Himachal Pradesh National

Law University

Topic-Capacity to Contract
Name-Vishwajeet Singh

Subject-Law of contract

Semester-2nd

Roll no.-49

Submitted to- Mrs. Navditya Tanwar

ACKNOWLEDGEMENT

I would like to thank Prof. Dr. S.C. Raina, Vice Chancellor, HPNLU, Shimla for providing me
with this golden opportunity to write on “Capacity to contract “ am highly obliged to him that he
provided me with resources so that I could make this assignment a successful task.

I would also like to thank Mrs. Navditya Tanwar our Law of contract professor that she provided
me with such an opportunity to present on the topics “Capacity to contract” in every way possible.
She supported in every obstacle I faced during this process and it could not have been possible
without his support.

I would also like to thank my parents who provided me with enough resources so that I could
accomplish this impossible task.

Last but not the least I would also like to thank god who has given me determination and energy
to complete this cumbersome task.
 Capacity to Contract
On the essentials of a valid contract, mentioned in Section 10,of Indian Contract Act,1972,is that
the parties to the contract should be competent. According to section 11:

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

It means that the following three categories of persons are not competent to contract:-

 A person who has not attained the age of majority

 A person who is of unsound mind
 A person who is disqualified from contracting by some law

Although the above stated categories of persons are not competent to contract, yet they may
sometimes be making some bargains, taking some loans, or be supplied with some benefits, etc.
the position of such people is being discussed below.

THE POSITION OF A MINOR

Who is a minor

A person who has not attained the age of minority is a minor. Section 3 of The Indian Act,1875
provides about the age of majority. It states that a person is deemed to have attained the age of
majority when he completes the age of 18 years, except in case of a person of whose person or
property a guardian has been appointed by the court, in which case the age of majority is 21 years.
In such a case the majority does not arise till the completion of 21 years of age by the ward, and it
is immaterial, whether the guardian dies or is removed, or otherwise ceases to act1. In England, the
age of majority is 18 year2 .

Nature of Minor’s agreement

1 Jaogona Ram Marwari v. Mahadeo prasad Sahu, I.L.R. (1909) 36 Cal. 768
2 Family Law Reform Act, 1969.
As noted above a minor is not competent to contract. One question which arises in case of an
agreement by a minor is, whether the agreement is void or voidable? The Indian Contract Act,1872,
does not have any provision to answer this question. In the absence of any statutory provision,
there had been controversy among High Courts on this point. The controversy was set at rest by
the decision of the privy council in Mohori bibee v. Dharmodas Ghose3, in 1903. It has held that
the agreement by a minor was void.

The facts of Mohori Bibee’s case are as under: The plaintiff, dharmodas Ghose, while he was a
minor, mortaged his property in favour of the defendant, Brahmo Dutt, who was a money-lender
to secure a loan. At the time of the transaction the attorney, who acted on behalf of the money-
lender, had the knowledge that the plaintiff was a minor.

The minor brought an action against the money lender stating that he was a minor when the
mortage was executed by him and, therefore, the mortage was void and inoperative and the same
should be cancelled. By the time the appeal to the privy Council the defendant, Brahmo Dutt died
and appeal was prosecuted by the executors.

The defendant the money lender, amongst other points, contended that:-

 The minor had fraudulently misrepresented his age, the law of estoppels should be applied
against him. In other words, he should not to plead that at the time of the transaction he
was a minor and therefore no relief should be given to the minor in the case; and
 If the mortgage is cancelled as requested by the minor, the minor also be asked to refund
the loan of Rs. 10,500 which he had taken.

The defendant’s contentions were rejected. Minor’s agreement was held void, and it was held that
the minor could not be asked to repay the loan taken by him on the above points raised by the
defendants, the matter was decided under:-

 The defendant contention that the minor had falsely misstated his age, the law of estoppel
should apply against him and he should not be allowed to contend that he was a minor, was
considered. The Privy Council rejected the contention, and the minor was allowed to plead
that he was a minor at the time of the agreement and the agreement is void. It was

3 (1903) 30 I.A. 114 (P.C.).

 found that at the time of minor walking into the agreement the minority was known to the
defendants agent. It was held that the law of estoppel as stated in the Indian Evidence act
was not applicable to the present case, because in this case the statement of was made to a
person who knew the real facts and was not misled by the untrue statement. It was observed:
 “There can be no estoppel where the truth of the matter was known to both of the parties,
and their lordships hold, that false representation, made to a person who knows it to be
false representation, made to a person who knows it to false, is not such a fraud as to take
away the privilege infancy.”

