- In India, the Indian Majority Act, 1875 governs the age of majority, setting it at eighteen years (Section 3).

- However, if a person below eighteen years has a appointed a guardian for them, they will attain majority at the age of twenty-one years.

2. Soundness of Mind:

- At the time of entering into a contract, the individual must be of sound mind.

- According to Section 12 of the Act, an individual is considered of sound mind when they can comprehend and understand their actions, as well as the consequences and obligations arising from them.

3. Absence of Disqualification:

- The individual must not be disqualified under any law applicable to them.

Disqualifications for Contracting

Under the Indian Contract Act, 1872, individuals failing to meet the criteria specified in Section 11 are deemed incompetent to contract. Consequently, the following categories of individuals lack the legal capacity to enter into contracts:

Minor:

- In India, a minor is defined as an individual who has not yet completed eighteen years of age.

- A minor lacks the capacity to comprehend the implications of contractual obligations.

- Therefore, contracts entered into with minors are void ab initio, meaning they are void from the outset and cannot be enforced in a court of law.

- Consequently, a party cannot compel a minor to fulfill their obligations under the agreement, nor can they seek specific performance or rely on estoppel principles.

Person of unsound mind:

Idiots- Idiots are incapable of understanding the nature of the contract and it will be void ab initio.

Lunatic- A person who is of sound mind for certain duration of time and unsound for the remaining duration is known as a lunatic. When a lunatic enters into a contract while he is of sound mind, i.e. capable of understanding the nature of the contract, it is a valid contract. Otherwise, it is void.

Influence of the drug- A contract executed under the influence of alcohol or drugs may be deemed valid or invalid based on the individual's capacity at the time of signing. If an individual is intoxicated to the extent that they are unable to comprehend the nature and implications of the contract, said contract is considered void. Conversely, if the individual possesses the requisite mental capacity to understand the contract, it shall be enforceable.

Persons disqualified under law:

1. Citizen of a country with which India is at war. Contracts entered into during a period of war with an alien enemy are void. An Indian citizen residing in the territory of an alien enemy is also treated as an alien enemy under contract law. Contracts made before the commencement of war are either dissolved if contrary to public policy or suspended and revived post-war, unless barred by limitation.

2. A person serving a sentence cannot enter into a contract during their incarceration. However, their capacity to contract is restored upon completion of their sentence.

3. An insolvent is someone declared bankrupt, against whom insolvency proceedings have been initiated in court, or whose assets have been taken over by a resolution professional. An insolvent lacks authority to enter into contracts regarding their property.

4. Diplomats and ambassadors of foreign countries are immune from lawsuits in Indian courts unless they voluntarily submit to the jurisdiction of those courts. Additionally, sanction from the central government is required for such suits. However, foreign sovereigns have the right to enforce contracts against third parties in Indian courts.

Competency of Parties to Enter into Electronic Contracts:

A party may enter into an electronic contract if it meets the statutory requirements outlined in Section 11 and Section 12 of the Indian Contract Act, 1872.

Competency to Contract on Behalf of Another:

Under the Indian Contract Act, 1872, a person may appoint another to enter into contracts with third parties on their behalf. The appointing person is referred to as the principal, and the appointed person is known as the agent. Any individual may act as an agent, except for minors or persons of unsound mind, who cannot be held liable for their actions on behalf of the principal.

An agent's authority is Express or Implied.

Ensuring Competency in Corporate Contracts:

When companies enter into contracts with each other, they typically ensure that the other party is legally competent to contract to prevent future legal complications. This is often achieved by including a representation clause in the contract, affirming that the company, in accordance with its memorandum and articles of association, has the authority to enter into the contract through its authorized representatives.

Both parties may attach a copy of the articles of association to substantiate the representations made.

If the memorandum and articles dictate otherwise, the agreement includes a condition precedent clause stipulating that the company must pass necessary board resolutions to amend its articles of association. A specific deadline, known as a "long stop date," is provided for the other party to fulfill these conditions; failure to do so results in termination of the agreement.

A party may be required to furnish a copy of the board resolution or amendments to the articles of association to prove compliance with the condition precedent.

FREE CONSENT

In the Indian Contract Act, Section 14 defines consent as the mutual agreement between two or more persons regarding the same subject matter and in the same manner of interpretation.

Vitiating Factors and Their Effect

1. Coercion

Coercion, as defined in Section 15 of the Indian Contract Act, 1872, involves the use of force or threats to compel someone to enter into an agreement. This includes acts prohibited by the Indian Penal Code (45 of 1860) or unlawfully detaining or threatening to detain any property, with the intent to induce a person to enter into a contract.

Coercion refers to the exertion of undue pressure on an individual to enter into a contract, thereby negating free consent. It may include physical or psychological harm inflicted to substantiate a threat, thereby compelling compliance or submission from the threatened individual.

2. Undue Influence

Undue influence, as per Section 16 of the Indian Contract Act, 1872, arises under the following circumstances:

When one party to the contract holds a position of trust and improperly controls the other party.

The dominant party exploits this position to secure an unjust benefit.

