LAW OF CONTRACT

PROJECT
Legal validity of minor’s contract
Introduction

The term minor/minors is no where defined in the contract

act. But taking into consideration the wordings of section 11 of Indian
contract act, a minor is a person who has not attained the age of 18
years. The age of majority of a person is regulated by section 3 of the
Indian majority act, 1857.

Section 3 of the INDIAN MAJORITY ACT, 1875 provides about the age of
majority. It states that a person is deemed to have attained the age of
majority when he completes the age of 18 years, except in the following
cases a person continues to be a minor until he completes the age of 21
years.

 Where a guardian of a minor‟s person or property has been appointed

under the Guardians and Wards Act, 1890 or

 Where the superintendence of a minor‟s property is assumed by a Court

of Wards.

According to Section 10 of the Indian Contract Act, 1972 all agreements

are not contracts. Only those agreements are contracts that are made by
parties who are competent to enter into a contract. Further, the word
‘competent’ has been described in Section 11 of Indian Contract Act; it is
inclusive of 3 essentials-

 The person should be of the age of majority; that is to say, 18

years

 He should be of sound mind at the time of making of contract.

 He should not be disqualified from contracting by any law to

which he is subject.
It can be said that majority is an essential before entering into a contract

Minor’s contract

A minor is one who has not attained the age of 18, and for every contract,
the majority is a condition precedent. By looking at the Indian law, minor’s
agreement is a void one, meaning thereby that it has no value in the eye
of the law, and it is null and void as it cannot be enforced by either party
to the contract. And even after he attains majority, the same agreement
could not be ratified by him. Here, the difference is that minor’s contract
is void/null, but is not illegal as there is no statutory provision upon this.

Mohiri Bibi v. Dharmodas Ghosh

The case goes back to the year 1903 in which, for the first time, the Privy
Council held that a minor’s contract is void-ab-initio that it is void from the
beginning.

Facts of the case – the plaintiff Dharmodas Ghosh, when he was a

minor, mortgaged his property to the defendant, a moneylender. At that
time, defendant’s attorney had the knowledge about plaintiff’s age. The
plaintiff later paid only Rs 8000 but refused to pay rest of the money. The
plaintiff’s mother was his next friend (legal guardian) at that time, so he
commenced an action against the defendant saying that at the time of
making of a contract, he was a minor, so the contract being a void one, he
is not bound by the same.

The court held that unless the parties have competence under Section 11
of the Act, no agreement is a contract.
Effects of minor’s agreement

Through this landmark judgment, the effects can be explained-

 No liability arising out of either tort/contract: A minor is

incapable of giving consent, and the nature of minor’s agreement
is a nullity and cannot be enforced

 The rule of estoppel: Estoppel is a legal rule of evidence which

prevents a party from alleging something that contradicts what
he previously stated. The court held that the doctrine of estoppel
does not apply to the case in which the person knows the real
facts, before hand and here the attorney of the defendant knew
that the plaintiff was a minor. Hence this rule does not apply.

 Restitution of benefit: According to Section 64 of the Indian

Contract Act, when a person at whose option a contract is
voidable rescinds it, the other party need not perform it. This
applies to contracts that are voidable, but a minor’s contract is
void, and therefore, he cannot be asked to refund the amount
money to the moneylender.

Exception to general rule

For providing protection to a minor, his agreement is void. But there are
certain exceptions as well.

 When minor has performed his obligation: In a contract, a

minor can be a promisee but not a promisor. So if the minor has
performed his part of the promise, but the other party hasn’t the
minor being in the position of a promisee he can enforce the
contract.
  A contract entered into by guardian of minor for his
benefit: In that case, a minor can sue the other party when it
does not perform its promise. In the case of Great American
Insurance v. Madan Lal[1]the guardian on the behalf of her son
entered into an insurance contract in respect of fire for the
minor’s property. When the property was damaged and minor
asked for the compensation, the insurer denied it by saying that a
contract with a minor is a void one. But later the court held that
this contract was enforceable, and he is liable to pay
compensation.

 Contract of apprenticeship: Under the Indian Apprentices Act,

1850, a contract of apprentice entered by guardian on his behalf
is binding on the minor.

Necessities supplied to a minor

If a person is incapable of entering into a contract is supplied by another

person with necessities of life, the person who has supplied is entitled to
get reimbursement from the property of such incompetent person,
including a child as well. But if the minor has no property of his own, then
he cannot be bound to reimburse the other person.

Can a minor be a partner?

The way of a contract creates a partnership, and the essential of a

contract is that the both the parties should be of the age of majority.
However, as an exception as per Section 30 of the Partnership Act is that
with the due consent of all the partners, the minor can be admitted to the
benefit of partnership for the time being. But he will not be liable for any
of his acts.

Liability of a minor under the Negotiable Instrument Act

As per Section 26 of the Act, a minor can draw, endorse, and negotiate
and he can bind everybody except himself. Every person who is capable
of contracting according to the law to which he is subject may bind
himself and be bound by the making, drawing, accepting, delivery and
negotiation of a promissory note, cheque or a bill of exchange.

Can a minor be an agent or principal?

A minor can never be a principal because Section 183 of the Indian

Contract Act for anybody to become a principal he should be of the age of
majority and be of sound mind and since a minor is not competent to
contract, he also cannot employ an agent. But, a minor can become an
agent as per the provisions of section 184 but the principal shall be bound
by the acts of the minor and he would not be personally liable in that
case.

Landmark case laws

 Srikakulam Subramaniam v. SubbaRao[2]– To pay off, the

promissory note and mortgage debt of his father, minor and his
mother, the minor sold a piece of land to the holders of the
promissory note in satisfaction of the debt. He paid off the
mortgage and got possession of the land. But later the minor
claimed that because of his minority the contract was void, and
he demanded the possession of land. But the court held that this
contract was for the benefit of the minor and was entered into by
his guardian; his mother and thus was a valid one.
  Suraj Narayan v. SukhuAheer[3]: In the concerned case, a person
borrowed some money during his minority and after attaining the
age of majority, he made a fresh promise to pay that sum and
interest thereon, but this contract was not enforceable due to the
reason that consideration received during minority is not a good
consideration.

 Kundan Bibee v. Sree Narayan[4]: S, while he was a minor

received some goods from K in connection with his business and
was indebted to him, when he attained majority, he took some
more money and executed a bond for paying the total amount to
K. In an action by K to recover the said amount, it was contended
by S that he was not liable to pay as they purported to be in his
minority. However, S was made liable to pay the whole amount
since there was a new consideration attached.

 Kuwarlal v. Surajmal[5]: Regarding necessities provided to minors

it was held that the house given to a minor on rent for living in it
and to continue his studies is part of necessities, and therefore he
is entitled to payment of rent from minor’s property.

CONCLUSION

Generally it is assumed that mental faculties of a minor are in developing

state. He is not mature enough to understand what is good and what its
implications on his interest are. In the light of it, law protects a minor, so
that any person by making an agreement with him cannot exploit him.

The Indian contract act 1872, has also granted privileged position to a
minor with regard to agreements made by him. In any agreement he does
not incur personal liability. He is allowed to get benefit in an agreement
entered into by him. Not only this, but entire judicial mechanism helps
him, judges are their councellors, jury are their servants and law is their
guardian. But at the same time, it is ensured that while protecting interest
of minor, unnecessary hardships should not be created for the persons
who deal with a minor.