Another contention of the defendant was that, if the plaintiff claim to order the cancellation of
mortgage is allowed, the minor should be asked be asked to refund the money under section 64
and 65 of the Indian Contract Act.

Section 64 and 65 Indian Contract Act reads as under:-

“When a person at whose option a contract is voidable rescinds it, the other party thereto need not
perform any promise therein contained of which he is a promisor. The party rescinding a voidable
contract shall,if he has received any benefit there under from another party to such contract, restore
such benefits, so far as may be, to the person from whom it was received.”

The lordship observed that section 64 was applicable to the case of a voidable contract. Minor’s
agreement being void, section 64 was not applicable to the case and therefore the minor could not
be asked to pay the amount under this Section .

Application of section 65, Indian Contract Act, to the present case was also considered. Section 65
is as follows :

“When an agreement is discovered to void or when a contract becomes void , any person who has
received any advantage under such agreement or contract is bound to restore it, or to make
compensation for it, to the person from whom he received it.”

As regards the application of the section to the present case it was observed that this section, like
Section 64, is applicable to an agreement or contract between competent parties, and has no
application to a case in which there never was, and never could have been, any contract. The minor,
therefore, could not be asked to repay the amount even under section 65.

The law commission of India4 disagreed with the interpretation given by the privy council to
section 65. In their view section 65 covers the case of a minor, who makes false representation that
he is a major and such a minor should be asked to pay the compensation. They recommended that
an explanation be added to section 65 to give effect to their opinion. Their opinion is as under5:

“We feel that Judicial Committee had not actually interpreted section 65 and we are of the opinion
that an agreement is ‘void’ or ‘discovered to be void ‘ even though the invalidity arises from
incompetency of a party to contract. We recommend that an explanation be added to section 65 to
indicate that the section should be applicable where a minor enters into an agreement on false
representation that he is a major.”

No amendment to the contract act has been done so far to give affect to the recommendations of
the law commission.

The money lender claimed the compensation on section 41 of the Specific Relief Act 1877. The
section reads that:

“ On adjudging the cancellation of an instrument, the court may require the party to whom such
relief is granted to make any compensation to the other which may require.”

As regards this section, it was held that the section gives the discretion to the court to order
compensation, but under the circumstances of this case, justice did not require the return of the
money advanced to a minor, as the money had been advanced with the full knowledge of the
infancy of the plaintiff. The claim for refund under the specific relief act was, therefore,
disallowed.

Position under English Law

According to the general rule of common law, the contract made by an infant was voidable at his
option. The rule in the Infants Relief Act 1874 which declares the following three contracts
absolutely void

4 Law Commission of India, 13th Report, on Indian Contract Act, 1872

5 Law Commission of India, 13th Report, p.20
  Contracts for the repayment of money lent or to be lent
 Contract for supply of goods(other than necessaries);
 Contracts for accounts stated

Ratification of minor’s agreement

A minor’s agreement being void ab initio, incapable of being validated by a subsequent ratification
after the minor has attained the age of majority. The consideration furnished in respect of a
transaction during minority cannot be considered to be valid thus no ratification is possible of a
promise after attaining the age of majority for a promise made by person during the age of
minority6. Every contract needs a separate consideration, and consideration which passed under
the earlier contract cannot be imported into the contract which the minor entered on attainment of
majority7.

In Suraj Narain v. Sukhu Aheer8, a person borrowed some money during his minority and then
made a fresh promise, after attaining the age of majority, to pay the sum plus intrest thereon. The
consideration received during the age of minority a good consideration was the question before
the Allahabad high court it was held by a 2:1 majority decision that a consideration received during
the minority cannot be said to be a good consideration in the strict term mentioned in the section
2(d) of the Indian contract act and there was no question of that consideration being considered
valid for a fresh promise. The promisor, therefore, could not be made liable in respect of a promise.

If a person has received a part of the consideration during the minority and a part of the
consideration in the majority age and the person promises to pay for the consideration both of them
after the attainment of majority it I enforceable then which could be seen in the case of Kundan
Bibi v. Sree narayan9.

