Can a minor ever be made liable on a contract?

Not on the contract itself, since it is void ab initio. The only route to recovery is section 68, which allows a supplier of necessaries suited to the minor's condition in life to be reimbursed from the minor's property. That liability is quasi-contractual and does not attach to the minor personally, so a minor with no property is liable for nothing. A minor is also liable for his torts, but a plaintiff cannot recast a breach of contract as a tort to get around the incapacity.

How do I decide between coercion and undue influence in a problem?

Ask what kind of pressure was applied. If there was a threat of an act forbidden by the Penal Code, or unlawful detention of property, it is coercion, and no relationship is needed. If the pressure arose from a relationship in which one party could dominate the other's will — authority, fiduciary relation, or the other's capacity impaired by age, illness or distress — it is undue influence, and the burden of proof shifts once the transaction appears unconscionable.

Is silence about a defect always fraud?

No, and this is the default position. Mere silence as to facts likely to affect willingness to contract is not fraud. It becomes fraud only in four situations: where there is a duty to speak, as in insurance or a fiduciary relation; where silence is equivalent to speech because the other party has framed it that way; where circumstances change and falsify a statement true when made; and where a half-truth misleads by omission. Name the situation that applies rather than asserting a general duty of disclosure.

Why is a post-employment non-compete void when it seems reasonable?

Because section 27 contains no reasonableness test, unlike English law. Every agreement restraining a person from exercising a lawful profession, trade or business is void to that extent, and no exception covers post-employment restraints in a contract of service. Employers protect themselves instead through confidentiality obligations, which restrain the misuse of information rather than the exercise of a trade and are enforceable after employment ends.

What is the difference between an agreement being void and being illegal here?

An illegal agreement is one whose object or consideration falls within section 23 — forbidden by law, defeating a statute, fraudulent, injurious, or immoral or against public policy. Every illegal agreement is void, but many void agreements are lawful, such as wagers in most of India or agreements void for uncertainty. The practical difference is that collateral transactions to an illegal agreement are tainted and unenforceable, while those collateral to a merely void agreement stand.

Does inadequacy of consideration by itself invalidate a contract?

No. The explanation to section 25 states that an agreement is not void merely because the consideration is inadequate. But the same explanation adds that inadequacy may be taken into account in determining whether consent was freely given. So it functions as evidence supporting a plea of undue influence or coercion rather than as an independent ground, which is exactly how it is used in problems involving a dominant party.

Chapter 3 of 10

30%

CMA Intermediate Business Laws and Ethics★ Units 4–7 of the Indian Contract Act, 1872 — roughly 14 marks. Free consent generates more practical problems than any other single unit of the Act, and the minor's position is examined at almost every sitting.

Contract Act: Capacity, Consent & Validity

Who can contract, whether the assent was real, and whether the law will countenance the bargain at all — capacity, the five vitiating factors, unlawful objects, void agreements and contingent contracts.

⏱ 34 min readModerate difficulty✓ Free · exam-pattern aligned

Timed practiceMCQs from this chapter with instant scoring

FlashcardsFormulas & traps on spaced repetition

CMA Intermediate PYQsSolved previous-year questions

By the end of this chapter you'll be able to…

1State who is competent to contract and explain why a minor's agreement is void ab initio rather than voidable
2Apply the consequences of that rule — no ratification, no estoppel on misrepresented age, no specific performance — and the section 68 exception for necessaries
3State the position of a minor as partner, agent and shareholder, and in tort
4Apply the section 12 test of soundness of mind at the time of contracting, including lucid intervals
5Distinguish coercion from undue influence on named bases, including where the burden of proof lies
6Distinguish fraud from misrepresentation by intention, and by the availability of damages and of the ordinary-diligence defence
7Identify the four circumstances in which silence amounts to fraud
8Apply the rules on bilateral mistake of fact, unilateral mistake and mistake of law, including foreign law
9State when consideration or object is unlawful under section 23 and list the heads of public policy
10State the expressly void agreements and the exceptions to the restraint of trade rule
11Distinguish a contingent contract from a wagering agreement and apply the section 32 to 36 enforcement rules

