Who is Competent to Contract?

Every person is competent to contract who has the legal capacity to do so which includes the age of majority according to the law, soundness of mind and is not disqualified from contracting by any law to which he is subject.

According to Sections 11 and 12 Indian Contract Act, the following persons are competent to contract:

• Every person who has attained the age of majority: According to Section 11, any person who has attained the age of 18 years is competent to contract.
• Persons who are of sound mind: According to Section 12, a person who is of sound mind is competent to contract. A person who is of unsound mind at the time of making the contract is not competent to contract.
• Persons who are not disqualified by law: According to Section 11, any person who is not disqualified by law is competent to contract.

Nature of agreement with minor

Neither Section 10 nor 11 makes it clear whether the agreement entered by the minor is voidable at his option or altogether void. This led to a controversy about the nature of the minor’s agreement, which was resolved in the Privy Council decision in Mohiri Bibi v. Dharmodas Ghosh.

The Privy Council decision in Mohiri Bibi v. Dharmodas Ghosh held that a minor’s agreement is totally null and void from the beginning, and the minor is not considered competent to contract or give any consideration.