CAPACITY OF PARTIES

Sec.11 of the Indian Contract Act, 1872 lists down the

qualifications which enable a person in India to enter into
contracts-
• A person should have attained the age of majority as per
the law of the country of which he is a citizen.
• In India, the age of majority is governed by the Indian
Majority Act, 1875. As per Sec. 3 of the Indian Majority
Act, 1875, an Indian citizen is said to have attained the age
of majority upon completion of eighteen years of age.
• However, if a person is below the age of 18 years and a
guardian has been appointed for him, he shall attain
majority at the age of 21 years.
• A person should be of sound mind at the time of
entering into a contract.
• As per Sec. 12 of the Act, a person can be said to be of
sound mind when he can assess, understand his actions and
realize the consequences of obligations imposed on him at
the time of entering into a contract.
• A person should not be disqualified under any law to
which he is subject.
Disqualifications for entering into a contract
Minor
In India, a minor is an Indian citizen who has not
completed the age of eighteen years. A minor is incapable
of understanding the nature of the liabilities arising out of
an agreement. Hence a contract with a minor is void ab
initio (void from the beginning) and cannot be enforced in
a court of law. The result is that a party cannot compel the
minor to perform his part of obligations as enumerated in
the agreement (plead specific performance of an
agreement/rule against estoppel).
Mohori Bibee vs. Dharmodas Ghose
•The respondent, Dharmodas Ghose, a minor, had
mortgaged his property in favor of the moneylender,
Brahmo Dutt for securing a loan amounting to INR
20,000/-.
•Mr. Brahmo Dutt had authorized Kedar Nath to enter
into the transaction through a power of attorney. Mr.
Kedar Nath was informed of the fact that Dharmodas
Ghose was a minor through a letter sent by his mother.
•However, the deed of mortgage contained a declaration
that Dharmodas Ghose was of the age of majority.
•The respondent’s mother brought a suit on the ground
that the mortgage executed by his son is void on the
ground that her son is a minor.
 •The relief sought by the respondent was granted and an
appeal was preferred by the executors of Brahmo Dutt
before the Calcutta high court. The same was dismissed.
•An appeal was then made to the Privy council. The
Privy council held that-
A contract with a minor is void-ab-initio.
Sec.7 of the Transfer of Property Act, 1882 states that a
person competent to contract is competent to transfer a
property.
Hence, the mortgage executed by the respondent is
void.
•However, if a minor enters into a contract and performs
his part of obligations, the other party can be compelled to
perform and fulfill its obligations, and, in such instances,
the contract becomes legally enforceable.
A.T Raghava Chariar vs. O.A. Srinivasa Raghava
Chariar
A minor entered into a contract for mortgage with a
person of the age of majority.
The minor extended the monetary amount and
performed his part of the obligations.
The other party refused to honor the agreement.
The full bench of the Madras High court had to decide
“whether a mortgage executed in favour of a minor who
has advanced the whole of the mortgage money is
enforceable by him or by any other person on his behalf.”
The court ruled that-
The agreement sought to be enforced is the promise of
the mortgagor who is of full age to repay the money
advanced to by the mortgagee.
The mortgagee (the minor) has already advanced the
money which was the consideration for the promise of
the mortgagor and performed his part of the
obligations. There is nothing pending from his side.
Hence, the contract is enforceable.
Additionally, a minor cannot enter into a contract and
provide his consent when he attains majority. This is
because a minor’s agreement is void from the beginning. A
void agreement cannot be made legally valid by
ratification.
Suraj Narain Dube vs. Sukhu Ahir
Suraj Narain lent money to Sukhu Ahir who was a minor. The minor
executed a promissory note against the money borrowed.
After four years, when the minor attained majority, he and his
mother executed a second promissory note in favour of Suraj Narain
in respect of the original loan plus the interest accumulated over the
years.
The court held-
The first agreement entered into by the parties is void as a minor
is incompetent to contract. The minor had no liability to pay
under this agreement. However, the minor made a promise and
provided the promissory note, amounting to consideration.
