Capacity/competent of parties

Meaning & Definition…

 According to section 11 of
the contract act:
“ 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,
and is not disqualified from
contracting by any law to
which he is subject.”
Persons disqualified from entering into the contract…

Minors, who are not Persons disqualified

Persons of unsound
of the age of to contract by any
mind, and
majority. law ( Insolvents )
 MINOR
 Who is a minor – Acc. To
sec 3 of Indian majority act,
1875, a minor is a person
who has not attained the age
of 18 years.
 Legal position of Minor’s
agreements
An agreement by a minor is absolutely void

No estoppel against a minor

No ratification on attaining the age of majority

Minor as a partner

Minor as an agent

Minor as a shareholder or member of a company

Minor as an insolvent

Contract for supply of necessaries

Contract by parents or guardians of the minor

Surety’s liability for minor

1. Agreement is void ab initio:

Case mohori bibi vs. Dharmodas Ghose – Dharmodas , a

minor borrowed Rs.20,000 from mohori bibi, a
mortgagee & as a security executed a mortgage in his
favour.
The minor wanted to set aside the mortgage. The
mortgagee wanted the refund of Rs 20000.
It was held that the agreement with the minor was void
ab initio & question of refunding money does not arise.
 The rule of estoppel doesn’t
apply to a minor i.e. a minor
is not estopped from
pleading his infancy in order
to avoid a contract, even if
he has entered into an
agreement by falsely
representing that he was of
full age.
 Illustration: A sold
a house to B, A does so by
wrongfully making B believe that the house
belonged to A.
A subsequently cannot take the defense that the title
of the house cannot be provided to B as the
house didn’t belong to A in the first place. A will
be liable for the same
Ratification

Meaning Rule in case of a

minor
Ratification means  No Ratification on attaining
the age of majority:
the subsequent  minor cannot ratify the
adoption and agreement on attaining the
age of majority which he has
acceptance of an entered into in the age of
minority.
act or agreement.
 Thus consideration given during
minority is no consideration.
 • If it is necessary a fresh
contract may be entered in to by
the minor on attaining majority
provided it is supported by fresh
consideration
 Minor as a partner

 A minor cannot become a partner in

a partnership firm.
 However, acc. To sec 30 of Indian
partnership act 1932, with
the
consent of all the partners
for the time being be
admitted to the benefits of
partnership.
Minor as an agent

 A minor can act as an agent.

 But in no case he will be
liable to his principal.

 Thus, Principal is liable for

all the contracts entered into
by the minor as the former’s
agent.
Minor as a shareholder

 A minor cannot become a

shareholder but fully paid up
shares my be transmitted to
him through his lawful
guardians.
 Minor as an insolvent.

 A minor cannot be declared

insolvent because he is not
competent to contract.

 A minor cannot be declared

insolvent as he is incapable
of contracting debts & dues
are payable from the
personal properties of minor
& he is not personally liable.
Position of a surety
 Position of a surety – Where
in contract of guarantee, a
major stands surety on
behalf minor, then major
would be liable.
Contract by parents or
guardians of the minor:
 It’s a valid contract provided
the two conditions are
fulfilled:
 That the minor’s guardian
has the right to make a
contract on behalf of the
minor
 That the contract is made
lawfully and for the benefit
of the minor.
Minor’s Liability for necessaries

 A minor who enters into a contract to purchase food, shelter,

clothing, medical attention, and/or other goods or services
necessary to maintain the minor's well-being will generally
be liable for the reasonable value of those goods and
services even if the minor disaffirms the contract.
 health, comfort or education

His property is liable but he is not personally liable.

 Minor’s Liability for
necessaries

His property is liable

but
he is not personally
liable.
Minor’s Liability for necessaries
…

Necessaries is not confined to

food, clothing & shelter but it
also includes articles or services
which are reasonably necessary
for a minor suitable to his
conditions in life … a watch or a
bicycle may be necessary for a
minor.
Persons of UNSOUND MIND…

Acc 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 & of
forming a rational judgment as
to its effect upon his interest.”
 Unsoundness may be categorized
as:

Idiots – has Lunatic or Drunkenness Hypnotism- Mental Decay

completely insanity – the artificially on account of
lost his mental person losses induced sleep old age
powers the capacity
due to the
illness of brain
or mental
bodily
distress.
 Persons disqualified from contracting

Insolvents- all
Convicts – persons
property in hand of
Corporations – who are sentenced
Foreign sovereign Official assignee.
contract is ultra to imprisonment
Alien enemy (prior sanction of He can enter into
vires if not in cannot enter into
central govt) contract when court
MOA) contract during that
passes an order of
period).
discharge
 For Your
THANK Stay home
time and
YOU and stay safe
patience