Prepared by Dr. Seema H.

Kadam,Associate
Prof.,TMES-MBA,GTU
CAPACITY TO CONTRACT
CAPACITY TO CONTRACT
 According to sec. 10. an agreement
becomes a contract if it is entered into
between the parties who are competent to

Kadam,Associate Prof.,TMES-MBA,GTU
Prepared by Dr. Seema H.
contract.
 According to sec.11 , every person is
competent to contract who:-
(a) is the age of majority according to the
law to which he is subject
(b)is of sound mind
(c)is not disqualified from contracting by any
law to which he is subject.
MINOR
 Minor is a person who has not completed 18
years of age.

Kadam,Associate Prof.,TMES-MBA,GTU
Prepared by Dr. Seema H.
 In following two cases , he attains majority
after 21 years of age:
(a) where a guardian of a minor’s person or
property has been appointed under the
guardians and wards act,1890, or
(b) where the superintendence of a minor’s
property is assumed by a court of wards.
 MINOR’S AGREEMENT

 His agreement is altogether void and inoperative.

Kadam,Associate Prof.,TMES-MBA,GTU
Prepared by Dr. Seema H.
 He can be promisee or a beneficiary in a contract.
 His estate is liable for the necessary goods supplied or
necessary services rendered to him or to anyone whom he
legally bound.
 He may enter into contract of apprenticeship,service,education
and instruction provided this are beneficial for him.
 He can be an agent.
CONTD.
 He cannot be partner but he can be
beneficiary of existing partnership.

Kadam,Associate Prof.,TMES-MBA,GTU
Prepared by Dr. Seema H.
 If he has received any benefit under a void
agreement, he cannot be asked to
compensate for it.
 The court never order specific performance
of his agreements
 He can always plead minority and is not
stopped from doing so even when he enters
into an agreement by falsely
misrepresentation of his age.
 He cannot be adjudged insolvent.
PERSONS OF UNSOUND MIND
 Lunatics- a lunatic can enter into a contract
when he is of sound mind.

Kadam,Associate Prof.,TMES-MBA,GTU
Prepared by Dr. Seema H.
 Idiots-an agreement of an idiot like that of
minor is altogether void.

 Drunken or intoxicated persons-their

Kadam,Associate Prof.,TMES-MBA,GTU
Prepared by Dr. Seema H.
states-They can enter into contracts and enforce these contacts in
our courts but they cannot be sued in our courts without prior
sanction of central government.
 Corporations- the contractual capacity of a statutory corporation is
limited by the statute governing it. As regards a company registered
under the companies act,1956,its contractual capacity is regulated
by its Memorandum of Association and the companies act 1956.
 Insolvents-when a debtor is adjudged insolvent, he is deprived of
his power to deal in his property divisible among his creditors.
 Convicts-a convict when undergoing imprisonment is incapable of
entering into a contract.
 Clare was age 17, a minor in her state, when she
bought a week’s worth of groceries at the local
supermarket. Later she discovered she spent too

Kadam,Associate Prof.,TMES-MBA,GTU
Prepared by Dr. Seema H.
much money and was going to be over her
weekly budget. So she took the groceries back
and asked for her money back. If she sues, will
she get her money back?
 Tanya, a minor, was the daughter of a
construction worker. When se was 17, she
bought an evening gown for $400.00 to wear to a
school dance. After the dance, Tanya decided
she didn’t like the dress and returned it asking for
the money back. Is she legally entitled to the
money?
 Janice had been drinking all afternoon before
she whet into a used car lot. When signed a
contract to purchase a two year old car for as

Kadam,Associate Prof.,TMES-MBA,GTU
Prepared by Dr. Seema H.
much as it would cost for the same model
new. She sought to disaffirm the contract
based on intoxication. At the trial, she
testified that, at the time of purchase, she
knew she was buying a car but could not
understand any of the terms of the contract.
Will the court hold her to the terms of the
contract?
 While still a minor, Beach bought a stereo
system on credit from McReam’s Electronic
Cloud for $500. Beach paid $100 down and

Kadam,Associate Prof.,TMES-MBA,GTU
Prepared by Dr. Seema H.
promised to pay $50 a month on the unpaid
balance until the debt was paid. After
making four payments, two of which were
made after he reached the age of majority.
Beach decided to disaffirm the contract and
return the equipment.