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Why this chapter matters in CMA Intermediate

This chapter supplies the three questions the law puts to every agreement after formation — were the parties competent, was the assent real, and will the law countenance the bargain. The consequences differ in a way that decides answers: coercion, undue influence, fraud and misrepresentation make a contract voidable, while mistake makes an agreement void, because in the first four there was consent that was not free and in the last there was no agreement at all. Two rules do most of the work in problems: a minor's agreement is void ab initio with everything else following from that, and where dominance and an unconscionable transaction are shown the burden of disproving undue influence shifts to the dominant party.

Before you start — revise these

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The Regulatory Framework & Contract Formation

Offer, acceptance and consideration must be established before capacity, consent and legality arise — the Act is a sequence and these are its later steps.

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How to Write CA Foundation Law Answers

Answers here turn on stating the consequence precisely — void or voidable, damages or only rescission — which is the conclusion the marking scheme looks for.

Contract Act: Capacity, Consent & Validity

Weightage: Units 4 to 7 of the Indian Contract Act — roughly 14 marks. Free consent alone generates more practical problems than any other single unit of the Act, and the minor's position is examined at almost every sitting.

The previous chapter established that an agreement requires offer, acceptance and consideration. This one asks three further questions the law puts to every agreement before it will enforce it: were the parties competent, was the assent real, and is the bargain one the law is prepared to countenance?

Capacity to contract

Section 11 provides that every person is competent to contract who is of the age of majority according to the law to which he is subject, who is of sound mind, and who is not disqualified from contracting by any law to which he is subject.

Three disqualifications follow, and the first is the most heavily examined.

Minors

A minor is a person who has not attained eighteen years of age. Where a guardian has been appointed by a court, majority is attained at twenty-one.

A minor's agreement is void ab initio. This is the single most important proposition in the topic. The Act says only that a minor is not competent to contract, and for many years there was doubt whether the resulting agreement was void or merely voidable at the minor's option. The Privy Council settled it in Mohori Bibee v Dharmodas Ghose, holding that such an agreement is void from the beginning. It never had legal existence.

Everything else follows from that:

No ratification. A minor cannot ratify an agreement on attaining majority, because there is nothing to ratify — a void agreement cannot be brought to life by later approval. A fresh agreement supported by fresh consideration after majority is a different matter and is valid.

No estoppel. A minor who fraudulently misrepresents his age and induces another to contract is not estopped from later pleading minority. The reasoning is that estoppel cannot be used to defeat a statutory protection; if it could, the protection would be worthless against the very misrepresentation minors are most likely to make.

No specific performance, since there is no contract to enforce, and no restitution of money already paid unless the minor still has the property in a traceable form, in which case a court may order its restoration on equitable principles.

Necessaries. Section 68 creates an important qualification. Where a person incapable of contracting is supplied by another with necessaries suited to his condition in life, the supplier is entitled to be reimbursed from the property of the minor. Note precisely what this does and does not say. The liability is not contractual — a minor cannot contract — and it is not personal. It is a quasi-contractual liability enforceable only against the minor's estate. If the minor has no property, the supplier recovers nothing.

What counts as necessaries depends on the minor's station in life and existing supply. Food, clothing, shelter, medical care and education are the usual examples, but articles of luxury are never necessaries, and articles otherwise necessary are not so if the minor is already adequately supplied with them.

A minor as partner. A minor cannot be a partner, because partnership arises from contract. Under section 30 of the Indian Partnership Act, 1932 a minor may be admitted to the benefits of partnership with the consent of all partners. His share is liable for the firm's debts but he is not personally liable, and within six months of attaining majority he must elect whether to become a partner.

A minor as agent. A minor may act as an agent, since an agent does not incur personal liability on contracts made for the principal. The principal is bound by the minor agent's acts, but the minor is not liable to the principal for negligence or breach.