Ratification of acts done on minor’s behalf

6 Arumungan v. Duraisinga, I.L.R. (1914) 37 Mad. 38

7 Bhola Ram v. Bhagat Ram, A.I.R. 1927 Lahore 24,26
8 A.I.R. 1928 All. 440.
9 1906, 11 Cal. W.N. 135
A minor’s agreement is void ab initio, neither he can himself enter into a contract nor authorize
any agent to get to an agreement on his behalf. Ratification is an act done of the other persond
behalf a s the person on whose behalf the agreement is entered into is not in the capacity the
representative cannot enter into the agreement validation of a previously done act is also not
possible as seen above discussing ratification done after attaining of the majority age.

In Irvine v. Union Bank of Australia10 the privy council observed that:

“A ratification in law is treated as equivalent to a previous authority, and it follows that, as a

general rule, a person or body of persons, not competent to authorize an act, cannot give a validity
by ratifying it.”

As a minor is incapable of entering into any agreement he could not authorize any third person to
enter into an agreement on is behalf or rectify such action done in the past as at that time he did
not had the authority to enter into an agreement he could have been conferred by the person
ratifying the act at the date when the act were performed.11

No Estoppel Against a Minor

When a minor misrepresents at the time of contract that he has attained the age of majority, the
question arises in such a case is, does the law of estoppel apply against him, so as to prevent him
from alleging that he was a minor when the contract was made? Can he be made liable for on the
ground that at the time of entering the agreement he acted to attain the age of majority. Section
115 of the Indian Evidence Act which lays down the concept of estoppels:

“Where one person has by his declaration, act or omission intentionally caused or permitted
another person to believe a thing to be true, and act upon such belief, neither he nor his
representative to deny the truth of that thing.”

According to the rule contained in section 115, Indian Evidence Act, if you make a statement today
which misleads another person you are not allowed to deny the statement tomorrow when the
question of your liability arises. Meaning that if a person alters his position in faith of the act or
omission done by you he must be compensated for the act or omission he has done.

10 (1877) 3 Cal. 280

11 Tukaran v. Madhorao, A.I.R. 1948 Nag. 298, at p. 295
In the case of Mohori Bibee v. Dharmodas Ghose12,the minor did not misrepresented his age while
entering the contract so the element of estoppels is not taken into consideration by the privy
council.

Many cases have come up in the high court for the law of estoppels against the minor and the
decisions of the high court find that the consensus is that the law of estoppel does not apply against
a minor. He is allowed to plead minority as a defence to avoid liability under an agreement even
though at the time of making the agreement he misrepresented his age, falsely stating that he has
attained the age of majority.

In Vaikuntarama pillai v. Authimoolam chettiar13, the madras high court has held that there is a
clear statutory provision stating that a minor is incompetent to enter into a contract. The law of
estoppels is stated in the Indian Evidence Act which is a procedural law which could not over
power the statutory law. The same principle was found by the Bombay High Court in Gadigeppa
v. Balangowda14 observing that:

“I agree with the view of Madras High Court in Vaikuntarama pillai v. Authimoolam Chettiar, and
think that there could be no estoppels against an Act of the Parliament or against an Act of the
legislature, and the principle of estoppel cannot be invoked to defeat the plain provisions of the
statue.”

The Patna High Court also has held that the rule of estoppel is the rule of evidence , is subject to
provisions of the Indian Contract Act, which makes an agreement by a minor void.

In Khan Gul v. Lakha Singh15 the Lahore high court also held that the law of estoppels does not
apply against a minor. The reason advanced by Sir Shadi Lal C.J. is, however, different. According
to him the law of estoppel is a rule of evidence, is a general law and this has to read subject to
special law contained in the Indian Contract Act, according to which the agreement by minor is
void.

12 (1903) 30 I.A. 114 (P.C.) :30 Cal. 539

13 I.L.R. (1915) 38 Mad. 1071
14 A.I.R. 1931 Bom, 561
15 A.I.R. 1928 Lahore 609.
In Lakhwinder Singh v. Paramjit kaur16, the plaintiff- respondant, a daughter of Avtar Singh, now
deceased, inherited a part of his property consisting land. While minor, she executed general power
of attorney in favour of her mother Smt. Rattan Kaur, who executed a sale deed of land belonging
to her daughter favour of defendant- appellant.

Finding the defendant respondant was a minor at the time of execution of power of attorney nor
her mother obtainedspecial permission from the district court , sale of land was held void. The
Punjab and Haryana High Court , replying on supreme court decision in Kartar Singh v. Harbans
Singh17, held that the contention that the transferee was a bone fide purchaser would not be
available since he did not make all reasonable and diligent enquiries regarding the capacity of the
transferor and the necessity to alienate the estate of the minor.

