CAPACITY TO

CONTRACT
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DEFINITION

Section 11 of the Contract Act provides that, "Every person

is competent to contract who is of the age of majority
according to the law to which he is subject & who is of
sound mind & is not disqualified from contracting by any
law to which he is a subject."
AGE OF MAJORITY

◦ According to section 3 of Indian majority Act-1875

every person domiciled in India attains majority on
the of 18 years of age.
PARTIES UNABLE TO ENTER INTO A
CONTRACT
◦ The following persons are in competent to contract

1. Minor
2. A person of unsound mind
i. Lunatic
ii. Idiot
iii. Drunken and Intoxicated
3.Person disqualified by law
i. Alien enemy
ii. Foreign Sovereign
iii. Convict
iv. Corporation and Company
V. Insolvent
MINOR’S AGREEMENT
◦ i. An agreement with or by minor is void and inoperative ab initio. A minor's
has received any benefit under a void contract, he cannot be asked to return the
same.
◦ ii. He can be a promisee or beneficiary.
◦ iii. His agreement cannot be ratified by him on attaining the age of majority.
◦ iv. If he has received any benefit under a void agreement, he cannot be asked
to compensate or pay for it.
◦ V. He can always plead minority. Fraudulent representation by a
minor- no difference in the status of agreement. The contract
remains void.
◦ VI. There can be no specific performance of the agreements
entered into by him as they are void ab initio.
◦ Vii. He cannot enter into a contract of partnership. A minor with the
consent of all the partners, be admitted to the benefits of an existing
partnership.
◦ viii. He cannot be adjusted insolvent
◦ Ix. He is liable for necessaries' supplied or necessary services.
(a) A minor can enter into contract of apprenticeship, or
fortraining or instruction in a special art, education, etc. (b)
These are allowed because it generates benefits to the Minor.

◦ X. He can be an agent. Minor can act as an agent but not personally

liable. But he cannot be principal.
Mohiri Bibee vs. Dharmodas Ghose

FACTS
In this case, Brahmodatt is a money lender and Kedarnath is his agent who works under him. Dharmodas
Ghose is a minor who mortgages his land to Brahmodatt for Rs. 20,000/-. In the first installment,
Kedarnath gives Rs. 10,500 to Dharmodas Ghose. When the mother of Dharmodas Ghose receives
information about this arrangement between Kedarnath and Dharmodas Ghose she writes a letter to
Kedarnath that when this arrangement was made then Dharmodas Ghose was a minor and thus this
arrangement shall be cancelled. On this Kedarnath demanded the money given to Dharmodas Ghose and
filed a suit. Till the time the case reached Supreme Court Kedarnath died and it was filed by his wife
Mohiri Bibee.
ARGUMENTS

◦ The argument given was that as per

 Section 64 of the Indian Contract Act, 1872 and 
Section 65 of the Indian Contract Act, 1872 if any contract is void
or voidable then the benefits received by both parties have to
restore. Then they relied on Section 41 of the Specific Relief Act,
1963 that stated that is an instrument is cancelled then the court can
intervene and ask the party to compensate the benefits received.
VERDICT

◦ The Supreme Court cancelled this contention and stated that 

Section 64 of the Indian Contract Act, 1872 and 
Section 65 of the Indian Contract Act, 1872 is not applicable here
because it states that there has to be a contract and here there was
no contract as one party is minor. By taking into consideration 
Section 41 of the Specific Relief Act, 1963 the Court held that as
Brahmodatt and Kedarnath both knew that the other party is a
minor thus, they should not receive any compensation.
Video Link: https://www.youtube.com/watch?v=V2OxwWT-vRU