A minor as shareholder. A minor may hold fully paid shares, transferred to him through a lawful guardian, since no further liability attaches. He cannot be allotted partly paid shares.

Liability in tort. A minor is liable for his torts, but a plaintiff cannot convert what is really a breach of contract into a tort in order to sidestep the incapacity.

Persons of unsound mind

Section 12 provides that a person is of sound mind for the purpose of making a contract if, at the time of making it, he is capable of understanding it and of forming a rational judgement as to its effect upon his interests.

The test is applied at the time of contracting, which produces two consequences the Act states expressly. A person usually of unsound mind but occasionally of sound mind may contract during a lucid interval. A person usually of sound mind but occasionally of unsound mind may not contract while he is of unsound mind.

The category includes idiocy, which is permanent, lunacy or insanity, which may be intermittent, and drunkenness or delirium, which is temporary but complete while it lasts. An agreement by a person of unsound mind is void, and section 68 applies to necessaries supplied to such a person in the same way as to a minor.

Persons disqualified by law

Alien enemies — contracts with a person of a country at war with India are suspended or dissolved. Foreign sovereigns and ambassadors enjoy immunity and can sue but cannot be sued without the sanction of the Central Government. Convicts cannot contract while undergoing imprisonment. Insolvents cannot deal with their property once adjudicated, until discharged. Companies and statutory corporations are limited by their constitutional documents and the statute creating them.

Section 13 defines consent: two or more persons are said to consent when they agree upon the same thing in the same sense — consensus ad idem.

Section 14 provides that consent is free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake.

The consequence of the absence of free consent depends on which factor is present, and this is where marks are won or lost:

Coercion, undue influence, fraud or misrepresentation — the agreement is a contract voidable at the option of the party whose consent was so caused.
Mistake, in the cases where it operates — the agreement is void.

The reason for the difference: in the first four cases there was consent, but it was not free, so the injured party is given a choice whether to be bound. In the case of mistake there was no real agreement at all — the parties never agreed upon the same thing in the same sense — so there is nothing to affirm.

Coercion

Section 15: coercion is committing or threatening to commit any act forbidden by the Indian Penal Code, or unlawfully detaining or threatening to detain any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.

Two points recur in questions. Coercion may be directed against any person whatever, not necessarily a party to the contract — a threat against a stranger's life to compel a contract is coercion. And it may be committed by any person, not necessarily a party.

A threat to file a criminal case, where the case is genuine, is not coercion; a threat to file a false one is. A threat to commit suicide has been held to amount to coercion, since although suicide itself is not punishable, attempting it was an offence and threatening it is within the section's mischief.

Undue influence

Section 16: a contract is induced by undue influence where the relations subsisting between the parties are such that one of them is in a position to dominate the will of the other, and he uses that position to obtain an unfair advantage over the other.

A person is deemed to be in a position to dominate the will of another where he holds a real or apparent authority over the other, or stands in a fiduciary relation to the other, or where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.

The burden of proof is the crucial practical feature. Where one party is in a position to dominate the will of the other and the transaction appears unconscionable, the burden of proving that the contract was not induced by undue influence lies on the party in the dominant position. This reverses the ordinary rule that he who alleges must prove, and it is what makes the doctrine effective.

Relationships in which dominance is presumed include parent and child, guardian and ward, doctor and patient, solicitor and client, and spiritual adviser and devotee. Relationships in which it is not presumed include husband and wife, landlord and tenant, and creditor and debtor — though dominance may still be proved on the facts.

Coercion distinguished from undue influence. Coercion is physical or criminal pressure and involves an act forbidden by the Penal Code or unlawful detention of property; undue influence is moral or mental pressure arising from a relationship. Coercion may be exercised by or against a stranger; undue influence operates only between the parties to the relationship. In coercion the burden of proof lies on the party alleging it; in undue influence, once dominance and an unconscionable transaction are shown, it shifts to the dominant party.