Return of benefit secured by a fraudulent minor

English law the doctrine of restitution

According to the English law, if the minor has received any benefit so in transaction, he is required
to restore back the benefits received by him, under the equitable doctrine of restitution. It is
applicable against the minor to restore back the property taken by him in the way it is traceable, if
the property or anything that is taken by the minor is not traceable then the doctrine of restitution
is not applicable there.

The case of Leslie v. Sheill18 explains the doctrine. In this case the defendant the minor falsely
misrepresented himself to be a major, and obtained two loans of 200 pounds each from the
plaintiffs, who were money lenders. The plaintiff brought an action against to recover pounds 475
being the amount and the interest taken thereon. It was held by the court of appeal that the money
could not be recovered. If it was allowed it will the enforcing the agreement which was never there
and is void under the Infants Relief act 1874(repayment of loan, such agreements are void).

It was explained that the object of the doctrine of restitution is to restore back the ill gotten gains
taken by a minor, if the minor is asked to repay the ill gotten gains received from the agreement
which could not be traced back it would be the enforcing of the agreement which is void.

16 A.I.R2004 P. & H. 6.
17 (1904) 4 S.C.C. 730
18 (1914) 3 K.B. 607
In the words of Lord Sumner, “Restitution stops where repayment begins.”

The doctrine has been explained by Lord Sumner in the following words:

“Where an infant obtained an advantage by falsely stating himself to be of full age, equity required
him to restore his ill gotten gains, or to the party deceived from obligations or acts in law induced
by the fraud, or to release the party deceived from obligations or acts in law induced by the fraud,
but scrupulously stopped short of enforcing against him a contractual obligation,entered into while
he was an infant even by the means of fraud.”

As regards the question of restoring back the property is concerned, Lord Sumner referred to the
following observations of Lush J. in Stocks v. Wilson19:

“What the court of equity has done in cases of this kind is to prevent the infant from retaining the
benefit of what he has obtained by the reason of fraud. It has done no more than this, and this is
very different thing from making him liable to pay damages and compensation for the loss the
other party’s bargain. If the infant has received property by fraud he is compelled to restore it.”

Indian Law: Compensation by a Minor

It has been noted above that in the English law that the restoration of the property fraudulently
obtained is allowed if it could be traced. According to Leslie v. Sheill20, the money obtained by a
minor as the same cannot be traced. If the money was asked back it would be the asking of
enforcing the contractual obligation.

In India, the question of compensation under the following two kinds of provisions has arisen
before the courts:-

 Whether a minor can be asked to pay compensation under Section 64 and 65, Indian
Contract Act for the benefit obtained under a void agreement.
 Whether a minor can be asked to pay compensation in view of the provisions contained in
section 39 and 41, Specific Relief Act,1877

19 (1913) 2 K.B. 235, at 247

20 (1914) 3 K.B. 607, at 607
Compensation under Section 64,65 and 70, Indian Contract Act

The question whether a minor can be asked to pay compensation to the other part, under section
64 and section 65, Indian Contract Act had arisen in the case of Mohori Bibee v. Dharmodas
Ghose21. While discussing the case, it is already noted that compensation under these Sections cant
be given as section 64 and 65 are applicable on valid agreements and contracts and an agreement
with a minor is void ab initio. It was the recommendation of the Law Commission to add an
explanation to the section but no amendment has been done so far.section 70 of the Indian Contract
Act , 1872 recognises quasi-contractual liability to compensate a person at whose cost some benefit
has been enjoyed. According to the provision, where a person at whose cost some benefit has been
enjoyed. According to that provision, where a person at whose cost some benefit thereof, the latter
is bound to make compensation to the former in respect of, or to restore, the thing so done or
delivered. The question which arises is can a minor be asked to compensate the benefits as
contemplated under section 70, be required to pay compensation under the provision? It has been
held that Section 70 cannot be invoked against a minor22.

In this context it has been that23 :

“the minor is excluded from the operation of section 70 for the reason that his case has been
specifically provided for the reason it has been specifically provided for by section 68…Besides,
in the case of a minor, even the voluntary acceptance of the benefit of work done or thing delivered
which is foundation of the claim under section 70 would not be present, and so. On principle, that
section cannot be invoked against a minor.”

