Introduction to capacity to contract
In India, the law regarding contracts is majorly the Indian Contract Act of 1872. Therein, capacity is dealt with in Section 11 of the Act. Section 11 says:
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, and who is of sound mind and is not disqualified from contracting by any law to which he is subject.
The first factor of Section 11 is that of the age of majority, that is, this section is also applicable to minors.
- Minors: In India, Act XI of 1875 determines the age of majority. Section 3 of the Act lays down that every person domiciled in British India shall be deemed to have attained his majority when he shall have completed his age of eighteen years, and not before. By virtue of section 11, a minor is incompetent to contract. But the Indian Contract Act is conspicuous by its silence about the nature of a minor’s contract. It is thus not clear as to whether a minor’s contract is void or voidable.
- Sound Mind: 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.
- Imbecility: An imbecile person is one who has no understanding from his infancy. Contracts entered into by such persons, other than those for necessaries, are void.
- Drunkenness: A contract by a drunken person is voidable only and not void and so it may be ratified by him when he is sober.
- Old Age: Mere loss of memory is not sufficient to constitute unsoundness of mind as such loss of memory, on its own, does not render any person unable to manage his own affairs. It has been held that loss of memory and absent mindedness is not inconsistent with the acts of a sane man. Therefore, even an extremely old man with declining strength of mind and body may be deemed fit to contract if he could exercise an independent and intelligent mind over what he is doing.
By – Shradha Arora
(Editor @ Legal Bites)