, a minor, falsely misrepresented himself to be a major and obtained two
loans of £200 each from the plaintiffs, who were money-lenders. The plaintiffs brought an
action to recover £475 being the amount of loan taken and interest thereon. It was held by
the Court of Appeal that the money could not be recovered. If that were allowed it would
enforcing the agreement to repay loan which is void.
⚫ The object of doctrine of restitution is to restore back the ill gotten gains taken by the minor, rather
than enforcing the contract. If a minor is asked to pay money which cannot be traced and which he no
more possess, it would amount to enforcing the agreement.

⚫ The question which has arisen in India is how far a minor can be asked to restore back the benefit
wrongly obtained by him under a void agreement? Can a minor be asked to pay compensation to the
other party? The following two kinds of provisions have arisen before the courts:

1. Whether a minor can be asked to pay compensation under S.64 and 65, Indian contract act for the
benefit obtained by him under a void agreement?

2. Whether a minor can be asked to pay compensation in view of the provisions contained in S.39 and
41, Specific Relief Act?

• Compensation under S.64 and 65, Indian Contract Act –

The question whether a minor can be asked to pay compensation to the other party, under S.64 and
65 had arisen in the case of Mohori Bibee vs. Dharmodas Ghose and it was stated by the Privy
Council that the question of compensation under S.64 and 65, Indian Contract Act, arises where the
parties are competent to contract, and these provisions does not apply to the case of a minor’s
agreement.
 The matter came for consideration before the Law Commission of India. The Law Commission

disagreed with the interpretation put to Sec.65 by the Privy Council. In its view compensation under

Sec.65 should be allowed, even if the invalidity of the agreement is because of the fact that a party is

incompetent to contract. It was recommended that an Explanation be added to Sec.65 to indicate that

the section is applicable where a minor enters into a contract on false representation that he is a major.

In spite of the recommendation by the Law Commission, no amendment has been made in the Act so

far.

• Compensation under Specific Relief Act –

Whether a fraudulent minor can be asked to pay the compensation in view of section 39 and 41 of the

Specific Relief Act, 1877 (now section 31 and 33 of 1963 Act) came in for consideration in some

cases.

Section 39 - Any person against whom a written instrument is void or voidable, and who has

reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may

sue to have it adjudged void or voidable; and the court may, in its discretion, so adjudge it and order it

to be delivered up and cancelled.

Section 41 - On adjudging the cancellation of an instrument, the court may
require the party to whom such relief is granted, to restore, so far as may be any
benefit which he may have received from the other party and to make any
compensation to him which justice may require.
In the case of Mohori Bibee vs. Dharomodas Ghose, the relief of cancellation had
to be granted as the minor was entitled to it under Sec.39 of the SR Act, 1877.
The money lender’s only request was that the relief should be subject to the
condition of the minor repaying to him the sum advanced as part of the
consideration for the mortgage. However, relief was not granted by the Privy
Council by stating that since the loan had been advanced with the full knowledge
of the plaintiff’s minority, the question of payment of compensation to the money
lender does not arise.
There was a sharp difference of opinion between the two sets of High Courts in
the following two landmark case laws -
⚫ Case – Khan Gul vs. Lakha Singh (1928)

The defendant was still a minor and 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 recovery of the
possession or refund of consideration.

Referring to Sec.39 and 41 of the Specific Relief Act, Lordship held that the doctrine of
restitution is not only confined to the cases covered by those sections. The doctrine rests
upon a statutory principle that an infant cannot be allowed by the court of equity to take
advantage of his own fraud. Accordingly, the learned Chief Justice Sir Shadi Lal ordered
refund of consideration.

⚫ Case – Ajudhia Prasad vs. Chandan Lal (1937)

A sum of money was borrowed by two minors under a mortgage deed. They were more
than 18 but less than 21 years but fraudulently concealed the fact that a guardian is
appointed for them. The question was whether the lender could get a decree for the
principal money or sale of mortgaged property.
 Chief Justice Sulaiman who delivered the judgment refused to follow the enlarged view
of restitution as in case of Khan Gul vs. Lakha Singh. His Lordship felt that the courts in
India were probably bound by the principle of restitution as in the case of Leslie vs. Sheill.
He stated that there is no rule of equity, justice and good conscience which entitles a court
to enforce a void contract of a minor against him under the cloak of restitution.

Amended provisions in the Specific Relief Act, 1963 – The Law Commission of India
preferred the view of Chief Justice Sir Shadilal and accordingly the controversy was set
aside by the new Specific Relief Act, 1963.