It is submitted that the above stated interpatation is neither logical nor nor in consonance with the
provision contained in section 70 which deals with every person and minor is person that is subject
to both section 68 and section 70 of the Indian Contract Act .

21 (1914) 3 K.B. 607

22 Bankay Behari Prasad v.Mahendra Prasad, A.I.R. 1940 Pat. 324
23 State of W.B. v. B.K. Modal & Sons, A.I.R. 1962 S.C. 779, at 789
Compensation under Specific Relief Act, 1963

Whether a fraudulent minor can be asked to pay compensation in view of provisions of Section 39
and 41, Specific Relief act, 1877,came in for consideration in certain cases. Before discussing the
case , the relevant provisions may be noted:

Section 39:”Any person against whom a written instrument is void or voidable, who has reasonable
apprehension that such instrument, is left outstanding, may cause him serious injury, may sue to
have it adjudged void or voidable; and the court may, in its discretion, so adjudge it and order it to
be delivered up and cancelled.”

Section 41: “on adjudging the cancellation of an a instrument, the Court may require the party to
whom such relief is granted to make any compensation to other which justice may require.”

In Mohori Bibee’s case, the minor the minor had applied for the cancellation of the mortgage deed,
executed by him, under section 41 of the act. It was held that since in this case the loan had been
advanced to the minor with full knowledge of his minority, the question of compensation to be
paid by him under section 41 of the act does not arise.

On the question of compensationunder section 41, Specific Relief Act, there is a sharp difference
of opinion between two sets of high courts, one view having been expressed by the Allahbad high
court.

Lahore High Court view

The question of compensation arose before the Lahore High Court in Khan Gul v. Lakha singh24.
There the plaintiffs, who had advanced the sum of Rs. 17,500 to a minor brought an action against
him to recover the amount. The minor was held liable to refund the same.

While deciding the case Sir Shadi Lal, C.J. made a liberal interpretation of the above stated
statutory provisions and also the equitable doctrine of English law. Decision on the following two
points needs the mention:

24 A.I.R. 1928 Lahore 609

  According to section Section 39, Specific Relief Act, 1877 a minor may sue for the
cancellation of an instrument pertaining to be void agreement, and when he so goes to the
court to claim the relief the court may ask the minor to pay the compensation to the other
side under section 41. In this case the minor was not the plaintiff but was the defendant.
But the Lahore high court still held that the minor must be asked to pay back the money.
In its view the party must be compensated by a fraudulent minor, in equity, irrespective of
the fact the minor is the plaintiff or the defendant.
 Sir Shadi LaL, C.J. also made a significant departure from the English doctrine of
restitution and decision of Leslie v. Sheill25, according to which restoration of the property
and the benefits can be done it they are traceable but not be asked to pay back money as it
is untraceable and also according to the Infant Relief Act minors cannot be asked to pay
back loans.

In the present case it is seen that repayment of money is an act of restoring rather than that of
enforcement of contract, but it is because there is no contract but one of the parties has unjustly
benefited at the cost of the other.

Allahabad high court view

In Ajudhia v. Channdan LaL26, the Full Bench of the Allahabad High Court considered at length
the decision of the Lahore High Court and expressed entirely the opposite view. As regards the
two points discussed above, i.e., firstly, compensation under the Specific Relief Act, and secondly,
the question of restitution or compensation, the conclusions were different from those arrived at
by the Lahore High Court.

 Regarding the minors responsibility to compensate under specific relief act, it was held that
a minor cannot be asked to give any relief to the other party when the minor is a defendant
in the case. A minor can be asked to give relief when he himself is plaintiff and wants some
relief for himself. If a minor, who is defendant in a case, is asked to provide relief, that is

25 (1914) 3 K.B. 607

26 A.I.R. 1937 All. 610
 contrary to the spirit and language of section 41, Specific Relief Act, 187 and will also
amount to enforcing a contract, which is void.
 Regarding the question of paying money compensation by a minor, the rule laid down in
Leslie v. Sheill27 was followed, and a minor, the rule laid down in Leslie v. Sheill was
followed, and it was held that a minor may be asked to restore back the property if the same
can be traced, but he cannot be asked to pay money compensation because that would
amount to enforcing void contract against a minor. Sulaimam, C.J. while expressing his
disagreement with the views of Sir Shadi Lal,C.J., said:28

“Where the contract of the transfer of property is void, and such property can be traced, the
property belongs to the promise and can be followed. There is every equity in his favour for
restoring the property to him. But where the property is not traceable and the only way to grant
compensation would be by granting a money decree against the minor, decreeing the claim
would be almost tantamount to enforcing the minor’s pecuniary liability under the contract
which is void.”

