This article has been written by Aeshita Marwah.
Under the Indian Contract Act, 1872, integrity is a requirement for any party to enter into any arrangement. Section 11 of the Contract Act states- “Every person is competent to negotiate a contract who is of the age of majority according to the law to which he is subject and who is of a reasonable intelligence and is not excluded by the law to which he is subject.”
Thus, the Section asserts that the following parties are unable to enter into a contract:
- People of unsound mind
- People disqualified under the legislation
Minor and contract law do not go hand in hand, and the age of majority is a requirement for a legal contract.
Who is a minor?
A minor is a citizen who has not yet attained the age of majority under the statute of which he is subject. The age set by the statute could be different for different jurisdictions. In India, according to the Indian Majority Act, 1875, the age of majority is reached after the end of 18 years, except in the case of a person named by the Court to be a guardian, the age fixed is 21 years.
It should be remembered, however, that the Indian Majority Act, 1875 has been revised and that the age of the majority is assumed to be 18 years, irrespective of the fact that the guardian of that minor has been named.
The definition “minor/minor” is not specified in the Contract Act. But, taking into account the language of Section 11, a minor is a person who has not reached the age of 18 years. The age of the majority of a person is ruled by Section 3 of the Indian Majority Act, 1857. The person or property of a minor has been named by the Court or, if the property of a minor is under the control of the Courts of Justice, the age of maturity of that person is 21 years and not 18 years.
Section 11 of the Act specifically bars a minor from entering into a deal. The consequence of this explicit prohibition is that any contract entered into by a minor shall be null and void from the beginning, irrespective of whether the other party was aware of his minority or not.
Mohiri Bibi v. Ghosh Dharmodas
The case dates back to the year 1903, in which, for the first time, the Privy Council ruled that the marriage of a minor was void-ab-initio and that the contract was void from the start.
The appellant, Dharmodas Ghosh, mortgaged his house to the defendant, the moneylender when he was a minor. At this point, the defendant’s counsel knew the age of the complainant. Later, the complainant paid only Rs 8000 but declined to pay the remainder of the revenue. The mother of the complainant was his legal guardian at the time, so he started an action against the claimant, claiming that he was a minor at the time of the contract, so that the contract, being void, is not bound by the same.
The Court ruled that, unless the parties have authority under Section 11 of the Act, no arrangement is a contract.
The legislation on minor deals is based on two concepts:
- That the law must shield a minor from his or her own inexperience, which could allow an adult to take undue advantage of him or to compel him or her to enter into a contract which, while reasonable in itself, is clearly imprudent (e.g. whether a minor buys anything that he or she cannot afford at a fair price); and
- That the statute does not bring undue suffering to parents who treat juveniles equally.
Srikakulam Subrahmanyam v. Kurra Suhha Rao
In order to pay off the promissory note and the mortgage debt of his father, the son-in-law and his mother sold a piece of land to the holders of the promissory note in order to satisfy the bill, and he was also able to pay off the mortgage debt and reclaim ownership of the land. After that, the minor brought an action to reclaim the property. Lord Morton holds that the case of Section 11 and Mohiri Bibi case left no question that a minor should not enter into a contract and that if the guardian had not taken part in the deal, it would have been invalid. However, the bond, which was for the good of the minor and under the authority of the guardian, was held to be binding on him.
Whether a minor’s agreement is voidable or void altogether?
Section 10 of the Contract Act talks about the integrity of the parties and Section 11 talks about people who are not permitted to enter into a contract. However, no clause leaves it certain what the implications of a minor entering into an arrangement would be, whether it will be null and void at his discretion or not.
As a result, these clauses created a legal conundrum about the existence of a minor arrangement. The Privy Council eventually settled this conflict in 1903 through the landmark case of Mohiri Bibi vs. Dharmodas Ghose, where Dharmodas Ghose, a minor, mortgaged his house for Rs. 20,000 to a money lender.
At the time of the deal, the legal agent working on behalf of the moneylender was informed that the party was a minor. The minor brought an action against the moneylender alleging that he was a minor at the time of the contract and that the contract was thus null and inept. At the time of the appeal to the Privy Council, however, the appellant died and his child, Mohiri Bibi, lodged the appeal.
By clearing the air in the above-mentioned case, the Privy Council declared that the arrangement of the minor was invalid ab initio i.e. void from the outset. In the case of a minor, the common belief that “every man is the best judge of his own interest” is omitted.
What will be the effects of the minor’s agreement?
If a minor’s deal is deemed to be invalid, there should be no obligation on any party to fulfil any aspect of the contract and the consequences of the contract are therefore void. But if a minor by distorting his age to deceive someone enters into a deal with someone, would there be a stumbling block against him?