Sec.33(1) does not alter the earlier law. If the minor comes to the court as a plaintiff, he
can be compelled to restore the benefit and to make such compensation to the other party as
justice may require. The object is to restore the parties to their original position, as far as
possible. Sub-sec (2) makes a difference that if the minor is brought before the court as a
defendant, he can be compelled to account for the portion of the money or anything else
received by him as he has gone to benefit him personally, such as education or training, or
had resulted in an accretion to his estate.
iv) Ratification –

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

Ratification dates back to the date of making of the contract and, therefore, a contract which was then

void cannot be made valid by subsequent ratification. Ratification means accepting and giving legal

force to an obligation that previously was not enforceable.

⚫ A fresh contract should be made on attaining majority if necessary. A new contract will also require a

fresh consideration. The consideration furnished in respect of a transaction during the minority cannot

be considered to be a valid consideration.

⚫ Every contract needs a separate consideration, and consideration which was passed under the earlier

contract cannot be imported into the contract which the minor entered on attainment of majority.

⚫ Case – Suraj Narain vs. Sukhu Aheer (1928)

A person borrowed some money during his minority and executed a promissory note against it.

Subsequently, he made a fresh promise, after attaining majority to pay that sum plus interest thereon.
 The question before the court was whether the consideration received by a person during his minority can be good

consideration for a fresh promise by him after attaining majority.

It was held that the consideration received by a person during his minority could not be called consideration in its

strict term within the meaning of S.2 (d), and there was no question of that consideration being considered valid for a

fresh promise.

⚫ Case – Anant Rai vs. Bhagwan Rai (1940)

A person can always make a fresh promise after attaining majority in terms of the promise made during minority.

All that is necessary is that there should be some fresh consideration.

⚫ Though a contract by a minor is void, it is competent for such a person to carry on the transaction started during

minority, even after attaining majority in such a way as to bind himself for the whole transaction.

⚫ Case – Nilchand vs. Mir Jan Mohomed Khan (1937)

A contract of lease had been entered into on behalf of the plaintiff, while he was a minor. After attaining majority,

the plaintiff continued with the transaction of lease. It was held that the plaintiff was entitled to enforce the lease and

recover the arrears of rent.

⚫ If the part of the benefit was received by a person during his minority and the other part after attaining the age of

majority, a promise by him after attaining majority to pay an amount in respect of both the benefits is enforceable, as

that constitutes a valid consideration for the promise.

v) Minor’s liability for necessaries –

⚫ Sec.68 of the Contract Act provides for the liability for necessaries supplied to persons incompetent
to contract.

⚫ Sec. 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.”

⚫ A minor’s agreement is void-ab-initio, and he is incapable of making a contract to pay for any
services rendered or good supplied to him. However, for the necessaries supplied to a minor,
reimbursement is permitted to the person supplying such necessaries.

⚫ Meaning of “necessaries” – The term has not been defined anywhere in the Act but as per the
judgment in the Chappel vs. Cooper (1844), things necessary are those without which an individual
cannot reasonably exist. Articles of mere luxury are always excluded. Therefore, what is necessary is
a relative fact to be determined with reference to the fortune and circumstances of a particular minor,
usage of which the society renders them proper for a person in the rank of life in which the infant
moves.
⚫ Case – Peter vs. Fleming (1840)

The court took judicial notice that it was prima facie not unreasonable that an undergraduate at a
college should have a watch and consequently a watch chain, and therefore it was a question of fact
whether the watch chain supplied on credit was such as was necessary to support himself properly in
his degree. The Court held that all such articles as are purely ornamental are to be rejected, as they
cannot be requisite for anyone. There may be exceptional cases only when purely ornamental things
may be necessary. The burden lies upon the supplier to prove that the ornamental thing is necessary for
the minor.

⚫ Case – Ryder vs. Woombwell (1868)

A minor was supplied with a pair of jewelled solitaires and an antique goblet and though he moved
in high society, he was held not liable as the plaintiff could not prove that the articles were specially
necessary for the minor.

⚫ To render an infant’s estate liable for necessaries “two conditions must be satisfied, namely:

i) The contract must be for goods reasonably necessary for his support in his station in life, and

ii) He must not have already a sufficient supply of these necessaries.”

⚫ Case – Nash vs. Inman (1908)

An undergraduate in the Cambridge University, who was amply supplied with proper clothes

according to his position, by the plaintiff with a number of dresses, including eleven fancy waistcoats,

the price was held to be irrevocable. The Court stated that the supplier has to prove, not only that the

goods supplied were suitable to the condition in life of the infant, but that he was not sufficiently

supplied with the goods of that class.

⚫ What are necessaries may depend upon the status of a person, and also his requirements at the time of

actual delivery of the goods.

⚫ Case – Sham Charan Mal vs. Chowdhury Debya Singh (1894)

Money was advanced to a minor for defending himself in certain criminal proceedings against him

on a charge of dacoity. The minor executed a bond in respect of his defence. It was held that the

amount borrowed was in connection with his personal liberty and it comes within the meaning of

“necessaries”.