Fraud

Section 17: fraud means any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party or his agent, or to induce him to enter into the contract:

the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
the active concealment of a fact by one having knowledge or belief of the fact;
a promise made without any intention of performing it;
any other act fitted to deceive;
any such act or omission as the law specially declares to be fraudulent.

Silence as fraud. The explanation to section 17 provides that mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud — unless the circumstances are such that it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.

Four situations in which silence amounts to fraud are examined regularly: where there is a duty to speak, as in contracts uberrimae fidei such as insurance, or where the parties stand in a fiduciary relation; where silence is equivalent to speech, as where a buyer says "if you do not deny it I shall assume the horse is sound" and the seller says nothing; where a change of circumstances falsifies a statement true when made; and where a half-truth is told, since a statement literally true but misleading by omission is a false statement.

Misrepresentation

Section 18: misrepresentation is a positive assertion, in a manner not warranted by the information of the person making it, of that which is not true though he believes it to be true; or any breach of duty which, without an intent to deceive, gains an advantage to the person committing it; or causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.

Fraud distinguished from misrepresentation. The essential difference is intention: fraud involves knowledge of falsity or absence of belief in the truth, and an intent to deceive; misrepresentation is made in the honest belief that it is true. The consequences differ accordingly. Fraud makes the contract voidable and gives a right to damages; misrepresentation makes it voidable but gives no right to damages, only rescission and restitution.

There is a further difference on the availability of the defence that the truth could have been discovered. Section 19's exception provides that where consent was caused by misrepresentation, or by silence amounting to fraud, the contract is not voidable if the party whose consent was so caused had the means of discovering the truth with ordinary diligence. But this exception does not apply to active fraud — a person who lies cannot defend himself by saying the victim should have checked.

Mistake

Bilateral mistake of fact. Section 20 provides that where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. Both parties must be mistaken, the mistake must be of fact rather than of opinion, and the fact must be essential to the agreement — as where the subject matter has perished without the knowledge of either party, or where the parties are at cross purposes about the identity of the subject matter.

Unilateral mistake. Section 22 provides that a contract is not voidable merely because it was caused by one of the parties being under a mistake as to a matter of fact. The general rule is therefore that a unilateral mistake does not affect the contract. Exceptions arise where the mistake concerns the identity of the person contracted with, or the nature of the document signed where the signatory was misled about its character.

Mistake of law. Section 21 provides that a contract is not voidable because it was caused by a mistake as to any law in force in India. Ignorance of the law is no excuse. But a mistake as to a law not in force in India — foreign law — has the same effect as a mistake of fact, because no one is expected to know the law of another country.

Legality of object and consideration

Section 23 provides that the consideration or object of an agreement is lawful unless it is:

forbidden by law;
of such a nature that, if permitted, it would defeat the provisions of any law;
fraudulent;
involves or implies injury to the person or property of another; or
the court regards it as immoral or opposed to public policy.

In each of these cases the consideration or object is unlawful, and every agreement of which it forms part is void.

Agreements opposed to public policy are the residual head and the one most often asked. The recognised categories include trading with an enemy, agreements to commit an offence, agreements interfering with the course of justice, stifling prosecution of a non-compoundable offence, maintenance and champerty in their objectionable forms, agreements for the sale of public offices or titles, agreements tending to create a monopoly, agreements in restraint of parental rights, and agreements in restraint of personal liberty or of marriage.

Expressly void agreements

Sections 24 to 30 declare certain agreements void regardless of the parties' intentions.

Agreement in restraint of marriage (section 26). Every agreement in restraint of the marriage of any person other than a minor is void. The restraint may be total or partial; both are void.

Agreement in restraint of trade (section 27). Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind is, to that extent, void. Indian law here is markedly stricter than English law, which permits reasonable restraints. The exceptions are:

Sale of goodwill, where the seller may agree not to carry on a similar business within specified local limits, so long as the limits are reasonable having regard to the nature of the business.
Partnership Act exceptions — restraints on an outgoing partner, restraints agreed among partners during the continuance of the firm, restraints on a partner upon dissolution, and restraints in anticipation of dissolution, each valid if the restrictions are reasonable.
Trade combinations which regulate business and do not restrain it, and service agreements restraining an employee during the term of employment, which are valid; a restraint operating after employment ends is void.