- No obligation arising out of any tort or contract: A minor is incapable of giving permission, and the essence of a minor arrangement is null and cannot be implemented.
- The estoppel clause: Estoppel is a legitimate rule of proof that forbids a group from claiming something that undermines what it has previously said. The court ruled that the doctrine of estoppel did not extend to the situation in which the individual had known the true facts beforehand, because here the defendant’s solicitor understood that the complainant was a minor. This law also does not apply.
- Restitution of benefits: According to Section 64 of the Indian Contract Act, if an individual at whose discretion the contract is voidable rescinds the contract, the other party is not allowed to do so. This applies to transactions that are null and void, but the contract of a minor is null and void, and so it cannot be required to return the sum of money to the moneylender.
Exception to the general rule
- When a minor has done his duty: In a contract, a minor can be a promise, but not a promise. So if the minor has made his part in the promise, but the other side would not have the minor in the place of a promise to execute the contract.
- A contract entered into by the guardian of a minor for his benefit: In that case, a minor can sue the other party if he fails to satisfy his agreement. In the case of Great American Insurance v. Madan Lal, the guardian on behalf of her son entered into an insurance policy for the burning of a minor’s house. If the land was destroyed and the minor demanded coverage, the insurer refused it by arguing that the deal with the minor was invalid. Later, however, the court ruled that the contract was enforceable and that it was liable to pay penalties.
- Contract of apprenticeship: Under the Indian Apprentices Act, 1850 an apprenticeship contract entered into by the guardian on his behalf is binding on the minor.
No estoppel against a minor
The problem of estoppel against the minor created legal problems between the authorities. But the responsible authority has decided that there is no such estoppel against a juvenile. Estoppel means that if a person makes a comment that misleads another person, he or she cannot refute the same statement in the future as his or her duty to make a statement occurs. The theory of estoppel forbids a group from saying anything that violates its prior claims. As a consequence, the minor is not prohibited from providing child protection.
The explanation is that there should be no stumbling block against the legislative rule set down in the statute. But in the case of Mohiri Bibi, the defendant misinterpreted his age in order to mortgage his house, but the money-lender was already aware that the defendant was a minor. Accordingly, the Privy Council did not recognize the doctrine of estoppel since the appellant was not deceived or misled by the argument of the minor.
In the light of the various rulings of the different High Courts of India, it should be noted that a minor can plead a minority as mitigation even if, at the time of the arrangement, he wrongly declared that he was not a minor.
If a minor enters into some arrangement by representing that he is of full age, does Section 115 of the Indian Proof Act, 1872, prohibit him from proving that he was a minor when he made the agreement? In other words, will he be prohibited from revealing his true age in any future conflict arising out of the contract?
The point was raised but not determined in the case of Mohiri Bibi vs. Dharmodas Ghose, but the point was resolved in Sadik Ali Khan vs. Jai Kishore, where the private council noted that – an act committed by a minor is null and incapable of finding a plea in court. The idea underpinning the decision is that there should be no estoppel against a monument.
The position is – even though a minor has entered into a contract by distorting his age, he can, at any later stage, plead “minority” and escape a contract. Minority in India is a fact and not a right (as in England) and this can be found at any point of the proceedings, irrespective of the circumstances surrounding it.
Doctrine of Restitution
If a minor has purchased property or assets by wrongly representing his age, he may be obliged to refund it, but only if the same is traceable. The Courts may, on the grounds of equity, ask the minor to refund his ill-gotten gains, because he cannot have the liberty of stealing under the care of the child. Where the minor has sold the property or the merchandise, it cannot be made to refund or recover the worth of the goods so it will amount to an invalid deal.
The theory of restitution cannot be enforced in situations where it is impossible to locate merchandise or where the minor has received cash instead of goods. A well-known case of Leslie (R) Ltd v. Sheill, where a juvenile fooled some money-lenders by distorting his age and got them to lend him a sum of £400 assuming that he was an adult.
The complainant sought to recover the principal sum and interest as damages for theft but refused to do so as there was no interruption against the minor. In comparison, the money-lenders relied on the theory of restitution, arguing that the minor should be responsible for the return of the money on an equal basis.
Lord Sumner’s refusal to acknowledge the contention held that the money paid to the claimant (minor) was used for his own use. There is no way to track down the money, and there is no way to recover it since this will lead to an invalid contract being implemented.
However, if a minor moves the court for the cancellation of his contract, the court may award relief on the condition that he recovers all the gains he has gained under the contract or that the opposing party provides sufficient compensation according to Section 30 and Section 33 of the Special Relief Act, 1963.
