CAPACITY OF PARTIES

One of the essential conditions for the validity of an agreement is that all the parties to it must have capacity to enter into contracts. Section 11 of the Contract Act states that 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.

Thus the Section declares that a person is incompetent to contract under the following circumstances: If he is a minor, according to the law to which he is subject, If he is of unsound mind, and If he is disqualified from contracting by any law to which he is subject.

MINOR According to the Indian Majority Act, 1875, a minor is one who has not completed his or her 18th year of age. So a person becomes a major after the completion of 18th year of life. To this rule there are two exceptions(a) When a guardian of the minors person or property is appointed by a court of law and (b) When a minors property is taken over by the Court of Wards for management. In either cases minority continues up to the completion of the 21st year.

The Law regarding Minors Agreement

1.Minors agreement is void: Law acts as the guardian of minors and protects their rights, because their mental faculties are not maturethey dont possess the capacity to judge what is good and what is bad for them. Accordingly, where a minor is charged with obligations and the other contracting party seeks to enforce those obligations against minor, the agreement is deemed as void ab-initio.

2.Beneficial agreements are valid contractsCourt protects the rights of minors. Accordingly, any agreement under which a minor has received a benefit can be enforced as against the other party. In other words, a minor can be a beneficiary e.g., a payee, an endorsee or a promisee under a contract. Example- Where a minor had performed his part of the agreement and delivered the goods, he was held entitled to maintain a suit for the recovery of their price.

3.Minors liability for necessaries- The minors property is liable for the payment of a reasonable price for necessaries supplied to the minor or to anyone whom the minor is bound to support. What is a necessary article is to be determined from the status, and the social position of the minor. The price which the trader will get is reasonable price, not the price agreed to by the minor. Only the minors property is liable. The minor is not personally liable.

Example- A trader supplies a minor with rice for his consumption. He can recover the price from the minors property. What are necessaries? - What goods and services are necessaries for minors are determined by their status and social position. Necessaries include the following: Goods- Physical goods are necessary not only for bare existence and also for reasonable comforts and luxuries to which the minor concerned is habituated. Services rendered- A minor requires certain services for example a nurse for an infant, a teacher for him, the marriage expenses of a minor etc. Loans- If required the minor can incur loans for his necessaries.

4.Law regarding compensation or restitution- A minor cannot be compelled to compensate for or refund any benefit which he has received under a void agreement.
Example- A minor sells a house for 50,000 tk. Later he files a suit to set aside the sale on the ground of minority. He may be directed to refund the purchase-money received by him.

5.Partnership by minor- A minor cannot enter into a contract of partnership. But he can be admitted into the benefits of a partnership with the consent of all the partners. 6.A minor can be an agent- A minor can draw, make, indorse, and deliver negotiable instruments so as to bind all parties except himself. When a minor and a major jointly enter into an agreement with another person, the minor has no liability but the contract can be enforced against the major if his liability can be separately ascertained.

7.Position of minors guardian- An agreement by a minor is void but an agreement by his guardian on his behalf is valid provided the obligations undertaken are within the powers of the guardian.