Ch.2.1. Minors contract:
Section 11 of the contract act, states that the parties to the contract must be competent to contract is that, the two parties must not be "incapax". There is no capacity when a party is a minor or insane, an idiot or when he is disqualified according to any special law, to which he is subject.
i) Contract entered into by a minor is void ab-initio:
A person who has not completed 18 years of age is a minor and in the case of a ward he is a minor until he attains thee age of 21 years. The leading case on this point is Mohori Bibi Vs. Dharmadas Ghosh (1903). D. Dharmadas a minor executed a mortgage for a sum of Rs.20,000/- out of which the money lender M had paid him only Rs.8,000/-. M had notice of the minority of D, D sued to set aside the mortgage. It was held by privy council that the contract was void ab-initio and no question of refunding moneys arose in such a transaction.
This has been followed in a number of cases. Hence it is settled that a Minor's contract is void from the beginning. The aim of the Contract Act is to protect the interests of a minor, and to save him from the transactions in which the other party may have taken advantage of the minority of the person. It has been held that if a minor performs his promise and delivers goods to another party, the minor has got a right to recover the price through his guardian. The minor is entitled to plead his minority and is not estopped under the provisions of the evidence act (Sn.115). This is settled \in SadiqAli Khan V.JaiKishore; a deed entered into by a minor was held a nullity. False representation as to age, could not stop him from pleading his minority.
ii) Necessities supplied to a minor :
According to Sn. 68 of the contract act if necessaries are supplied to the minor then the person who supplies is entitled to be reimbursed of the amounts from the property of the minor. The minor is not personally liable. Leading case : Rider Vs. Wombwell. Supplying golden buttons etc., to a minor was not a "necessity").
iii) Estoppel, not applicable to minor :
Even if a minor falsely represents himself to be a major and enters into a contract, the contract is void and unenforceable. The minor may plead his minority in the suit against him. The rule of Estoppel that he shall not deny his representation as a major, is not applicable to him. This does not entitle him to cheat persons and gain some advantage. If he cheats a trader and gains property, he will be liable to restore it to the trader.
iv) Ratification :
As the minor's agreement is void ab initio, the minor cannot ratify and make the contract valid after attaining majority. There is no specific performance against the minor as the agreement is void ab initio.
Ch. 2-2. Insanity, Idiocy :
Incapacity may arise as a result of insanity or idiocy. The rule in such a case is that a contract made by an. insane or an idiot is void ab-initio. But a lunatic who is usually of sound mind but occasionally of unsound mind may make a valid contract, during his lucid intervals. Sn. 12; The test is, such a person must be capable of understanding the contract, and of forming a rational judgement as to his interests. "A", a patient in a Mental Hospital, who is at intervals of sound mind, may contract when he is of sound mind.
Drunkenness is also considered as an incapacity and contract made by a drunken person is void. Hence a man who is so drunk that he cannot understand the contract or who cannot form rational judgement cannot make a valid contract. Other incapacities : Incapacity may arise as a result of the status of persons as in the case of foreign sovereigns, Ambassadors, enemy alients etc.