A definition of the term "contractual capacity" would be:

You have contractual capacity if you are legally able to enter into a contractual
relationship.
The general rule with regards to minors who enter into contracts is:
If minors follow the rules of disaffirmance, they may void some contracts.
The general rule for disaffirmance of a contract by a minor is:
So long as the contract does not involve certain goods or services (necessities), the minor
may disaffirm at any time during minority.

http://www.inbrief.co.uk/contract-law/contract-with-minors.htm


Minors and the Age of Majority: Entering into
Contracts with Minors
If I am to enter into a contract with a minor is there anything
which I should be aware of?
What is meant by a minor?
A minor is someone under the 18 years according to the Births and Deaths Registration
Amendment Act (No 1) 2002.
The Age of Majority
Anyone over the age of 18 is said to be over the age of majority. Prior to 2002 the age of
majority was 21, being reduced by this act.
Contracting with a minor
In what situations would I need to contract with a minor?
There are many situations in which minors would have to enter into contracts, for example
when purchasing something they may be required to sign the terms and conditions of sale
for particular goods. When purchasing goods they may also enter into an agreement in
relation to a warranty.
There may also be times in the sporting context whereby a contract would be entered by a
minor; this could even be in relation to their potential employment or for the potential for
someone to be employed on their behalf.
Accordingly you can contract with someone under the age of majority, you must just be
aware of certain factors when doing so.
The general position when contracting with a minor
In order to form a legally binding contract the general elements of a contract must be
present, for example there must have been an offer, acceptance and an intention to form a
legally binding contract. Without all of these elements being in place a contract will not be
legally binding.
If all these elements are in place a contract with be legally binding, however, the law
presumes that certain people do not have the power to enter into a contract. If you have
the above elements and enter into a contract with one of the following kinds of people the
contract will be void:
Children under 7 years of age
People who are diagnosed as mentally insane
People whose judgement has been impaired by being very drunk or drugged
There is no exception in the law along the above lines for a minor meaning that a minor is
free to enter into a contract with the contract being legally valid.
However, there is an assumption made by the law that a minor cannot fully understand the
implications of a contract.
The implications of a contact
If a minor is assumed not to understand the implications of a contract a minor will remain
fully protected by the law even if this is to the disadvantage of the other party and
regardless of what clauses have been inserted into the contract.
Voidable Contract
A contract entered into with a minor is voidable. This means that the minor is able to cancel
any contract at any time prior to reaching the age of majority and for a reasonable time
afterwards.
Will a minor have to have a justifiable reason for this?
There is no requirement for a minor to have a justifiable reason for cancelling the contract
at any time, they can do it for whatever reason and if they feel it may be advantageous for
them to do so.
All of the above is designed specifically to protect those under the age of majority when
entering into a legally binding contract.
Are there any exceptions to the general rules in relation to minors?
The situation is not necessarily as clear-cut as simply applying the above provisions to all
contracts entered into involving someone under the age of majority.
There is one extremely important exception to the above position. The general position in
relation to contracts with minors does not apply to contracts of service, apprenticeship and
education with children.
What is the reason for this?
The reason for this is that the requisite organisations that enter into these kinds of contracts
with children require some form of certainty that enables the child to earn his living or start
to do so. The law views these contracts as beneficial to the minor and so it would be an
untenable position if the contract could simply be unilaterally cancelled by the minor.
Does this apply to all contracts entered into by children?
This rule will always be subject to the minor being at least old enough to understand the
nature of the contract that they are entering into.
What is the case if the child is not deemed old enough?
If the child is not deemed old enough to understand the nature of the contract then the
contract will fall outside of this exception and will be void in line with the general position
outlined above.
Court Enforcing a contract
If the child was deemed old enough to understand the nature of the contract and the
contract was deemed beneficial as it applied to a contract of service, apprenticeship or
education there is still the small issue of the way in which the court would enforce the
contract.
A court would never force someone whether that person is an adult or a minor to
perform a contract for personal service due to a matter of public policy that parties should
not be forced to continue in a personal relationship against their will.
What options for a remedy will be available in this situation?
As a court will not order the performance of a contract in this manner the only available
option for remedy would be that of damages.
Is there a way around this position?
When entering into a contract with a minor it is a good starting off point to ensure that you
include a guarantor provision in the contract.
What is meant by a guarantor?
A guarantor is another party to the contract, in most cases the parent. This does not take
away from the fact that the primary party to the contract will be the minor it just provides
for situations where there may have been a default in payment on the contract or a similar
issue.
Entering into a contract with the guardian
A better way to solve the issues of entering into a contract with a minor is to organise for
the guardian in most cases a parent to enter into the contract on behalf of the minor.
However, there are slight issues flowing from case law which states that a parent will not be
liable on their childs contract unless they act as their agent and that a minors contract
cannot be validated by consent or authorisation of their parent or guardian.
To avoid this many feel that it is good practice to enter a clause into a contract dealing
specifically with the parent continuing to remain liable if the contract has been breached by
the minor.

