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‘Capacity’ to Contract


A person’s capacity to enter into a legal agreement or contract is referred to as their capacity to contract. The notion of capacity to contract is examined in this academic research, with a focus on the case “SURAJ NARAIN DUBE VS SUKH AHEER 1928”[1]. Using legislation this paper aims to provide a full grasp of the issue. This paper also discussed a minor’s ability to contract, and the consequences of doing so, as well as the significance of consideration in light of case law.

Keywords – Consideration, Capacity to contract, Legal agreement, Minors’ contracts


A contract[2] is the outcome of nearly every single transaction we see around us. You commit to giving the seller money in exchange for the food when you purchase food from him. If you own a store, you have agreements: one with the goods’ maker and another with the client who will purchase the goods from your store.

While shopping for food, we may overlook if the seller is competent to engage in a deal. If you’re a retailer, though, you should double-check that the manufacturer is lawfully capable of doing the same. This is critical if you want to hold the manufacturer legally responsible for any defaults he makes during the period of the contract. Any agreement between two private entities that bind them to each other legally. A contract might be orally or in writing in nature. Verbal contracts, on the other hand, are more difficult to carry out and should be avoided wherever possible. First and foremost, one party makes an offer to another, and the acceptance of the offer by the person to whom it is made leads to a contract. “The Indian Contract Act of 1872 defines Contract as An arrangement binding by law under Section 2(h)”[3]. “In contract law, consideration is defined as the exchange of one thing of value for another”[4]. Every contract made with a minor, or someone under the age of 18, is null and void from the start because the minor is unable to sign it. “As in the instance in this case[5], a person took out a loan while he was still a minor, and after achieving a majority, he established a new agreement to repay the sum plus interest, but the contract was unenforceable since the consideration gained while he was still a minor was invalid”.



Capacity to contract refers to the ability to lawfully enter into a contract. The capacity to contract ties the contracting parties with a vow to follow it. However, only a few people have the ability or competency to make a contract[6]. “Capacity is assessed by whether or not a person has achieved the age of majority and whether or not they are mentally competent of comprehending the contract conditions”[7].

These six elements must be included in any contract-

  • Offer
  • Acceptance
  • Capacity
  • Intent
  • Consideration
  • Legality


To make a contract formal and legitimate, consideration has to be given to it while establishing it. This is one of the three basic criteria, along with mutual assent and a legitimate offer and acceptance. The exchange of valuable goods/services is referred to as “consideration.”

Two elements are necessary for a contract to be valid- a legitimate object and a lawful consideration[8]. As a result, the Indian Contract Act lays out the parameters that define such legitimate consideration & contract objects.

Section 23[9] of the Indian Contract Act specifies that a contract’s consideration or object is valid consideration unless they are[10]

  • Is specifically prohibited by law
  • Is of such a kind that it would contradict the purpose of the law
  • Are deceptive
  • Cause bodily harm or material damage to another person or property
  • The courts have ruled that they are immoral.
  • Against government policy.

As a result, any of the foregoing cannot be included in a legitimate consideration or lawful object.


Facts of the case-

“In June 1919, the complainant, Suraj Narain, lent a sum of money to the respondent, Sukhu Ahir, who was a teenager at the time”[12]. In June 1923, the very first defendant, who had gained a majority at that time, executed a money bond in favor of the Complainant for the sum of Rs. 76 in consideration of the principal sum lent to the respondent when he was a minor, as well as the interest that had accumulated. The claimant filed a lawsuit in the Court of Small Matters in Jaunpur after the cash due to him was not paid.


  • That whether sum loaned to a child Defendant was a due consideration for the later bond, or if the bond constituted invalid.


Within this case, a person borrows money once he was Minor and then makes a new guarantee to pay back the money plus interest after becoming an adult, but the contract does not work out since short-term consideration is not valid consideration.


The Court decided that Defendant failed to meet the contract’s competency conditions, that the subsequent bond is not a valid consideration, and that the contract is thus invalid because the previous bond was made by a minor. “The Allahabad High Court’s 3 benches confirmed the Court’s verdict, stating that the earlier contract failed Section 11 of the Indian Contract Act, Competency of Contract, because the respondent was a minor, and so the contract was void. Because of the last contract’s void status, the consideration was deemed inadequate for the contract, and the deal was declared void. And the appeal was dismissed along with the cost”[13].




