Feedback

Understanding Contracts: Who Can and Cannot Enter into Legal Agreements

In the field of law, a contract is a legally enforceable agreement, as defined by Section 2(h) of the Indian Contracts Act, 1872. For a contract to be valid, it must meet certain criteria outlined in Section 10 of the Act, including the capacity of the parties involved.

Capacity to Contract 

Capacity to contract refers to the legal competency of individuals to enter into a valid contract. According to Section 11 of the Act, parties must be of the age of majority, of sound mind, and not disqualified by law to enter into a contract. This ensures that parties are fully aware of their obligations and can legally bind themselves to an agreement.

Competent Parties 

Those eligible to enter into a contract include individuals of sound mind, those above the age of majority (18 years), solvent persons, and individuals not disqualified by law.

Incompetent Parties 

Certain individuals are deemed incompetent to contract. These include:

• Persons of Unsound Mind: Individuals who are not mentally capable at the time of contract formation.
• Minors: Individuals under the age of 18, whose agreements are void and cannot be enforced under Indian law.
• Persons Disqualified by Law: Individuals such as alien enemies during wartime, insolvent persons, and others disqualified by specific legal provisions.

Effects of a Minor's Agreement 

Minors cannot be held to the terms of a contract due to their incapacity to consent fully. They are not estopped from claiming infancy as a defense and cannot be held liable for contractual obligations or associated torts arising from such agreements.

Contracts for Benefits 

Minors can benefit from contracts where they are the beneficiaries, such as purchasing property. However, specific performance cannot be enforced against a minor.

Legal Provisions 

Section 68 of the Indian Contract Act allows minors to be liable for necessaries received, provided these are reasonable and essential for their support.