1. Capacity to contract under Indian law requires that parties are of the age of majority, sound mind, and not legally disqualified from entering contracts. 2. Any agreement with a minor is void, as a minor lacks capacity until age 18. While minors cannot be bound by contracts, they can receive partnership benefits and must return benefits received under a void contract. 3. To be of sound mind, one must understand the contract and rationally judge its effects on their interests, as defined in Section 12 of the Indian Contract Act. People who are occasionally unsound cannot contract during those periods.