It is obvious from “sections 10 and 11 of the Indian Contract Act that an individual who is incompetent to contract due to infancy cannot make a contract within the meaning of the Indian Contract Act”[14].

Case law- Mohari Bibee v. Dharmadas Ghose[15]

The respondent in this case[16] was a minor who was the rightful owner of the property. His mother was the legal guardian of his children. He lied about his age to a stranger and mortgaged his home. His mother then clarified his status as a minority. However, once he reached the age of majority, that person attempted to enforce the mortgage deal. The High Court of Calcutta went on to rule that any contract made with a minor or a newborn is void from the start. As a result, they determined that the mortgage agreement was void due to the underage defendant’s signature.



Just like previously mentioned, today’s minors do tasks with the same capability as an adult. They are expected to be self-sufficient. Minors must leave their homes to pursue higher education and careers that will significantly benefit them. As a result, the Indian Contract Act’s rules for juveniles must be changed and updated to reflect the current generation. As we’re seeing, the Infants Relief Act attempted to change the normal law position by making all minor’s contracts void, except contracts for necessities, but the English courts upheld the custom-based law position, which they most likely believed to be realistic and successful. The current custom-based legal view on the validity of minors’ contracts builds on this pragmatic convention. There must be consistency in the meaning of’ minor’ across all Indian statutes. “According to the Indian Majority Act, the age of majority is 18 years old”[17]. Yet though, the president has not given his approval to this law. The minority must also be viewed as a form of protection, as it will shield minors from a variety of benefits that others may derive from them. Minors should not take advantage of their age disadvantage. As a consequence, the minor can take unfair advantage of the preceding section. This age factor should not be considered while making agreements. It must be based on the minor’s abilities. Minors are sometimes capable of accepting the notion of mutuality. Similar to the Companies Act of 2013, which allows minors to become shareholders, the Indian Contract Act must include provisions that allow minors to engage in contracts under the supervision of a guardian.






Everyone should be aware of the importance of contracting capacity. Even though the Indian Contracts Act explicitly outlines the regulations, they are dispersed throughout the Act. This document aims to give readers a better understanding of the subject by combining most of the provisions relating to contracting capacity. If the general public has a better comprehension of the concept, several needless clashes and misunderstandings can be avoided. Another benefit would be that the judiciary would be relieved of the responsibility of examining these issues.

[1] Suraj Narain Dube vs Sukhu Aheer And Anr. on 6 July 1928 Indiankanoon.org, https://indiankanoon.org/doc/820475/ (last visited Sep 18, 2021)

[2] The Indian Contract Act, 1872

[3] Ibid.

[4] Ibid.

[5] Supra note-1

[6] Supra note-3

[7] Ibid.

[8] Supra note-5

[9] What considerations and objects are lawful, and what not | Indian Contract Act, 1872 | Bare Acts | Law Library | AdvocateKhoj Advocatekhoj.com, https://www.advocatekhoj.com/library/bareacts/indiancontract/23.php?Title=Indian%20Contract%20Act,%201872&STitle=What%20consideration%20and%20objects%20are%20lawful,%20and%20what%20not (last visited Sep 18, 2021)

[10] , https://www.toppr.com/guides/business-laws/indian-contract-act-1872-part-ii/legality-of-object-and-consideration/ (last visited Sep 15, 2021)

[11] AIR 1928 All 440

[12] Supra note-1

[13] Supra note-1

[14] Effects of an agreement entered into with a minor under Indian Contract Law iPleaders, https://blog.ipleaders.in/effect-of-minority-on-the-agreement/ (last visited Sep 17, 2021)

[15] Mohori Bibee v. Dharmodas Ghose, [1903] 30 Cal. 539

[16] Mohori Bibee & anr. Vs. Dharmodas Ghose – Law Times Journal Law Times Journal, https://lawtimesjournal.in/mohori-bibee-anr-vs-dharmodas-ghose/ (last visited Sep 18, 2021)

[17] The Majority Act Of 1875