THEORY OF ABROGATION

CAPACITY TO CONTRACT
WITH SPECIAL REFERENCE TO MINOR’S AGREEMENT

SABA FATIMA

ABSTRACT
For entering into any contract person must be legally competent to contract as defined by law
someone’s capacity is determined by whether or not they have reached the age of majority or
if they are mentally capable of understanding the applicability of contract for giving valid
consent. This article is bifurcated into three parts. The first part will focus on concept and
applicability in introductory section. Second part will deal with present scenario of law and its
relevancy. Third part will end with concluding remarks.

INTRODUCTION

A valid contract should have all essential elements including offer, its communication, meeting
of minds acceptance, communication of acceptance, consideration, capacity, legality.

1
THEORY OF ABROGATION

According to section-101 of the Indian Contract Act 1972, the parties to the contract should be
competent to make the contract.it is one of the essentials of valid contract. And according to
section-11of Indian Contract Act 1972,

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.2

Despite being ineligible to enter into

contracts, these individuals should still be
entitled to specific legal protections and
safeguards when it comes to engaging in
transactions such as making purchases,
obtaining loans, receiving goods from
third parties, or receiving certain benefits.
NATURE OF A MINOR’S AGREEMENT

The case of Mohori Bibee vs Dharmodas Ghose is significant as it highlights the importance
of protecting minors in agreements. In this case, a minor named Dharmodas mortgaged his
property to secure a loan of 20k from Brahmo Dutt, who was a money lender. At the time of
the transaction, the attorney acting on behalf of the money lender knew that Plaintiff is a
minor. 10.5k was advanced as a loan. Plaintiff brought an action against Defendant stating he
was a minor when the mortgage was executed. The important ruling that arose out of this
case was that under Indian statutes contracts with any minors were void ab initio.3 this case
also solves the great controversy in this connection among the Indian High Courts up to 1903
and the Privy Council finally resolved the controversy by declaring that the combined effect
of Section 10 and 11 is to make the minor’s agreement void.

1
The Indian Contract Act 1872, “All agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly
declared to be void.” This specific wording helps us derive that there are certain tenants that constitute a valid
contract
2
See the Indian Majority Act, 1875 (9 of 1875)
3
(1903) ILR 30 Cal 539 (PC)

2
THEORY OF ABROGATION

Illustration: A, a minor sold a house to B, the consideration was paid to A, but the sale-deed
could not be registered as A was a minor. On a suit by B, it was held that as A was minor, the
contract was void and amount of consideration was not recoverable.

In Raja Rami v. Prem Adib 4

Facts: A film producer entered into an agreement with a minor girl to act in a film and the
same agreement was entered into by the father of the minor on her behalf with the producer,
when the producer failed to keep up with the commitments. The minor sued the producer
through her father. The court said that agreement is void, as one of the parties to a contract is
minor. The consideration moving from the father was the girls’ promise to act and as the girl
was not legally competent to promise, there was no consideration at all. Hence contract
between producer and girl’s father is void.

CONTRACT BENEFICIAL TO MINOR

CASE- Clements v. London and North Western Rail Co5: An infant, who was employed as
a porter in a railway company agreed with his employers that he would join company's own
insurance scheme and would not make any claim for personal injury under the Employers'
Liability Act, 1880. Under the company's insurance scheme, the rate of compensation was
lower but it covered more cases of accidents for which compensation could be recovered than
under the Employers' Liability Act. It was held that on the whole the agreement was beneficial
to the minor and, therefore, the same was binding on him.

Section.68 of Indian contract Act says ‘If a person, incapable of entering into contract or
anyone whom he is legally bound to support, is supplied by another person with necessities

4
Raj Rani vs Prem Adib on 21 July, 1948
5
[1894] 2 Q.B. 482

3
THEORY OF ABROGATION

suited to his condition in life, the person who has furnished such supplies is entitled to be
reimbursed from the property of such incapable person.’6

Illustration- (A) supply the wife and children of (B), a lunatic, with necessaries suitable to their condition
in life. A is entitled to be reimbursed from B’s property.

In the case of Nash v Inman-7 it was held that an infant like a lunatic is incapable of making
a contract of purchase, but if a man satisfies the needs of the infant or lunatic by supplying to
him the necessaries the law will imply an obligation to repay him for the services so rendered,
and will enforce that obligation against the estate of the infant or lunatic.

A minor can be a beneficiary or a promisee. The Indian Contract Act, 1872 allows a minor to
receive benefits under a contract even though he cannot enter into the contract. In the eyes of
law, a minor is not considered incapable of accepting benefits. As long as the minor has paid
the full consideration and nothing further is required of him to do or incur any liability under
the contract, he can get the prescribed benefit.

PERSONS OF UNSOUND MIND

Similar to minors, individuals who are of unsound mind are also considered legally incapable
of entering into valid contracts. Section 12 of the relevant law states that a person is deemed to
be of unsound mind for contract purposes if, at the time of making the contract, they lack the
ability to comprehend it and make a rational judgment regarding its impact on their interests.
Therefore, in order for consent to a contract to be valid, the individual must be of sound mind,
capable of understanding the implications and intricacies of the contract.

PERSON DISQUALIFIED BY LAW

Alien enemies are also one such category that are exempt unless afforded special provision by
the state. This was established in Feroza Begum and Ors. v. Dewan Daulat Rai Kapoor and
Ors8, Section 83 of the Code of Civil Procedure stipulates that "Alien enemies residing in India
with the permission of the Central Government, as well as alien friends, have the right to file a

6
SECTION-68, INDIAN CONTRACT ACT.
7
Nash v. Inman (1908) 2 K B I
8
AIR 1975 Delhi 1

4
THEORY OF ABROGATION

lawsuit in any court that has the jurisdiction to hear the case, treating them as if they were
Indian citizens. However, alien enemies residing in India without such permission or those
residing in a foreign country are not permitted to initiate legal proceedings in any such court."

CONCLUSION

As per the research I found that Competency of parties to contract is one of the most important
requirements to make an agreement valid and enforceable in a court of law. A contract made
by minor and unsound person who is not able to understand the nature and consequences of the
contract is void ab initio. On the other hand, contracts with lunatics, people under the influence
of the drug may/may not be void depending upon the circumstances and situation. After the
removal of any of the disqualifications from person he will regain the legal capacity to contract.
Under English law all contracts entered by minor are not void some are voidable. But in India
minor’s agreement is as a general rule void. If minor’s agreement is void, no suit can lie against
him, nor can the minor ratify it on attaining majority. The ruling of the Privy Council in Mohori
Bibi Case was generally followed by the courts in India sometimes to the advantage and
sometimes to the disadvantage of minors. If contract is entered by legally appointed guardian
of a minor on behalf of and for the benefit of minor, the contract is valid if it is beneficial to
minor

SABA FATIMA

BA.LL.B THIRD YEAR

JAMIA HAMDARD UNIVERSITY, NEW DELHI