A minor has no power to ratify the contracts entered into by him
upon attaining the age of majority.
In the second agreement executed by the parties, there was no
consideration from the Plaintiff. The original advance was no
consideration for a second agreement. The second agreement is void
due to want of consideration.
 In certain instances, a contract entered into by the minor
or by the minor’s guardian for his benefit is valid in the eyes of
law-
•A contract for marriage entered into by a minor/his
guardian.
•A partnership contract entered into with a minor admitting
him to the benefits of a partnership. However, the minor
cannot be held personally liable for the losses incurred.
•A contract relating to the minor’s property entered into by
his guardian if it is for the benefit of the minor.
•A contract of apprenticeship with a minor.
•A contract supplying the minors with goods and services
necessary for life.
Websites such as YouTube expressly mention in their
terms and conditions that any minor while using its services
represents that he has the permission of his parent/ guardian to
do so. Parents and guardians are held liable for the child’s
activity on such websites.
Effect of a Minor’s Agreement
Doctrine of Estoppel: Not Applicable
The rule is that an estoppel action cannot be brought
against a minor. Even if he falsely represented that he had
reached the age of majority when the agreement was made, he
is permitted to plead minority as a defense to escape
responsibility under the agreement. The rationale behind this is
that giving effect to the doctrine of estoppel would mean
enforcing an otherwise void agreement and would defeat the
substantive principles of the Statute.
Ratification: Not Allowed
Because a minor’s agreement is invalid from its
inception, it cannot be confirmed by ratification after the minor
has reached the age of majority. A void contract is like a dead
letter and cannot be revived, nor can it serve as a consideration
for a subsequent promise. Thus, an agreement entered into by a
minor cannot be ratified.
Liability for Compensation
The minor can be asked to restore any benefit
derived from the instrument if he goes to the court as a
plaintiff, wanting its cancellation.
Even if he is a defendant, he may be asked to restore to the
extent his estate has been profited.
No Liability In Contract or In Tort Aarising Out of A
Contract
When a minor commits a tort, he is liable like any
other major person. But if the tort committed is directly
related to the breach of a contract, the infant cannot be
held accountable. “You cannot convert a contract into a
tort to enable you to sue an infant,” according to the usual
rule.
Liability for Necessaries
According to Section 68 of the Indian Contract Act
of 1872, if a person is unable to enter into a contract and
gets necessaries that are suitable for his or her position in
life from another person, he or she has the authority to
compensate the person who provided the necessaries.
Reimbursement is permitted from the estate of such an
incapable person.
Despite the fact that section 68 holds minor
responsible for the necessaries, it does not specify the
meaning of necessaries. In fact, necessaries encompass all
necessities as well as additional requirements that are to
the infant’s reasonable advantage and comfort, based on
his or her social and economic standing.
Minor as a partner:
The way of a contract creates a partnership, and the
essential of a contract is that the both the parties should be
of the age of majority. However, as an exception as per
Section 30 of the Partnership Act is that with the due
consent of all the partners, the minor can be admitted to
the benefit of partnership for the time being. But he will
not be liable for any of his acts.
Minor as an agent or principal:
A minor can never be a principal because Section 183 of
the Indian Contract Act for anybody to become a principal
should be of the age of majority and be of sound mind and
since a minor is not competent to contract, he also cannot
employ an agent. But, a minor can become an agent as per
the provisions of section 184 but the principal shall be
bound by the acts of the minor and he would not be
Minor as a partner:
The way of a contract creates a partnership, and the
essential of a contract is that the both the parties should be
of the age of majority. However, as an exception as per
Section 30 of the Partnership Act is that with the due
consent of all the partners, the minor can be admitted to
the benefit of partnership for the time being. But he will
not be liable for any of his acts.
Minor as an agent or principal:
A minor can never be a principal because Section 183 of
the Indian Contract Act for anybody to become a principal
should be of the age of majority and be of sound mind and
since a minor is not competent to contract, he also cannot
employ an agent. But, a minor can become an agent as per
the provisions of section 184 but the principal shall be
bound by the acts of the minor and he would not be