CAPACITY TO CONTRACT  An agreement becomes a contract if it is entered into between the parties who are competent to contract (Sec. 10).

Every person is competent to Contract (i) who is of the age of majority; (ii) who is of sound mind; and (iii) who is not disqualified from contracting by any law.

Contracts by a Minor  A ‘minor’ is a person who has not completed the age of 18 years.  However in the following cases, a person continues to be a minor up to 21 years of age: a. Where a guardian of a minors person or property is appointed. b. Where the superintendence or a minors property is assumed by a court of wards.

Minor’s agreement inoperative ab initio  A minor’s contract is absolutely void ab initio: In other words, a minor is neither liable to perform what he has promised under an agreement, nor liable to repay money received under it. Case Law Mohiri Bibi vs. Dharmodas Ghose (1903)

Rules regarding contracts with Minors  Minor can always plead Minority.  No ratification(=approval) on attaining majority.  Contracts by a parent or guardian – whether enforceable.

 Contracts by minor and adult jointly.  Minor as partner.  Minor as an agent.  Minor as a shareholder.  Minor and insolvency.  Minor’s liability in torts. Rules regarding contracts with Minors

Meaning of Rule of Estopple  As per rule of Estoppel when one person has by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true.  It does not apply to Minor.

So, when can a minor contract? (Exceptions) a)Contracts of marriage b)Contracts of apprenticeship c)Contracts for necessities and benefits.

 Section 68 Minor is liable to pay out of property for the necessaries supplied to him.  Only his property is liable and he is not personally liable.

Contracts for Necessaries  Necessary goods – defined in Sec.3(3), SOGA 1979 as ‘goods suitable for his condition in life, and to his actual requirements at the time of sale and delivery’.  Minors should pay for those goods and services actually supplied to them that are necessaries according to their station in life. Purpose of this rule  To allow minors to enter into contracts beneficial to them  To prevent unscrupulous businesses from taking advantage of their youth and inexperience.

Necessary does not mean Necessity “Necessary” can be more than just food and clothing. what is deem necessary may differ according to the particular minor. Example : Latest Apple laptop – for a Business student or Graphic Design student.

Nash v Inman (1908) A Cambridge undergraduate, the son of an architect, was supplied with clothes, including 11 ‘fancy waistcoats’, to the value of $122. The cloth could be appropriate to the station in life of the undergraduate, but the contract was not enforceable because the minor was already adequately supplied with clothes. Therefore clothes supplied by the tailor could not be classified as necessaries. 13

Girton College - Cambridge University

Doctrine Of Restitution  The act of restoring to the rightful owner something that has been taken away, lost, or surrendered.  The act of making good or compensating for loss, damage, or injury; indemnification.

Agreements with Minor  the case of Mohoribibi vs. Dharmodas Ghosh in 1903, a minor had taken a loan and then he sued to avoid the contract. Privy Council held that any contract with a minor is void ab initio and so the loaner cannot get any money that he gave as advance back. This rule is adopted all over India whether or not it benefits the minor.  In the case of Mir Sarwarjan vs. Fakhruddin Mohd. Chaudhary 1912, a contract to purchase a property was done on behalf of minor. It was held that the minor could not be sue for getting the possession of property.

Cont….  However, since in today's times minors are coming a lot in public life, it is not always possible to consider an agreement with a minor to be always void. Therefore, in the case of Srikakulam Sbhramanyam vs. Kurra Sabha Rao 1949, Privy Council held that a sale of inherited property of a minor to pay off inherited debt effected by the guardian was binding on the minor.

Doctrine Of Restitution  If a minor obtains property or goods by misrepresenting his age, he can be forced to return it but only as long as the goods are traceable in the minor's possession. This is called doctrine of equitable restitution.  If the minor sells or converts the property, the value of the goods cannot be retrieved because that would amount to enforcing a void contract.  In the case of Leslie vs. Sheill, a minor got 400 pounds from money lenders by misrepresenting his age. The money lenders could not recover it under any of fraud, quasi-contract, or doctrine of restitution.

Contracts by Persons of Unsound Mind  Contracts by Lunatics.  He suffers from intermittent intervals of Sanity and Insanity. Example: A patient in a lunatic asylum who is at intervals of sound mind, may contract during those times.

Contracts with  Idiots  Is a person who has completely lost his mental powers due to some mental strain or personal experience.  Idiocy is permanent.  An agreement with Idiot is a VOID agreement

Contracts by Drunkards or Intoxicated People  Contract by such a person is absolutely void and cannot be ratified.

Contracts with Parda-Nishin Women  In order to make a valid contract with such a woman, it should be established that the deed was not only executed by her but was explained to and understood by her.

Contracts by Married or Single Women  Can enter into contract if she is a major and does not suffer from any disability.  A married woman can enter into a valid contract w/o her husband’s consent.  A married woman can even bind her husband’s property and pledge his credit for pressing necessities.

Person disqualified by law

Following are the people disqualified by law Alien enemy: A person who is not a citizen of India is called an alien. Convicts: convict is incapable of entering into contract and the incapability ends when sentence expires or punishment finish. Corporation: A company is artificial person created by law. It can only contract through its board of directors.

Other Contracts  Foreign Sovereigns and Ambassadors