Are There Exceptions to Creating a Binding Contract with a Minor?
If every contract with a minor was invalid, no one in their right mind would ever enter into a contract with
a minor. To allow some minors to enter into contracts and/or prevent minors from abusing their
position, there are several exceptions including:
Sports or Entertainment Contracts
Generally speaking, minors who enter into sports or entertainment contracts are held to them, and cannot
void them at will.
Necessaries
Contracts for certain goods and services that are necessary to the health and safety of infants cannot be
voided. Such goods and services include food, clothing, and lodging or shelter. In some instances, an
automobile or motorcycle is also considered a necessary.
Disaffirm the Whole Contract
A minor who decides to void a contract because of his age must void the entire contract. The law does
not let them to continue to enforce some of the contract while voiding other parts.
Ratification
A minor can only void a contract while they are still under the age of maturity (again, usually 18), or for a
reasonable time after they have reached that age. If a person does nothing to disaffirm the contract after
they stop being a minor, the law can find that they will no longer be able to void the contract

1. Introduction
The contract lies at the heart of everyday business and is the means by which the
simplest to the most complex of business is done. Effectively, a contract can be
described as quite simple as a promise or agreement enforced or recognised by law.
The contact is made up of five basic elements which are necessary in order for there
to be a legally enforceable contract. I will deal with these elements in turn.

2. Intention to create legal relations
Sometimes it can be very difficult to establish that here was an intention to create
legal relations, especially in the case of family matters. The court will consider many
factors when deciding whether or not there was an intention to create legal relations.
These factors include the closeness of the family relationship and the extent to which
one of the parties relied on the agreement. When the contract is entered into
during the course of business then there will be a strong presumption that it was the
parties intention to be legally bound.
3. Letters of Comfort
These arise where a company or a state agency or even the government itself gives an
undertaking in respect of some related or subsidiary body that either a particular set
of circumstances exist or will be maintained in respect of that body. A degree of
uncertainty exists as to the legal enforceability of these letters of comfort. The
courts will treat them on a case by case basis and analyse the facts to find out the
real intentions of both parties.
4. Offer
An offer is essentially an expression of willingness to contract made with the intention
that it shall become binding on the person making it as soon as it is accepted by the
person to whom it is addressed. It will usually be a matter of construction as to
whether or not the offer was made in the first place and whether or not it was
intended to create a legally binding agreement. When considering such issues the
court will distinguish between an offer and an invitation to treat that is not
enforceable. An invitation to treat requires further confirmation by the invitor.
5. Acceptance
An acceptance is a final and unqualified expression of assent to the terms of an offer.
It may sometimes be difficult especially in business to determine when the
negotiations have ended and the offer has been accepted. The court will look at the
entire negotiation to ascertain whether or not final acceptance had taken place.
Acceptance can be deemed to have taken place through the conduct of the parties.
The general rule is that acceptance must be communicated to the person who makes
the offer, although there are exceptions to this rule, for example where the offer
expressly waives the requirement. One of the main exceptions is where acceptance is
made by post. In this situation acceptance happens upon the posting of the
acceptance. In practice, most contracts in todays business world will lay down very
specific methods of acceptance.

