The document discusses the legal capacity of parties to enter into a contract under Indian law. It summarizes key sections of the Indian Contract Act, 1872 regarding who is competent to contract, including being of the age of majority, of sound mind, and not otherwise legally disqualified. It also discusses cases related to the contracts of minors and people of unsound mind. Specifically, it summarizes a 1903 Privy Council case that established a minor's contract is void ab initio as a minor is not competent to enter into an agreement. It also examines the definition of sound mind and discusses evidentiary burdens regarding establishing mental capacity or incapacity.

1. Capacity of Parties to Contract
Mr. Amit Guleria (Double Medalist; Gold and Silver)
Assistant Professor,
Dr. B.R. Ambedkar National Law University Sonepat
Email: amitdbranlu@gmail.com

2. Sec. 11, ICA, 1972: Who are competent to contract.—Every person is
competent to contract who is of the age of majority according to the law
to which he is subject, and who is of sound mind, and is not disqualified
from contracting by any law to which he is subject.
There must be legal relationship.
Agreements of social or domestic nature are not contracts.
For Instance:
(i) Invitation for a dinner party (ii) Invitation to a birthday party etc. are not
agreements enforceable by law.

3. Minor’s Contract: Mohori Bibee V. Dharamodas Ghose (1903) 30 Cal 539 (Privy Council)
Facts: Dharamodas Ghose, a minor the owner of immovable property borrowed Rs. 20,000 (Rs.
8000 advanced) from Brahmo Dutt (Husband of Mohori Bibee) @ 12 % through Mortgage.
The agent/attorney of Brahmo Dutt (Kedar Nath) served a notice on Dharmodas Ghose for the
recovery of money, but the mother of Dharmodas Ghose (Jagendra Nandini) took a plea that
Dharmodas Ghose is a minor and cannot enter into a contract.
The lower court also considered that a minor is not competent to enter into a contract.
The appeal was filed by Brahmo Dutt in High Court of Calcutta and claiming the contract to be
“voidable” (to bring the case at the original state by repaying Rs. 8000 that was advanced
by Brahmo Dutt) and application of ‘doctrine of estoppel” Section 115 of Indian Evidence
Act, 1872 on Dharmodas Ghose. But it was held that estoppel is not applicable on a minor.
Held: The appeal was filed to Privy Council by Mohori Bibee as Brahmodas Dutt had been died
at that time. Even in appeal, Privy Council held that a minor is not competent to enter into a
contract, therefore any contract entered into with the minor is “void ab-initio”.

4. Sec. 12, ICA, 1872, What is a sound mind for the purposes of contracting.—A
person is said to be of sound mind for the purpose of making a contract, if, at the time
when he makes it, he is capable of understanding it and of forming a rational judgment as
to its effect upon his interests.
• A person who is usually of unsound mind, but occasionally of sound mind, may
make a contract when he is of sound mind.
• A person who is usually of sound mind, but occasionally of unsound mind, may
not make a contract when he is of unsound mind.
Sona Bala Bora v. Jyotirindra Bhatacharjee (2005) 4 SCC 501, at 509
A person of unsound mind need not necessarily be a lunatic or suffer from total
deprivation of reason. It is sufficient, if the person suffers from an inability, “from
defect of perception, memory, and judgment, to perform the act in question or to
understand its nature and consequences”

5. However, in Kanhaiyalal v. Harsing Laxman Wanjari AIR 1944 Nag. 232 it
was held that “mere weakness of mind is not unsoundness of mind”.
Burden of Proof: The presence and absence of mental capacity is a question
of fact. As it varies case to case. Doctrine of “non est factum” (as to the
nature of the transaction in a particular case).
In Tilok Chand v. Mahandu, AIR 1933 Lah 458, it was held that, where a
person is usually of sound mind, the burden of proving that he/she was of
unsound mind at the time of execution of a document lies on him who
challenges the validity of contract.
However, in Sona Bala Bora v. Jyotirindra Bhatacharjee (2005) 4 SCC 501 at
511, it was held that where a person is usually of unsound mind, the burdon of
proving that at the time of entering into contract he/she was of sound mind lies
on the person who affirms the same.