The expressed by Sir Shadi Lal, C.J. in the Lahore case has been considered to be better by
Pollock and Mullah29. The law commission also in the Reports30, has preferred the views of
Shadi Lal,C.J. expressed in the Lahore case on both the points discussed above. In other words,
it was in favor of permitting an action against a fraudulent minor irrespective of the fact the
minor is the defendant and the plaintiff.

In the view of the section 33 of the Specific Relief Act the present position in India can be
summarized as under:

 If the minor goes to the court as a plaintiff for cancellation of an instrument, the court
may, on adjudging the cancellation, require such a minor. To restore the benefit and to
make such compensation to the present provision is to restore the benefit and to make
such compensation to the other party as justice may require.

27 (1914) 3 K.B. 607

28 AI.R. 1937 All. 610, at 617
29 Indian Contract Act, 8 th Ed. (1957), p. 77
30 9th Report, Specific Releif Act, 1877, p. 46
  When the minor is the defendant in a case and he resists the enforcement of the suit on
the ground that he is incompetent to contract, the court may ask him to restore such
benefit to the other party, to the extend his estate is benefited.

Minor’s liability for Necessaries

It has already been noted that a minor’s agreement is void ab initio, and he is incapable of
making a contract to pay for any services rendered or goods supplied to him. However, for the
necessaries supplied to a minor, reimbursement is permitted to the person supplying such
necessaries. This is not on the basis of any contract between the parties but because it is deemed
to be a quasi contractual obligation. Section 68 makes a provision for the reimbursement for
the necessaries supplied to a minor. The provision is as under:

“If a person, incapable of entering into a contract, or anyone whom he is legally bound to
support, is supplied by another person with necessaries suited to his condition in life, ,the
person who has furnished such supplies is entitled to be reimbursed from the property of such
incapable person.”

The section permits reimbursement if:

 Necessaries are supplied

 To a person who is incapable of making a contract, eg. To a minor or a lunatic; or
 To a person who is defendant upon such person incapable of making a contract;
 For reimbursement, no personal action can lie against the minor, etc., but
reimbursement is permitted is permitted from the property of such incapable person.

What are necessaries?

There is, however, no definition of the term “necessaries” in the Contract Act. It is, therefore,
necessary to turn to judicial decisions to determine its precise import. Now, it was ruled by Baron
Parke in Peters v. Fleming, that from the earliest times down to the present, the word ‘necessaries’
is not confined in its strict sense to such articles as were necessary to support life, but extended to
articles fit to maintain the particular person in the state, degree and station in life in which he is;
and therefore we must not take the word “necessaries” in its unqualified sense but with
qualification as above pointed out. To put the matter concisely, “necessaries” means goods suitable
to the condition in life of the defendant and to his actual requirements at the time of the sale and
delivery, and whether an article supplied to an infant is necessary or not, depends upon its general
character and upon its suitability to the particular infant’s means and station in life. It must further
be observed that as necessaries include everything necessary to maintain the infant in the state,
station, or degree of life in which he is, what is necessary is a relative fact, to be determined with
reference to the fortune and circumstances of the particular infant; articles therefore that to one
person might be mere conveniences or matters of taste, may in the case of another be considered
necessaries, where the usages of society render them proper for a person in the rank of life in which
the infant moves.

The infant’s need of things may also sometimes depend upon the peculiar circumstances under
which they are purchased and the use to which they are put. For instance, articles purchased by an
infant for his wedding may be deemed necessary, while under ordinary circumstances the same
articles might not be so considered. The word “necessaries,” therefore, includes money urgently
needed for the requirements of a minor and cannot be restricted to what is necessary for the
elementary requirements of the minor such as food and clothing. Thus cash lent to him to effect
necessary repairs in his house, and payment of Government revenue are necessaries of the minor
proprietor. In the case of a minor Muslim girl, marriage is a “necessity” the person incurring
expenditure for marriage is entitled to relief under section 68. A debt incurred by guardian for
improving or developing minor’s estate is not binding on such estate. Money borrowed for its
upkeep or its preservation binds the estate.

Expenses incurred for minor’s education, marriage of his sister, expenses incurred in funeral of
minor’s parents, expenses incurred for necessary litigation etc. have been held to be necessaries.
Expenses incurred for minor’s marriage have also been held to be ‘necessaries’.

