Who is legally competent to enter into a contract in India?

Question

I want to know if an agreement signed by a minor or a person of unsound mind is enforceable against them. I would like to understand which provision governs this, what it entitles me to, and how long I have before the remedy lapses. I also want to know whether I need a lawyer for this or can do it myself.

MyVakeel Legal Desk · Accepted Answer

In India, the answer to "Who is legally competent to enter into a contract in India?" turns on Indian Contract Act 1872, Section 11, Indian Contract Act 1872, Section 12 and Indian Majority Act 1875, Section 3. The points below set out the position and then what to do about it, in the order it should be done.

Section 11 states that a person competent to contract must be of the age of majority according to the law to which they are subject, of sound mind, and not disqualified from contracting by any law.

Under Section 3 of the Indian Majority Act 1875, a person attains majority at eighteen years, except where a guardian has been appointed, in which case majority is attained at twenty-one.

The Supreme Court in Mohori Bibee v Dharmodas Ghose held that an agreement with a minor is void ab initio, not merely voidable, so it cannot be enforced or ratified even after the minor attains majority.

Section 12 requires a person to be capable of understanding the contract and forming a rational judgment about its effect on their interest to be treated as of sound mind for contracting purposes.

Persons disqualified by other laws, such as an undischarged insolvent or a person disqualified under statute, also lack contractual capacity even if otherwise of age and sound mind.

What to do next: 1) Verify the age and mental capacity of the counterparty before executing a contract; 2) Avoid extending credit or transferring property based on an agreement signed by a minor; 3) Have a guardian or legal representative execute agreements on behalf of a person lacking capacity; 4) Seek legal advice if a contract has already been signed by an incompetent party.

If you are unsure whether your facts fall inside Indian Contract Act 1872, Section 11, that is worth checking with an advocate before you commit to a route, because switching later costs time. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in corporate law.