WHO ARE COMPETENT TO CONTRACT? (Section 11)
One of the essentials of a valid contract is the competency of the parties to make contract. Law has laid down certain rules as to who are competent to enter into a valid contract. As per Section 11 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. From the above provisions of the section it means the following types of persons are not competent to contract:
(a) A person who has not attained the age of majority, i,e minor.
(b) A person of unsound mind
(c) A person who is disqualified from contracting by some law.
Age of majority: According to section 3 of Indian majority Act-1875 every person domiciled in Indian attains majority on the completion of 18 years of age. But there are two exceptions to rule of age of 18 years:
a. Where a guardian of a minor’s person or property is appointed under the Guardian and wards Act, 1890.
b. Where minor’s property has passed under the superintendence of the court of words.
The position of minor as regards his agreements may be summed up as under:
1. An agreement with or by a minor is void and inoperative ab initio: The Privy Council affirmed this view most emphatically in Mohiri Bibi v. Dharmodas Ghos, in this case, a minor mortgage his house in favour of a money-lender to secure a loan of Rs. 20,000 out of which the mortgagee (the money-lender) paid the minor a sum of Rs.8, 000. Subsequently the minor sued for setting aside the mortgage, stating that he was underage when he executed the mortgage. Held, the mortgage was void and. Therefore, it was cancelled. Further the money lender’s request for the repayment of the amount advanced to the minor as part of the consideration for the mortgage was also not accepted.
2. He can be a promise or a beneficiary - Incapacity of a minor to enter into a contract means incapacity to bind himself by a contract. There is nothing which debars him from becoming a beneficiary, e.g. a payee [Sharafat Ali v. Noor Mohd.], endorsee or a promise in a contract. Such contracts may be enforced at his option, but not at the option of the other party. The law does not regard him as incapable of accepting a benefit.
3. His agreement cannot be ratified by him on attaining the age of majority- “Consideration which passed under the earlier contract cannot be implied into the contract into which the minor enters on attaining majority.” [Nazir Ahmed v. Jiwan Das]. Thus consideration given during minority is no consideration. If it is necessary a fresh contract may be entered into by the minor on attaining majority, provided it is supported by fresh consideration.
4. If he has received any benefit under a void agreement, he cannot be asked to compensate or pay for it. Sec. 65 which provides for restitution in case of agreements discovered to be void does not apply to a minor.
5. He can always plead minority : Even if he has, by misrepresentation tenting his age, induced the other party to contract with him, he cannot be sued either in contract or in tort for fraud because if the injured party were allowed to sue for fraud, it would be giving him an indirect means of enforcing the void agreement.
6. There can be no specific performance of the agreement entered into by him as they are void ab ignition: A contract entered into on his behalf by his parent/guardian or the manager of his estate can be specifically enforced by or against the minor provided the contract is (a) within the scope of the authority.
7. He cannot enter into a contract of partnership: But he may be admitted to the benefits of an already existing partnership with the consent of the other partners. For a detailed discussion of minor as a partner refer to the chapter on Law of Partnership.
8. He cannot be adjudged insolvent: This is because he is incapable of contracting debts.
9. He can be an agent: An agent is merely a connecting link between his principal and a third party. As soon as the principal and the third party are brought together, the agent drops out. A minor binds the principal by his acts without incurring any personal liability.
10. His parents/guardian are/is not liable for the contracts entered into by him, even though the contract is for the supply of necessaries to the minor. But if the minor is acting as an agent for the parents/guardian the parents/guardian shall be liable under the contract.
Minor’s liability for necessaries: Section 68 provides that a minor is liable to pay out of his property for ‘necessaries’ supplied to him or to his minor dependants whom is legally bound to support. It is important to note here that it is only the minor’s property which is liable for meeting the liability arising from such contracts and the minor is not personally liable. Necessaries would include:
a) necessary goods that are
(i) suitable to the position and financial status of the minor, and (ii) necessaries both at the time of sale and at the time of delivery. For e.g. An engagement ring may be a necessary, but not a vanity bag bought for the minor’s fiancée.
b) Services rendered that are required for the living and maintenance of the minor. e.g. Education, training for a trade, legal advice, etc.