Can anyone enter into a contract?

The answer for this would be no. we know that we enter into many contracts on a daily basis but not everyone can enter into contracts according to the Indian Contract Act,1872 the capacity to contract is clearly mentioned. the article will focus on who can enter into a contract and who cannot.

the concept is explained in two sections as explained below.

Sec.11 states the following

“11. Who are competent to contract. —Every person is competent to contract who is of the age of majority according to the law to which he is subject,1 and who is of sound mind and is not disqualified from contracting by any law to which he is subject.”

This section says that every person is competent to contract and creates exception of the following 3 grounds: –

  1. Age of majority

This means that one should be considered as a major according to the taw he is subject to. In India the age of majority is 18 years according to the section 3 of The Indian Majority Act, 1875.such contracts with minors are considered as void ab initio (void from the beginning)

However, there are a few exceptions to this rule. A minor is allowed to enforce a contract which is of some benefit to him and he has to bear no obligation under this contract. This was enforced in the case of Raghava Chariar v. Srinivas[1].  Ordinary trade contracts are not including in these beneficial contracts. The minor has an option to retire from a beneficial contract after attaining majority. The minor is generally not held liable for entering into a contract by misleading the other party to be a major. A person cannot ratify (making a contract that was void valid) an agreement made by him during his minority after attaining majority.

Effects of minor’s agreement

  1. No estoppel against Minor

A minor who has entered into contract by misrepresenting his age can disclose his age and make the contract void by disclosing his real age. This means that there is no estoppel against him.

  • No liability in contract or in Tort Arising out of Contract.

A minor cannot be held liable for any obligations of the contract and he is not capable of giving a consent and the consent given by the minor is not a valid consent.

Doctrine of Restitution

Under this doctrine if a minor buys or sells property or goods by misrepresenting his age, he will be compelled restore it but only if the goods or property are traceable and in his possession. A famous case law under this doctrine is Leslie (r) Ltd. v. sheill[2].

  • Sound mind

Here soundness of mind refers to the capacity of the person to think like a reasonable human being and take decisions and understand the consequences of those decisions and act accordingly. Someone of an unsound mind at the time of entering into a contract is considered to be incapable of entering into a contract. (explained in detail in section 12 of The Indian Constitution,1872).

Section 12 of The Indian Contract Act,1872 states

“12.What is a sound mind for the purposes of contracting.—A person is said to be of sound mind for the purpose of making a contract, if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests. —A person is said to be of sound mind for the purpose of making a contract, if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests.” A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind. A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind.”

This means that one may not be completely disqualified from contracting if he is of unsound mind but it is determined on the basis on the soundness of the mind of a person while entering into the contract. for example, if a person is suffering with a lunatic asylum and he is at a state of not being able to think like a reasonable human being only at certain times and is normal at the other times, he is normal. Then the contracts made by him during his state of sound mind will be valid and contracts entered by him during the state of unsound mind are con considered to be valid.

  • Not disqualified from contracting by law

One should not be disqualified from contracting by the law he is subject to. This means that for example contracts with alien enemy or a person from a nation with whom the nation is in a war.  


[1] Raghava Chariar v. Srinivas ILR (1916) 40 MAD 630 (FB)

[2] Leslie (r) Ltd. v. sheill (1914) 3 KB 607 (CA)

Published by Tanmayi Kss

I am a first year law student.

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