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 cont who is of the age of majority according to the law to which he is subject, who is of sound mind and is not disqualified from contracting by any law to which he is subject. From the section 11 it follows that a person is incomplete to contract under the following circumstances: 1. If he is a minor, according to the law to which he is subject. 2. If he is of unsound mind and 3. If he is disqualified from contract by any law which he is subject. Now we shall discuss them one by one in detail:

1. Minor:
According to section 3 of the Indian Majority Act 1875, a person domiciled in India, who is under 18 years of age, is a minor. So a person becomes a major after the completion of 18 th year of life. To this rule there are two exceptions 1. When a guardian of the minors person or property is appointed by a court of law and 2. When a minors property is taken over by the court of wards for management. In either cases minority continues up to the competition of the 21st year.

Minors Agreement:
The law of regarding agreements by minors may be summaries as follow: 1. Validity of a minor a agreement. 2. No estoppels. 3. No ratification. 4. Minor as a partner. 5. Minor as a shareholder. 6. Minor as an agent. 7. A minor can be a promise. 8. Necessary supplies to minor. 9. Specific performance. 10. Law regarding compensation or restitution. 11. Position of minors guardian/ parents. 12. Surety for a minor. 13. Minor and insolvency 14. Contract by minor and adult jointly.

Validity of a minor Agreement:

A minor cannot enter into an agreement. An agreement by a minor is absolutely void and inoperative as minors and protects their right because their mental faculties are not mature. They do not possess the capacity to judge what is good and what is bad for them. According, where a minor is changed with obligations and the other contracting party minor, the enforce those obligations against minor, the agreement is deemed as void-ad- into. It is void from the beginning.

No estoppel:
No estoppels rights applicative for minor. Usually estoppels means holding out. When a minor by his act or conduct give the impression to the outside word of his majority and enter into a contract then hear she should be stopped from denying the responsibility of the contract but due to his or her minority the usual estoppels right does not applicable for a minor . (if minor hide the age and enter into agreement that is also void) In the other words of lord Halsbury: Estoppel arises when you are precluded from denying the truth of anything, which you have represented as fact although it is not a fact.

No Ratification:
Ratification means the subsequent adoption and acceptance of an act or agreement. A minors agreement being a nullity and void abolition has no existence in the eye of law. When we have to make new agreement when will be major (once void always void)

Minor As a Partner:
A minor cannot enter into a of partnership. But under section 30 of the Indian partnership. Act, he can be admitted to the benefits of partnership with the consent of all the partners by an agreement executed partners by an agreement executed through his lawful guardian with the other partners. Such a minor will have a right to such share of the property or profits of the firm as may be agreed upon and he would have access to copy any of the accounts of the firm. The minor cannot participate in the management of the business. He or she cannot carry any loss.

Minor As Shareholder:
A minor, being incompetent to contract, cannot be a shareholder of the company. A company can also refuse to register transfer or transmission of shares in favor of a minor unless the shares are fully paid.

Minor As An agent:
Minor can be an agent, but for any misdeed minor will not be responsible rather major will be responsible. He shall bind the principal by his acts done in the course of such an agency, but cannot held personally liable for negligence or branch of duty. Thus in appointing a minor as an agent, the principle runs a great risk.

A Minor Can Be A Promise:

An agreement under which a minor has received a benefit can be enforced as against the other party. A minor in whose favor a mortgage has been executed can get a decree for the enforcement of the mortgage. Similarly a promissory note executed in favor of the minor can be enforced. Under English law, agreement for the infants education, service, or apprenticeship and agreement which can be him to earn his living are binding unless they are detriments to his interest.

Necessary Supplies To Minor:

Minor is not responsible for his necessary which he or she received rather his or her property will be responsible. A responsible can be paid to the supplied from his or property. Example A supplies B, a lunatic necessaries suitable to his condition life. A is entitled to be reimbursed from Bs property. In the leading case of Mohori Bibi vs Dharmo Das Ghosh, a minor executed a mortgage for Rs20000 and received Rs 8000 from the mortgage money and for sale of the property in case of default. The court held that an agreement by a minor was absolutely void as against him and therefore the mortgage could not recover them mortgage money nor could he have the minors property sold under his mortgage. This is not necessary supplies. If it is necessary supplies than there is an option to recover the money from the minors property. Specific Performance: Specific performance means the actual carrying out of the contract carrying out of the contract as agreed. Since an agreement by a minor is absolutely void, the court will never direct specific performance of such an agreement by him. 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 because sections 64 and 65 of the Act do not apply to such case. Minor and Insolvency: A minor cannot be adjudicated an insolvent for he is incapable of contracting debts. Even for necessaries supplied to him, he is not personally liable. Only his property is liable (sec:68)

2.Person Of Unsound Mind:

As stated earlier, as per section II of the contract Act, for a void contract, it is necessary that each party to it must be having a sound mind. When at the time of forming a contract, one does not understand the contract itself along with it is consequences and unable to make rational judgment that he or she doing these upon his or her own interest, or not, the person is treated as a person regardless his or her normal condition is in total sense of his her work, can make contract. The person does not understand a contract is an unsound mind person. An unsound minded person does not understand the consequences and does not have rational judgment capacity that which is good or bad.

3.Disqualified person:
a. b. c. d. e. Alien enemy. Foreign sovereign. Convicted person. Insolvent person Married women.

a) Alien Enemy:
An alien means a citizen of foreign state. Contracts with aliens are valid. An alien living in India in free to enter into contracts with citizens of India is free to enter into contracts with citizens of India. But the state may impose restrictions certain types of transactions with aliens may be prohibited. A contract with an alien becomes unenforceable if war breaks out with the country of which the alien concerned is citizen. {Out break war-(see ch.11)}

b) Foreign Sovereign:
Foreign sovereigns or government cannot be used unless they voluntarily submit to the jurisdiction of the local court. Foreign sovereigns and government can enter into contract through agents residing in India. In such case the agent becomes personality responsible for the performance of the contracts.

c) Convicted person:
A convicted is one who is found guilty and is imprisoned. During the period of imprisonment, a convict is incompetent (a) to enter into contracts and (b) to sue on contracts made before conviction. On the expiry institute a suit and the law of limitation is held is obey once during the period of his sentence.

d) Insolvent:
An adjudge insolvent is competent to enter into certain types of contracts i.e he can incur debts, purchase property on be an employee but he cannot sell his property which vests in the officials receiver. Before discharge he also suffers from certain disqualification e.g connot be a magistrate or a director of accompany or a member of local body.

e) Married Women: Married women are competent to enter into contracts with respect to their separate properties provided they are major and are of sound. They cannot enter into contracts with respect to their husbands properties.