The obligation to defray the expenses of the marriages of sons and daughters is cast by the Hindu
law upon a father if there is any joint family property in his hands and not in other cases. A wife
who spends for the marriage of her minor daughter cannot recover the amount personally from the
husband. Neither section 68 nor sections 69 and 70 will apply. Further, the term ‘necessaries’ is
comprehensive and is not confined to necessaries of the person of the infant himself but extends
to necessaries provided for other members of his family, e.g., sister’s marriage, but the money
spent cannot be recovered, unless it constitutes a debt and is not a bounteous gift. As “necessaries”
include everything necessary to maintain an infant in the state, station, or degree of life in which
he is, “what is necessary” is a relative fact to be determined with reference to the fortune and
circumstances of a particular infant. Where the guardian of a minor borrows money for the
payment of rent due to lambardar, which the minor was bound to pay, the minor is liable under the
transaction, as the guardian can do, what the minor himself would do. The house leased to a minor
for the purpose of living and continuing his studies is for a necessity, suited to the conditions of
minor’s.

The advancing of funds to a male Hindu minor for meeting his own marriage expenses is not
supplying him with necessaries suited to his condition in life within the meaning of section 68 of
the Contract Act, and a person advancing such funds is not entitled to be reimbursed from the
property of such a minor. The Hindu law does not enjoin the marriage of a Hindu male before the
age of majority.

Section 12 of the Indian Contract Act also deals with capacity.

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 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.

Illustrations

(a) A patient in a lunatic asylum, who is, at intervals, of sound mind, may contract during those
intervals.
(b) A sane man, who is delirious from fever, or who is so drunk that he cannot understand the
terms of a contract, or form a rational judgment as to its effect on his interests, cannot contract
whilst such delirium or drunkenness lasts.

Unsoundness of mind

Unsoundness of mind is also another circumstance which renders a contract void and unlike
English Law, the question whether the other party had or had not the knowledge of such fact does
not arise. A contract entered into by a person who at the time was of unsound mind is void.31 Mere
weakness of mind does not amount to unsoundness of mind. In English law in order that a person
may avoid contract on the ground of insanity it is not only necessary to show that he was insane at
the time of entering into the contract, but it is further necessary for him to prove that the other party
knew him to be so insane as not to be capable of understanding what he was about. The test of
unsoundness of mind is whether the person is capable of understanding the business and of forming
a rational judgment as to its effect upon his interest. There being a presumption in favour of sanity,
the person who relies on the unsoundness of mind must prove it sufficiently to satisfy this test.

Where a person is not proved to be a lunatic on inquisition, it is necessary to rebut the general
presumption of sanity. This can be done by proving that his mind was completely deranged so that
he was incompetent to enter into any contract, or by proving that he was of unsound mind with
regard to the particular transaction. But when a person has been found lunatic by inquisition, so
long as the inquisition has not been superseded, he cannot, even during the lucid interval, enter
into a valid contract.

Mere weakness of mind is not sufficient. Although it is not necessary to prove utter mental darkness
or congenital idiocy, the party alleging unsoundness of mind of a person must establish that that
person was incapable of understanding business and forming rational judgement as to its effect.\
Idiocy is the most extreme form of mental unsoundness. Mere temporary forgetfulness is not
sufficient to indicate want of mental capacity. In a case to set aside a mortgage on the ground of
unsoundness of mind, the Court cannot substitute a mere weakness in the mind of the executant

31 Ram Sundar Saha v. Raj Kumar, I.L.R. (1928) 15 Cal. 285

and give him a decree thereon on the plaintiff failing to prove the particular kind of insanity
originally set up by him.

A person who is sometimes insane may make a valid contract in a lucid interval. But even though
the general insanity is established the existence of the lucid interval will require clear proof. So
where the unsoundness of mind has been proved by definite expert evidence the allegation of a
lucid interval has to be equally strictly proved. On the other hand, in the case of a document
executed by a person who is not generally insane but subject to attack of insanity at intervals, the
burden of proving that the document was executed at the time when the executant had an attack of
insanity is on the person who seeks to avoid the document. Similarly where a person is proved to
have lucid intervals, the onus of proving that he was of unsound mind at the time of the execution
of a document lies on him who challenges the validity of a document.