Undue influence involves two primary elements:

1. Relationship dynamics involving trust, confidence, or authority.

2. Unfair manipulation through careful scrutiny of the contract terms.

3. Fraud

Fraud, as defined in Section 17 of the Indian Contract Act, encompasses the following actions carried out by a party to the contract, or in collusion with their agent, with the intention of deceiving or inducing another party or their agent to enter into the contract:

1. Deliberate concealment of a fact known to the concealing party.

2. Making a promise without any intention of fulfilling it.

3. Any other act designed to mislead.

4. Any act or omission recognized by law as fraudulent.

Mere silence regarding facts that may influence a person's decision to enter into a contract does not constitute fraud unless the circumstances necessitate disclosure or the silence itself implies agreement.

4. Misrepresentation

Misrepresentation is defined under section 18 of the act. It occurs when one party provides false information, leading the other party to enter into a contract under a mistaken belief. However, the party providing the misleading information genuinely believes it to be true. Misrepresentation can occur in three ways:

1. When a party falsely asserts facts that are not true.

2. When there is a breach of duty that causes one party to misunderstand the terms of the contract.

3. When a mistake is made by one party due to the misrepresentation of facts or information.

4. Mistake

Under Indian Contract Law, there are two types of mistakes:

Mistake of Fact:

A mistake of fact occurs when one or both parties misunderstand a key aspect essential to the contract's understanding.

Such mistakes can arise from confusion, negligence, or inadvertence.

Mistakes of fact are never intentional; they are innocent oversights.

These mistakes can be unilateral (affecting one party) or bilateral (affecting both parties).

Mistake of Law

A mistake of law can pertain to either Indian laws or foreign laws. Regarding Indian laws, the principle is that ignorance of the law is not a valid excuse. This means that neither party can claim relief on the basis of being unaware of Indian laws or misinterpreting legal provisions.

The Indian Contract Act specifies that ignorance of Indian law does not afford any party grounds for relief, including misinterpretation of legal provisions.

In contrast, ignorance of foreign law is treated differently. Parties are not expected to be knowledgeable about foreign law and its implications. Therefore, under the Indian Contract Act, a mistake concerning foreign law is considered a mistake of fact.

Remedies for Breach of Contract

Under the Indian Contract Act, 1872, the remedies provided in case of a breach of contract are directed toward compensating the loss sustained on account of the breach. The remedies available are as follows:

1. Damages: The basic remedial action for breach of contract, which aims to compensate the non-breaching party for loss incurred by it, may be Compensatory Damages and Liquidated Damages. Compensatory damages aim to put the non-breaching party in the position they would have been if the contract was performed, while liquidated damages are pre-determined amounts stated in the contract to be paid in case of a breach.

2. Specific Performance: The party in breach is compelled to perform their part of the contract. It may be availed where monetary damages alone will not be adequate compensation for the loss incurred. For example, where the contract is for unique items or real estate.

3. Injunction: An injunction is an order of the court that forbids the breaching party from performing acts that will cause harm or further harm to the non-breaching party. This is an equitable remedy given in addition to, or instead of, damages.

4. Quantum Meruit: This is the remedy that operates when one party has conferred a benefit on the other without there ever having been, or no longer being, a contract between them, either because of a void or unenforceable contract or due to breach of contract. The party supplying the benefit may claim the value of the benefit conferred upon the other.

5. Rescission: Rescission allows the non-breaching party to rescind the contract and puts them in a position they were in before the contract was made. It is normally awarded in cases of mistake, fraud, or misrepresentation in the formation of the contract.

6. Restitution: This measure involves returning what the non-breaching party conferred on the breaching party. The basic idea of this approach is to avoid unjust enrichment.

Discharge of Contracts

The Indian Contract Act, 1872, provides for discharge of contracts through various means. These methods provide flexibility and a legal mechanism to the parties to either fulfill their obligations under a contract or to bring it to an end under the Act. Circumstances and the nature of the contractual agreement involved would decide the appropriate method of discharge.

The different principal methods of discharge are explained hereunder:

-Performance: When both parties perform what they are supposed to perform under the terms of the contract, it results in its discharge. This is the most prevalent mode by which contractual obligations are discharged.

-Mutual Agreement: Any contract may be discharged by the parties thereto either expressly by entering into a new agreement or impliedly by their conducts amounting to mutual intention.

-Impossibility of Performance: A contract is discharged if its performance becomes objectively impossible due to unforeseen circumstances beyond the control of the parties, such as destruction of the subject matter or change in law.

-Lapse of Time: If a contract provides for a time limit within which performance has to take place, failure of performance within that time may discharge the contract by lapse of the period stipulated.

-Operation of Law: There are certain circumstances laid down in the law which discharges a contract, such as bankruptcy, illegality of the contract, frustration of purpose, and impossibility of performance of the contract.

-Breach of Contract: A material breach by one party may entitle the other party to treat the contract as discharged, releasing him from further obligation under the contract.

-Consent: Parties may agree to discharge the contract by mutual consent, either by executing a new contract or by modifying the existing terms of the contract with the intention to discharge it.

-Rescission: Rescission involves the cancellation of a contract due to defective formation. Examples of defective formation include mistake, misrepresentation, and fraud, which would render it void from its creation.

-Novation: Novation substitutes one party or new terms/obligations for an existing contract.

-Performance of Condition Subsequent: A contract which is contingent upon a certain event happening in the future, if that condition happens, may discharge the contract.