CAPACITY TO CONTRACT
Capacity to contract means who all can come into a contractual relationship. As per section 10 of the Indian Contract Act, 1882, all the agreements are valid contract if it satisfies the following conditions:
Along with the above-stated conditions, parties also need to follow the condition laid down in section 13 of the Indian Contract Act, 1872, which states “Two or more persons are said to consent when they agree upon the same thing in the same sense.” This means that the parties to contract should have a common consensus about the subject matter of the contract.
Section 11 of the Indian Contract Act provides who all are competent to contract. It states “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.”
Age of Majority: the Indian Majority Act (Act IX of 1875) regulates whether the person is major or minor in India. Every person who is of 18 or above are considered as an adult in the eyes of law and hence competent to contract.
Sound Mind: - In Contracts Law, a person is considered to be of sound mind if, at the time of making the contract, he can understand the terms and conditions of the contract and able to make a rational judgement as to its effect upon his interests. An individual who is generally of unsound mind, yet sometimes of the sound brain, may agree when he is of sound mind. The case is similar in a situation with an individual who is generally of sound mind, however periodically of unsound mind.
The Position of Minor’s Agreement:
Minor’s Agreement is void: Under the Indian Contract law, any contract by a minor is altogether void. The main reason for this is that the minor is incapable to give a promise which can impose any legal obligation. Though a minor is not competent to form a contract he can act as the beneficiary to the contract. A minor cannot become a partner in the firm but as per section 30 of the Indian Partnership act, 1932, with the consent of other parties, he can take benefits from the business.
Minor can always plead minority: - The contract made by minor is void, any money lent to the minor on the promissory note or through the contract cannot be recovered. Even if the minor falsely represent him as the major and comes into a contract, he can still plead for the minority and recover the amount. But the court said that if the minor fraudulently mortgages and/or sells any property then the agreement will stand void and reimbursement will be given to the person who lent the property and the purchaser.