The test of unsoundness of mind is whether a person is incapable of understanding the business
concerned and of forming a rational judgment as to its effect upon its interest. Unless a person is
adjudged as of unsound mind by inquisition, there is always a presumption of sanity.
Therefore, a person who alleges unsoundness of mind must prove sufficiently enough to satisfy his
case. Mere weakness of mind is not sufficient proof of unsoundness of mind. Temporary
forgetfulness is not a sufficient test of unsoundness of mind. Where a person is usually of unsound
mind, then the burden of proving that at the time of contract he was of sound mind lies on the
person who affirms It is not that the lunatic remains continuously in state of unsoundness of mind,
but once it is established that a person is of unsound mind, the onus is one the person who alleges
the execution of a document during lucid interval. Although it is necessary to prove utter mental
Infirmity or congenital idiocy in order to constitute unsoundness of mind, yet it is for the Plaintiff
to establish that the person was incapable of understanding business and of forming a rational
judgment as to its effect’.

If a person has been adjudged to be of unsound mind on inquisition, the presumption is that he
continues to be of unsound mind and it is for the person who wants to take the benefit of the
contract made with such person to establish that he was of sound mind at the time when he made
the contract. Only proof of loss of memory is not sufficient because such loss of memory would
not by itself render a person unfit for the management of his affairs. With the increasing old age
there results a loss of vigour and even mental energy and the extreme old age brings about vacuity
of mind, but it cannot be said that the person of old age has not become of unsound mind until it
can be proved that his mind has become completely blank32. When it is alleged that due to extreme
old age, the person has become incapable of understanding his own business and of forming a
rational judgment as to its effect upon his interest, the onus to prove unsoundness of mind lies upon
the person who alleges such unsoundness of 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. In the case of Keolapati v. Amar Krishna
Narain Singh a document executed by an imbecile person and bearing his signature does not have
conclusive force.

Burden of Proof relating to unsoundness and imbecility

The question of unsoundness and imbecility is to be determined not upon wire drawn speculations
but upon tangible and unmistakable facts. Normal presumption is in favour of sanity. The onus of
proving insanity is on person who alleges it. The question whether a person is of unsound mind at
the time of execution of a document is a question of fact33.

A case of lucid interval cannot be established by the solitary fact that on the day on which the
transaction took place the person in question did not show any instability or insanity. An allegation
of the unsoundness of mind of a person should be established by proof which shows that he was
incapable of understanding business and forming a rational judgement as to the effect of his
transaction upon his interest. Question whether contract is invalidated by unsoundness of mind
does not depend merely on belief or disbelief of the witness before Court but largely upon inference
to be drawn from evidence.

When it is shown that a person suffered from senile dementia on a particular day a presumption of
its continuance would arise and it would then be on the party who tries to uphold the subsequent

32 Ram Sundar Saha v. Raj Kumar, I.L.R. (1928) 15 Cal. 285.

33 Trilok Chand v. Mahandu, A.I.R. 1933 Lahore 458
transaction of that person to show that at the time of the transaction there was no incapacity. Once
it has been established that a person is usually of unsound mind, the burden of proof is on the party
who alleges that the document was executed during a lucid interval34.

It may be noted that the provisions of section 68 are not applicable to a contract entered into by a
person of unsound mind and so no claim for refund of moneys advanced to such person is
maintainable. But money lent by a lunatic to another may be recovered in a suit on his behalf by
his next friend under section 65.

Drunkenness

Similarly drunkenness is a ground for avoidance of contract but in order to be so it must be so

excessive and absolute as to suspend the reason for a time and create impotence of mind, and it
must be distinguished from that “merriment of a cheerful cup which rather revives the spirits than
stupefies the reason”. So it has been held that although a mortgagor may have been drinking hard
and frequently of unsober and unsound mind, a mortgage deed executed by him is good and validly
executed unless it is established that at the time the deed was executed he was of unsound mind. A
contract by a drunken person is voidable only and not void and so it may be ratified by him when
he is sober35.

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. With ageing, there
results a natural vacuity of mind, but it cannot be said that such a person has become of unsound
mind unless it can be proved that his mind has become completely blank. In such cases, the onus

34 Sona Bala Bora and others v. jyotirindra Bhattacharjee, (2005) 4 S.C.C. 501
35 Trilok Chand v. Mahandu, A.I.R. 1933 Lahore 458.
is on the one who alleges unsoundness of mind to prove that he has become unable to understand
his own affairs and form rational judgements36

36 Chako v. Mahila Ddraupati, A.I.R. 20070 M.P. 2967.