CAPACITIES OF PARTIES

The ‘capacity of contract’ means the capability to the parties to enter in to a valid contract i.e. The parties should be mature enough to understand the effect of agreement.

Accounting to Sec.11 of I.C.A.A Person who is major, of sound mind, and is not disqualified from contracting by law is competent to enter into a valid contract. Thus all the three tests (i.e. age, soundness, disqualification) must be applied to determine whether a person is competent to contract or not.

As per Sec.11 of I.C.A, the following persons are not competent to contract i.e. they are incapable of entering into a valid contract.

(1)Minors     (2) persons of unsound mind    (3) persons disqualified by law.

(1)     MINOR:  According Ses.3 of the Indian majority Act 1875.

‘A minor is a person who has not completed eighteen years of age’.

Thus A minor is a person who has not attained the age of minority eighteen years. (i.e.) he is a person who is below the age of 18 Years.

In the following 2 cases a person becomes a major on completing the age of 21 years.

a)      Where a guardian of minor’s person or property has been appointed under the guardians and wards Act 1890 or

b)      Where the superintendence of a minor’s property is assumed by a court of wards.

The age of majority is to be determined according to the law to which the minor is subject. For ex:  in England for all purposes, a minor is a person who is under the age of 18 years.

Why should minors be protected? :  A minor has an immature mind and can’t think what is good or bad for him. Minors are often exploited. So he must be protected by law from any exploitation. But at the same time, the law must not cause unnecessary hardship to the persons who deal with minors.

Legal rules:  The law relating to minor’s agreements and effects thereof can be discussed in the following points.

1)      Void Abinitio: An agreement with a minor is void from the very beginning and void absolutely (i.e.) it doesn’t create any legal rights and obligations between the concerned parties.

                                         CASE: Mohoribibi vs Dharmodas Ghose

2)      No estoppel against a minor: When someone makes another person to believe that a particular thing or fact is true then later on he cannot be allowed to deny the truth of that thing.

It will be interesting to know that there is no such estoppel against the minor. In other words where a minor by misrepresenting his age has induced the other parties to enter in to a contract with him, he cannot be made liable on the contract. There can be no estoppel against a minor. I means he is not stopped from pleading his minority in order to avoid a contract. No doubt minor has got protection but he has no liberty to cheat man.

CASE: Sadique Alikhan  vs  Jaiksihore

3)      No ratification: - It means act of confirming or approving, an agreement with minor is completely void. An agreement made by a minor (during his period of minority) cannot be confirmed by him on attaining majority. This is so because minor’s agreement is void- ab- initio and therefore cannot be made valid by ratification. However if the minor wants to carry out the agreement, a fresh contract should be made on attaining majority. But a fresh consideration is required for that new agreement.

                                         CASE:   Arumugan vs. Duraisinga.