6. Consideration
A promise is not, as a general rule, binding as a contract unless it is made in a deed or
supported by some consideration. Where a contract is under seal no consideration
need be provided.
7. Capacity
The law presumes that everyone has the capacity to contract and the onus is on the
person claiming that they were incapable to prove so. If they succeed this incapacity
may defeat the contract and make it unenforceable. The courts will accept three
categories of incapacity. The first of these is contracts entered into by a minor. Apart
from contracts for necessaries and contracts of apprenticeships, education and
service the general rule is that the contract will not be binding on the minor. The
second category of incapacity is insanity. In order not to be bound the person must
show that owing to his mental condition he did not understand what he was doing,
that the other party was aware of this incapacity and that the contract was not one
for necessaries. The third category of incapacity is intoxication and there is a similar
burden of proof on the person seeking to rely on it as in the case of insanity.
8. Business Capacity
The question of capacity to contract in a commercial law context arises when
registered companies enter into contracts. There are two issues that need
consideration. Firstly, the company must have the power to enter into the particular
contract. This will be evident from the Memorandum of Association and the Articles of
Association of the company. Secondly, it is necessary to see if the person who is
entering into the contract on behalf of the company has the power to do so. This will
be contained in the Articles of Association.
9. Formal Requirements
The general rule at common law is that contracts do not have to be in writing. Where
formal requirements are necessary, these will have been established by statute and
will refer to specific contracts. For example contracts concerning interests in land
and guarantees must be in writing under the Statute of Frauds.
10. Contractual Terms
In general, the terms of a contract are those set out and agreed by the parties to the
contract. But, in certain circumstances the courts have been prepared to imply terms
into a contract. In order to do so it must be reasonable and necessary and must not be
inconsistent with the express wording of the contract. There are also terms that are
implied by statute, most notably by the Sale of Goods and Supply of Services Act 1980
and by other EU-driven consumer legislation as well as consumer law. Custom and the
Constitution are also sources of implied terms in contract law.
- See more at: http://www.lawyer.ie/ten-step-law/creating-a-legally-enforceably-
contract#sthash.CoZtmGZY.dpuf