Agreement in restraint of legal proceedings (section 28). An agreement which absolutely restricts a party from enforcing his rights by legal proceedings, or which limits the time within which he may do so, is void. Agreements to refer disputes to arbitration are expressly saved.

Agreement void for uncertainty (section 29). An agreement the meaning of which is not certain, and is not capable of being made certain, is void. An agreement to sell "a hundred tonnes of oil" without specifying the kind is uncertain; an agreement to sell "at the market price on the date of delivery" is not, because it can be made certain.

Wagering agreement (section 30). An agreement by way of wager is void, and no suit lies for recovering anything alleged to be won on any wager. Its essentials are a promise to pay money or money's worth on the determination of an uncertain event, mutual chances of gain and loss, neither party having any interest other than the stake, and neither having control over the event.

Wagering agreements are void but not illegal in most of India, so collateral transactions are not tainted. Note the exclusions: a contract of insurance is not a wager because the insured has an insurable interest; a share or commodity transaction intended to result in delivery is not a wager, though one settled only by differences is; and a subscription or prize of five hundred rupees or upwards for a horse race is expressly excepted.

Contingent contracts

Section 31 defines a contingent contract as a contract to do or not to do something if some event, collateral to such contract, does or does not happen.

The essentials are that performance depends on a future uncertain event which is collateral to the contract — that is, not part of the consideration itself. A contract of insurance and a contract of indemnity are the standard examples.

The rules on enforcement:

Contingent on an event happening — enforceable when the event happens; void if the event becomes impossible.
Contingent on an event not happening — enforceable when the event becomes impossible; void if it happens.
Contingent on the future conduct of a living person — the event is considered impossible when that person does anything rendering it impossible within any definite time.
Contingent on an event happening within a fixed time — void if the time expires without the event, or if the event becomes impossible before the time expires.
Contingent on an impossible event — void, whether or not the impossibility was known to the parties at the time of the agreement.

Distinguish a contingent contract from a wagering agreement: in a wager, the uncertain event is the sole determining factor and the parties have no interest beyond the stake; in a contingent contract the event is collateral and the parties have a real interest in the subject matter. This is precisely why insurance is a contingent contract and not a wager.

How this chapter is examined

Practical problems dominate, and the recurring patterns are predictable: a minor misrepresenting his age; a supplier claiming for goods supplied to a minor, testing whether they were necessaries and whether the minor has property; a spiritual adviser or doctor obtaining a transaction from a devotee or patient, testing the presumption of dominance and the reversed burden of proof; a seller keeping silent about a defect, testing whether silence amounts to fraud; a party who could have discovered the truth by ordinary diligence, testing the exception to section 19; an employment or goodwill covenant, testing section 27 and its exceptions.

Descriptive questions ask for the distinction between coercion and undue influence, between fraud and misrepresentation, and between a wagering agreement and a contingent contract, and for the exceptions to the restraint of trade rule. Each should be answered on named bases with paired points, ending with the consequence — because the consequence, whether the agreement is void or voidable and whether damages are available, is the part that shows the distinction is understood.

Key formulas & results

Everything to memorise for the exam hall, in one card. Screenshot this for revision.

Competency to contract (section 11)

Age of majority + sound mind + not disqualified by any law to which the person is subject

All three are required. Majority is eighteen, or twenty-one where a court has appointed a guardian.

The minor's rule and its consequences

A minor's agreement is void ab initio → no ratification on majority, no estoppel despite misrepresented age, no specific performance, and restitution only of property still traceable

Settled in Mohori Bibee v Dharmodas Ghose. Every consequence follows from the agreement never having had legal existence.

Necessaries (section 68)

Reimbursement is from the property of the minor, not from the minor personally, and the liability is quasi-contractual rather than contractual

If the minor has no property the supplier recovers nothing. Luxuries are never necessaries, and goods otherwise necessary are not so if the minor is already adequately supplied.

