The Indian Contract Act vide Section 10 stipulates that the parties to a contract must be competent to contract. Section 11 of the said Act determines persons who are competent to contract. It states "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."
It can thus be determined that the following persons are incompetent to enter into any agreement:--
any minor
any person of unsound mind
any person disqualified by law to which he is subject.
The age of majority has been determined by the Indian Majority Act, 1875 which states "Every person domiciled in India shall be deemed to have attained his majority when he shall have completed his age of eighteen years, and not before. In the case, however, of a minor of whose person or property or both a guardian has been appointed by a court, or of whose property the superintendence is assumed by a court of wards, before the minor has attained the age of eighteen years, when he has completed the age of 21 years."
Section 12 of the Contract Act determines when a person is said to be of sound mind. It states "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."