1. An agreement with or by a minor is void
Section 10 of the Contract Act requires that the parties to a contract must be
competent and Section 11 says that a minor is not competent. But neither Section makes
it clear whether the contract entered into by a minor is void or voidable. Till 1903, courts
in India were not unanimous on this point. The Privy Council made it perfectly clear that
a minor is not competent to contract and that a contract by a minor is void ab initio.
2. No ratification
An agreement with minor is completely void. A minor cannot ratify the agreement
even on attaining majority, because a void agreement cannot be ratified. A person who is
not competent to authorise an act cannot give it validity by ratifying it. Thus, where a
minor borrowed a sum of money by executing a simple pronote for it and after attaining
majority executed a second pronote in respect of the original loan plus interest thereon, a
suit upon the second pronote was not maintainable.
If on coming of age, a minor makes a new promise and not merely an affirmation
of the old promise, for a fresh consideration, the new promise will be binding.
3. Minor can be a promisee or beneficiary
If a contract is beneficial to a minor it can be enforced by him. There is no
restriction on a minor from being a beneficiary, for example, being a payee or a promisee
in a contract. Thus a minor is capable of purchasing immovable property and he may sue
to recover the possession of the property upon tender of the purchase money. Similarly a
minor in whose favour a promissory note has been executed can enforce it.
Example: X, a minor, insured his goods with an insurance company. The goods were
damaged. X filed a suit for claim. The insurance company took the plea that the person
on whose behalf the goods were insured was a minor. The court rejected the plea and
allowed the minor to recover the insurance money. (The General American Insurance
Company Ltd. v. Madan Lal Sonu Lal (1935) 59 Bom. 656). : 5 :
The infancy of one party to a contract does not affect the other partys liability, the
plea of infancy being a privilege personal to the infant, so that although an infant may
avoid a contract, he can, nevertheless, hold liable and, if necessary, sue the other party to
the contract.
Contracts of apprenticeship : Contracts of apprenticeship are also for the benefit of
minors. Such contracts, according to the Apprenticeship Act, are binding on minors. But
the Act requires that the contracts be made by guardians on behalf of minors. In English
Law, contracts of service and apprenticeship are treated as similar to contracts for
necessaries.
4. No estoppel against a minor
Where a minor by misrepresenting his age has induced the other party to enter into
a contract with him, he cannot be made liable on the contract. There can be estoppel
against a minor. In other words, a minor is not estopped from pleading his infancy in
order to avoid a contract. It has been held by a Full Bench of the Bombay High Court in
the case of Gadigeppa v. Balangowala that where an infant represents fraudulently that he
is of age and thereby induces another to enter into a contract with him, then in an action
founded on the contract, the infant is not estopped from setting up infancy. The court
may, however, require the minor to compensate the other party on the ground of equity.
This is based on the rule that a minor can have no privilege to cheat men.
Fraudulent misrepresentation as to age by an infant will operate against him in
certain cases. If a minor obtains property or goods by misrepresenting his age, he can be
compelled to restore it but only so long as the same is traceable in his possession.
If by misrepresenting himself to be of full age, a minor has obtained money from a
trustee and given release, the release is good and he cannot compel the trustee to make
payment a second time. : 6 :
5. No Specific performance
A minors contract being absolutely void, there can be no question of the specific
performance of such a contract. A guardian of a minor cannot bind the minor by an
agreement for the purchase of immovable property; so the minor cannot ask for the
specific performance of the contract which the guardian had no power to enter into.
6. Liability for torts
A minor is liable in tort. Thus, where a minor borrowed a horse for riding only he
was held liable when he lent the horse to one of his friends who jumped and killed the
horse. Similarly, minor was held liable for his failure to return certain instruments which
he had hired and then passed on to a friend. But a minor cannot be made liable for a
breach of contract by framing the action on tort. You cannot convert a contract into a tort
to enable you to sue an infant.
7. No insolvency
A minor cannot be declared insolvent even though there are dues payable from the
properties of the minor.
8. Partnership
A minor being incompetent to contract cannot be a partner in a partnership firm,
but under Section 30 of the Indian Partnership Act, he can be admitted to the benefits of
partnership.
9. Minor can be an agent
A minor can act as an agent. But he will not be liable to his principal for his acts.
A minor can draw, deliver and endorse negotiable instruments without himself being
liable. : 7 :
10. Minor cannot bind parent or guardian
In the absence of authority, express or implied, an infant is not capable of binding
his parent or guardian, even for necessaries.
11. Joint contract by minor and adult
In such a case, the adult will be liable on the contract but not the minor.
12. Liability for necessaries
The case of necessaries supplied to a minor or to any person whom such minor is
legally bound to support is governed by Section 68 of the Indian Contract Act. A claim
for necessaries supplied to a minor is enforceable at law. But a minor is not liable for any
price that he may promise and never for more than the value of the necessaries. There is
no personal liability of the minor, but only his property is liable. A minor is also liable for
the value of necessaries supplied to his wife.
Necessaries mean those things that are essentially needed by a minor. They cannot
include luxuries or costly or unnecessary articles. Necessaries extend to all such things as
reasonable persons would supply to an infant in that class of society to which the infant
belongs. Expenses on minor's education, on funeral ceremonies of the wife, husband or
children of the minor come within the scope of the word 'necessaries'.
Not only must the goods supplied by such as are suitable to the minor's status, they
must also be actually necessary. Ten suits of clothes are necessaries for a minor whereas
even three suits may not be deemed necessary for another. The whole question turns upon
the minor's status in life. Utility rather than ornament is the criterion.
Example : Inman an infant undergraduate in Cambridge bought eleven fancy waistcoats
from Nash. He was at that time adequately provided with clothing. Held the waistcoats
were not necessary and the price could not be recovered. (Nash v. Inman. (1908) 2.
K.B.I.). : 8 :
Certain services rendered to a minor have been held to be 'necessaries'. These
include education, medical advice, a house given to a minor on rent for the purpose of
living and continuing his studies , etc.
Goods necessary when ordered might have ceased to be necessary by the time they
are delivered. e.g., where a minor orders a suit from a tailor but buys other suits before
that ordered is actually delivered. Here the minor could not be made to pay the tailor. The
following have been held to be necessaries :
(i) Livery for an officer's servant.
(ii) Horse, when doctor ordered riding exercise.
(iii) Goods supplied to a minors wife for her support.
(iv) Rings purchased as gifts to the minor's fiancee
(v) A racing bicycle.
On the other hand, following have been held not to be necessaries :
(i) Goods supplied for the purpose of trading.
(ii) A silver-gift goblet.
(iii) Cigars and tobacoo.
(iv) Refreshment to an undergraduate for entertaining.