Soundness of mind (section 12)

Capable, at the time of making the contract, of understanding it and of forming a rational judgement as to its effect upon his interests

Tested at the moment of contracting: a usually unsound person may contract in a lucid interval, and a usually sound person may not while unsound.

Consequences of unfree consent

Coercion, undue influence, fraud, misrepresentation → voidable at the option of the aggrieved party. Mistake (where it operates) → void.

Voidable because consent existed but was not free; void because there was no consensus ad idem at all. Fraud alone additionally gives damages.

Undue influence — burden of proof (section 16)

Where one party is in a position to dominate the other's will AND the transaction appears unconscionable, the burden of proving the absence of undue influence lies on the dominant party

This reversal of the ordinary rule is what makes the doctrine effective, and it is the point most problems turn on.

Ordinary diligence exception (section 19)

Where consent was caused by misrepresentation or by silence amounting to fraud, the contract is NOT voidable if the aggrieved party had the means of discovering the truth with ordinary diligence

The exception does not protect active fraud — a person who lies cannot say the victim should have checked.

Mistake

Bilateral mistake of fact essential to the agreement → void (s.20). Unilateral mistake of fact → contract not voidable (s.22). Mistake of Indian law → not voidable (s.21). Mistake of foreign law → treated as mistake of fact.

Ignorance of Indian law is no excuse; no one is expected to know the law of another country.

Wager versus contingent contract

Wager: the uncertain event is the sole determining factor and neither party has an interest beyond the stake. Contingent contract: the event is collateral and the parties have a real interest in the subject matter.

This is exactly why insurance is a contingent contract and not a wager — the insured has an insurable interest.

CMA Intermediate test series

Ready to be tested on this?

Contract Act: Capacity, Consent & Validity shows up in every CMA Intermediate paper — sit a timed one and find out where you actually stand.

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Full CMA Intermediate mocks, real clock
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Traps CMA Intermediate sets — and how to dodge them

These are the exact option-traps and misreads that cost marks under negative marking.

WATCH OUT

✗ Describing a minor's agreement as voidable at the minor's option

✓ It is void ab initio. Mohori Bibee v Dharmodas Ghose settled this, and every further consequence — no ratification, no estoppel, no specific performance — depends on it.

WATCH OUT

✗ Holding a minor personally liable for necessaries supplied

✓ Section 68 allows reimbursement only from the minor's property, and the liability is quasi-contractual. A minor without property is liable for nothing.

WATCH OUT

✗ Estopping a minor who lied about his age

✓ There is no estoppel against a minor. Allowing it would let the very misrepresentation minors are most likely to make defeat the statutory protection.

WATCH OUT

✗ Saying that mistake makes a contract voidable

✓ Mistake, where it operates, makes the agreement void, because the parties never agreed upon the same thing in the same sense. Only coercion, undue influence, fraud and misrepresentation make a contract voidable.

WATCH OUT

✗ Awarding damages for misrepresentation

✓ Misrepresentation gives rescission and restitution but not damages, because it is made honestly. Only fraud, which involves an intent to deceive, additionally gives a right to damages.

WATCH OUT

✗ Applying the ordinary-diligence exception to active fraud

✓ Section 19's exception covers misrepresentation and silence amounting to fraud. A party who made a positive false statement knowing it to be false cannot defend on the ground that the truth was discoverable.

WATCH OUT

✗ Treating mere silence as fraud without identifying which exception applies

✓ Silence is not fraud unless there is a duty to speak, or silence is equivalent to speech, or circumstances have changed falsifying an earlier true statement, or a half-truth has been told. Name the one that fits.

WATCH OUT

✗ Upholding a reasonable post-employment restraint on the English approach

✓ Section 27 voids every restraint of trade to that extent, and Indian law is stricter than English law. Only the listed exceptions save a restraint, and a restraint operating after employment ends is void.