⚫ The liability for necessaries by minors is not on the basis of any contract between the parties but

because it is deemed to be a quasi-contractual obligation.

BENEFICIAL CONTRACTS –

⚫ The law declared by the Privy Council in the Mohori Bibee case that a minor’s agreement is
‘absolutely void’ has been generally followed and growingly limited to cases where minor is charged
with obligations and the other contracting party seeks to enforce those obligations against the minor.
Accordingly, a minor is allowed to enforce a contract which is of some benefit to him and under which
it is required to bear no obligation.

⚫ Under English Law, an infant is bound by the contract of apprenticeship or services because such
contracts are beneficial to him and help him in earning his livelihood. Contract of apprenticeship stand
on the same footing as the contract for necessaries. The rule in India is different as minor’s contract of
service is void, whereas that of apprenticeship is valid.

I. Contracts of Service –

⚫ In India, a contract of service entered into by a minor is void.

⚫ Case – Raj Rani vs. Prem Adib (1949)

The plaintiff, a minor, was alloted by the defendant, a film producer, the role of an actress in a
particular film. The agreement was made with her father. The defendant subsequently allotted the
role to another artist and terminated the contract with the plaintiff’s father.
 The Bombay HC held that neither she nor her father could have sued on the promise. If it was a
contract with the plaintiff, she being a minor, it was nullity. If it was a contract with her father it was
void for being without consideration. The promise of the minor girl to serve, being not enforceable
against her, cannot furnish any consideration for the defendant’s promise to pay her salary.

⚫ Where a minor has given consideration under a contract, but the consideration given to him has failed,
he may have restitution.

⚫ Case – Walidad Khan vs, Janak Singh (1935)

A minor bought a zamindari property on payment of money, but he was ousted on a suit by a third
party, it was held “that the minor was at any rate entitled to recover from the vendor the sum which he
had paid as purchase money”.

⚫ For this principle to apply there should be total failure of consideration.

⚫ Case – Steinberg vs. Scala (Leeds) Ltd. (1923)

A minor purchased shares in a company and then repudiated them and also asked for refund of the
partly paid purchase price, the court held that the price which he has already paid was not refundable,
because there was evidence that the shares were of some value. If the shares were totally worthless
there would have been total failure of consideration from the company entitling the minor to refund.
But he was not liable to pay further demands or calls for payment.
II. Contracts of Apprenticeship –

⚫ Contracts of Apprenticeship is another species of contracts which are for the benefit of

minors. The Indian Apprentices Act, 1850 provides for contracts in the nature of contracts
of service which are binding on minors. The 1850 Act has been replaced in 1961 by Indian
Apprentices Act, 1961.

⚫ The preamble of the Act states, “For better enabling children, and especially orphans and

poor children brought up by public charity, to learn trades, crafts and employments, by
which, when they come to full age. they may gain a livelihood.”

⚫ Since the contracts of apprenticeship are binding against the minor, such contracts could be

validly entered into by a minor’s guardian on behalf of the minor. Section 4 of the Act
requires the contract to be made by a guardian on behalf of the minor.

⚫ Under English Law, contracts of service and apprenticeship are put on the same footing and

in the same category as contracts of necessaries.

⚫ Case – Roberts vs. Gray (1913)

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 the billiards matches, but the defendant repudiated the contract. The
plaintiff succeeded in recovering the 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.”

III. Contracts of marriage –

⚫ A contract for the marriage of a minor is also prima facie for his or her benefit. It is well

established that while the contract of marriage could be enforced against the other
contracting party at the instance of the minor it cannot be enforced against the minor.

⚫ Where the agreement for marriage of a minor involves statutory violation, the age of the

girl has to be 18 years, or else the agreement is likely to be avoided.

⚫ Case – Tulshiram vs. Roopachand (2006)

In this case, on the age of engagement the girl was not of 18 years but on the
date fixed for marriage she would have completed 18 years. The agreement was
held to be valid. The other party committed breach. The court allowed her
compensation of Rs.27,000 for mental pain and suffering, lowering of esteem in
society and amount spent on engagement ceremony.
⚫ Case – Kumari Shahnoor Md Tahssen vs. State of U.P. (2007)

Parties were governed by the Shariat law. The medical report showed that the
girl has not attained the age of majority. She had, therefore, no right to enter into
the contract of marriage on her own free will. She could have been given in
marriage only by her father or guardian. The Kazi who performed the ceremony
of marriage was in know of things. The marriage was not valid.
IV. Trade contracts not included in beneficial contracts –
⚫ This category of beneficial contracts does not include ordinary trade contracts.

