Capacity to Contract — Section 11 — KSLU Contract I Notes

Capacity to Contract

Minor’s agreement: the largest part of capacity — a minor’s agreement being void ab initio — is covered on its own page: The Minor’s Agreement & Its Effects.

A sharp 16-year-old buys a motorbike on credit, lies that he is 18, then refuses to pay. Who wins — the clever teenager or the cheated dealer? Contract law’s answer surprises most people, and that surprise is exactly what the examiner tests. The whole topic turns on one idea: some people the law protects from their own promises.

Who may bind themselves

Section 11 says every person is competent to contract who is (1) of the age of majority — 18 years under the Indian Majority Act, 1875 (amended 1999), (2) of sound mind, and (3) not disqualified from contracting by any law. Everyone else lacks capacity.

Persons of unsound mind — Section 12

A person is of sound mind for contracting if, at the time, he is capable of understanding it and of forming a rational judgment as to its effect on his interests. A usually-sane person may contract during a lucid interval; a usually-insane person may contract only when sane. Drunkenness or delirium that prevents understanding removes capacity.

Persons disqualified by law

Certain persons are disqualified by their status: alien enemies, foreign sovereigns and ambassadors (immunity), convicts while undergoing sentence, and insolvents. Their contracts are void or unenforceable to that extent.

🧩 WORKED EXAMPLE — the minor who lied about his age.

Facts. A, a minor, falsely represents to B that he is a major and buys goods on credit. B sues to recover the price.

Rule. A minor’s agreement is void ab initio and there is no estoppel against a minor even where he misrepresented his age (Mohori Bibee).

Apply. The agreement never bound A; B cannot enforce it, and A is not estopped by his lie. B may at most recover identifiable goods still with A.

Conclusion. B cannot recover the price; the contract is void.

Section 11, Indian Contract Act, 1872: “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.”

In Simple Terms: to make a binding contract you must be an adult, of sound mind, and not barred by law — a minor fails the first test, so his agreement is void from the start.

flowchart TD
    CAP["Capacity to contract (s.11)"]
    CAP --> A["Age of majority (18)"]
    CAP --> B["Sound mind (s.12)"]
    CAP --> C["Not disqualified by law"]
    A --> M["Minor's agreement = VOID ab initio (Mohori Bibee)"]
    M --> R["No ratification · No estoppel · Necessaries recoverable from minor's property (s.68)"]

Case Laws

• [C-4] Mohori Bibee v Dharmodas Ghose (1903) — a minor’s agreement is void ab initio; no estoppel, no ratification.

• Leslie v Sheill (1914) — a minor who obtained a loan by lying about his age could not be made to repay it in contract or tort.

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