WATCH OUT

✗ Treating a wagering agreement as illegal

✓ It is void but not illegal in most of India, so collateral transactions are not tainted. Money lent to enable a wager is generally recoverable.

WATCH OUT

✗ Calling an insurance contract a wager because it depends on an uncertain event

✓ The insured has an insurable interest, so the event is collateral rather than the sole determining factor and the parties have a real stake beyond the wager. It is a contingent contract.

Exam-pattern practice

PYQ-style questions with full solutions. Work through them as a readiness check — mark yourself honestly and get your gap report at the end.

Readiness check

Are you exam-ready for Contract Act: Capacity, Consent & Validity?

15 problems from this chapter. Try each one, reveal the worked solution, mark yourself honestly — get your gap report at the end.

15 questions~11 min

5-minute revision

The whole chapter, distilled. Read this the night before the exam.

•Competency requires majority, sound mind and no legal disqualification — all three.
•A minor's agreement is void ab initio; no ratification, no estoppel for a misrepresented age, no specific performance.
•Section 68 gives reimbursement for necessaries from the minor's property only, not personally.
•A minor may be admitted to the benefits of partnership, may act as agent, and may hold fully paid shares.
•Soundness of mind is tested at the moment of contracting, so lucid intervals count.
•Coercion, undue influence, fraud and misrepresentation make a contract voidable; mistake makes an agreement void.
•Coercion may be by or against any person whatever; undue influence operates only within the relationship.
•Once dominance and an unconscionable transaction are shown, the burden of disproving undue influence shifts to the dominant party.
•Fraud requires intent to deceive and gives damages; misrepresentation is honest and gives only rescission.
•Silence is fraud only where there is a duty to speak, silence equals speech, circumstances changed, or a half-truth was told.
•The ordinary-diligence exception protects against misrepresentation and fraudulent silence, never against active fraud.
•Bilateral mistake of fact voids; unilateral mistake generally does not; mistake of Indian law does not; foreign law counts as fact.
•Section 27 voids restraints of trade with no reasonableness test — only goodwill, partnership and during-employment exceptions save them.
•A wager is void but not illegal in most of India, so collateral transactions survive.
•A contingent contract's event is collateral and the parties have a real interest; a wager's event is the whole substance.

CMA Intermediate question blueprint

How this topic is asked, tier by tier — so you can prep to the pattern.

Typical weightage: 14

Exam-hall strategy

Battle-tested tips from mentors and toppers for this topic under the sectional clock.

State the consequence precisely in the conclusion — void or voidable — because everything about remedies and third-party rights turns on that word.
In undue influence problems, identify the deemed category first, then whether the transaction is unconscionable, then state where the burden lies.
In fraud versus misrepresentation problems, address intention explicitly, then damages, then whether the ordinary-diligence exception is available.
When silence is in issue, name which of the four exceptions applies rather than asserting a general duty of disclosure.
For restraint of trade, state that section 27 has no reasonableness test before turning to the exceptions.
In minor problems, deal with the loan, the misrepresentation of age, any post-majority promise and the necessaries claim as four separate points.
For contingent contract questions, quote the specific enforcement rule in sections 32 to 36 that the facts engage.

Beyond the exam

Where this skill shows up in the job you're competing for — and in life.

Contracts of insurance are the leading practical instance…

Contracts of insurance are the leading practical instance of a duty to disclose, and non-disclosure of a material fact is the commonest ground on which insurers repudiate claims.

The prohibition on post-employment non-competes shapes In…

The prohibition on post-employment non-competes shapes Indian employment drafting, pushing employers towards confidentiality, non-solicitation and garden-leave clauses instead.

Undue influence and the reversed burden of proof are rout…

Undue influence and the reversed burden of proof are routinely litigated over transfers of property by elderly persons to caregivers, relatives or advisers.

The minor's incapacity is why banks and companies require…

The minor's incapacity is why banks and companies require documents to be executed by a guardian, and why partly paid shares cannot be allotted to a minor.