⚫ Case – Cowern vs. Neild (1912)

A minor was carrying on the business as a hay and straw merchant. He received
a cheque from the plaintiff for the supply of clover and hay. He delivered the
clover which was rejected as bad and he failed to deliver hay. The plaintiff’s
action for recovering back the amount of the cheque failed. The Court held that,
trading contract does not come under the category of beneficial contracts for
minors.
V. Option of retirement from beneficial contracts on majority –
⚫ A minor will have the option of retiring from a contract of beneficial nature on
attaining majority provided that he exercises the option within a reasonable time.
PERSONS OF UNSOUND MIND
In English Law, a person of unsound mind is competent to contract, although he may avoid his

contract if he satisfies the court that he was incapable of understanding the contract and the other

knew it. The contract is voidable at his option. It becomes binding on him if he affirms it.

Case – Imperial Loan Co. vs. Stone (1892)

The Court stated that, when a person enters into a contract and afterwards alleges that he was

so insane at the time that he did not know what he was doing, and proves the allegation, the

contract is as binding on him in every respect, whether it is executory or executed, as if he had

been sane when he made it, unless he can prove further that the person with whom he contracted

knew him to be insane as nit to be capable of understanding what it was about.

The position of a drunken person is also the same, If he makes a contract while drunk, he may,

when sober, elect to avoid the contract or to affirm it.

A fair contract with a person who was apparently of sound mind, but who in fact was

suffering at the time of the contract from such mental disorder as rendered him incapable

of entering into the contract, is voidable but not void. If the contract is not to be enforced

against him, the person mentally disordered must prove that the other party either knew

that he was of unsound mind or knew of such facts as would justify the Court in inferring

such knowledge.

In India, the agreement of a person of unsound mind, is like a minor, absolutely void.

According to Sec.12 “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 judgment as to its effect upon his interests.”

A person who is usually of unsound mind, but occasionally of sound mind, may make a

contract when he is of sound mind. A person who is usually of sound mind, but

occasionally of unsound mind, may not make a contract when he is of unsound mind.
Disability at the time of agreement – For an agreement to be void what is relevant is that the person

in question was suffering from the disability.

Case – Inder Singh vs. Parmeshwardhari Singh(1957)

A property worth Rs.25,000 was agreed to be sold by a person for Rs.7000 only. His mother proved

that he was a congenital idiot, incapable of understanding the transactions and that he mostly

wandered about. The court held that the sale was void and explained the effect of Section 12 stating

that it does not always necessarily mean that the man must be suffering from lunacy to disable him

from entering into the contract. A person may to all appearances behave in normal fashion, but, at the

same time, he may be incapable of forming a judgment of his own, as to whether the act he is about to

do is to his interest or not. In this case, he was incapable of exercising his own judgment.

Case – Asfaq Qureshi vs. Aysha Qureshi (Nivedita Yadav) (2010)

A marriage between a Hindu girl and Muslim man was declared to be no marriage at all when the

evidence showed that the girl was intoxicated at the material time and was not conscious of ongoing

conversion and nikah ceremony. She also proved that she had not lived with the man even for a single

day. The Family Court was held to be competent to declare the status of the parties and declare the

marriage void.
Onus to prove unsoundness – The onus of proving unsoundness of mind of a person
always rests upon him who alleges such state of mind of person.
Case – Jyotindra Bhattacharjee vs. Sona Bala Bora (2005)

Late Bora, a Hindu, governed by Dayabhaga school and absolute owner of the suit
property, sold the said property. The appellant by sale deed as well as mutation order, got
possession of the property. The wife of Bora, his sons and daughters objected to the said sale
and challenged the transaction. One of the contention raised by the respondents was that late
Mr. Bora was not of sound and at the time of execution of the sale deed.
Holding that the onus to prove the fact of unsoundness of mind is always on the person who
alleged such state of mind, the Gauhati High Court said that the respondents could not
establish that late Bora was not a normal person. Merely because he picked up quarrels with
his family members and remained away from the house for long period and transferred the
entire property by way of sale rendering the members of the family homeless the Court ruled
that it could not indicate was not a normal person.
PERSONS DISQUALIFIED BY LAW
Alien enemies - All persons other than Indian citizens are aliens. When the sovereign or the state of

that alien is at war with India, he is an alien enemy. No contract can be made with an alien enemy

during the subsistence of war, except with the prior approval of the Government of India.

ii. Performance of the contracts made before the outbreak of war will be suspended during the course

of war. They can be performed only when the war is over. Even then, the government can put

restrictions on the performance of such contracts, if it considers them necessary for national interest.

Foreign Ambassadors- They are representatives of foreign countries. They can enter into a contract

but legal action can be taken only with permission of Central Government.

Convicts- Convict is a person in jail.

Insolvents- A person whose debts are more than his assets. His property will come in to the

possession of the official receiver.

Q&A