No liability in tort from a contract
The consent of a minor is void by all its consequences. A minor is not qualified to give consent and, as a result, there is no good consent, no change in the role or status of the parties should be made. It should be remembered that a minor cannot be found responsible for something that will implicitly execute his arrangement. Therefore, it is not possible to turn a contract into a tort in order to allow an action against a minor. In a case, the High Court of Calcutta said- “If the infringement is directly related to the contract and is a means of doing so and a parcel of the same transaction, the minor shall not be liable in error.” Accordingly, according to this theory, the minor is not found liable in mistake.
However, if the violation committed is free from the contract and is not specifically relevant to the contract, the fact that the contract is still concerned would not release the minor from his liability. This can be demonstrated in the case of Burnard v. Haggis. The details of the case are as follows:
The convict who was a junior and a juvenile borrowed a horse for the sake of a journey. He specifically claimed that he did not want a horse to jump. The convict then turned the horse over to his mate, who used the horse to jump, with the result that he fell and was wounded. The defendant was found liable in tort because the act resulted in the injuries to the horse was beyond the meaning of the contract and had an implied connection with the contract.
What are beneficial contracts?
The consent of a minor as laid down in the case of Mohiri Bibi is totally invalid. A bond for the benefit of a minor is, however, enforceable. Pursuant to Section 30 of the Indian Partnership Act, 1932, “A person who is a minor under the law of which he is a subject may not be a partner in a firm but may, for the time being, be admitted to share the benefits of a partnership with the consent of all partners.”
This may be achieved by an arrangement with his guardian and other partners. Consequently, the minor is merely responsible for the gains and not for the obligations or debts of the related company. A minor would have the option of withdrawing from a contract of this kind at the end of 18 years of age within a fair period of time. Apart from a beneficial contract under the Indian Union Act, contracts for the marriage or marriage of a Muslim minor, apprenticeship contracts are all deemed to be in the form of beneficial contracts.
Necessities supplied to a minor
Whether an individual who is unwilling to enter into a contract is provided by another person who is in need of life, he or she is eligible to obtain restitution from the property of such an incompetent person, including the kid. If, however, the minor has no property of his own, he cannot be obliged to refund the other person.
What will be the liability of a Minor for necessaries?
A minor shall be responsible for the necessaries. The word “necessaries” is not specified in the Act, but an illustrative definition of the sense of the term is provided by Alderson B in his judgment in Chapple v Cooper, Things necessary are those without which a person cannot properly exist. First of all, food, clothes, accommodation, and the like. Articles of sheer pleasure are often exempt, while luxury goods can be included in certain situations. A minor is often responsible for the required services given to him, such as the provision of schooling, medical facilities or legal advice. Thus, “necessaries” is a relative consideration that can be calculated on the basis of the conditions and the facts of the case.
According to Section 68 of the Contract Act, “If a person incapable of entering into a contract or a person legally bound to support the contract is provided by another person with the necessaries that are suited to his or her life, the person who provided the supplies is entitled to be reimbursed from the property of such an incapable person.”
- The contract shall be for the products required for the support of the contract or for its quality of living.
- The availability of these necessities must not already be sufficient.
If a minor is supplied with the required goods even if he already has a significant volume of stock of the necessary goods, the minor is not responsible for reimbursement to the seller and the price is irrecoverable. In India, the responsibility of the minor does not depend on the permission of the minor. It occurs out of a quasi-contractual nature, which means that the obligation is just that of the properties of the minor.
Can a minor become a partner?
The form of the contract establishes a relationship, and the nature of the contract is that all parties should be of the age of majority. However, as an exception to the rules of Section 30 of the Partnership Act, a minor may be entitled to the benefit of a partnership for the time being with the proper consent of both parties. Yet he will not be responsible for any of his conduct.
Can a minor become a principal or an agent?
A minor will never be a principal because, in order for anyone to become a principal, Section 183 of the Indian Contract Act should be of the age of majority and sound mind, and because a minor is not qualified to contract, he cannot hire an agent either. However, a minor may become an agent in compliance with the provisions of Section 184, but the principal is obliged by the act of the minor and will not be directly liable in that situation.
Liability of a minor under the Negotiable Instruments Act
As per Section 26 of the Act, a minor may draw, authorize, and compromise, and may bind anyone but himself. Every person who is capable of contracting under the legislation under which he or she is subject may be obliged by making, drawing up, approving, presenting and negotiating a bill of pledge, check or bill of exchange.
Landmark case laws
Srikakulam Subramaniam v. SubbaRao – In order to pay off the promissory note and the mortgage debt of his parents, minor and his mother, the minor sold a piece of land to the holders of the promissory note in order to satisfy the debt. He paid off the mortgage and took ownership of the land. Later, however, the minor argued that the contract was null and void because of his minority, and requested ownership of the land. But the court ruled that the contract was for the good of the minor and that it had been entered into by his guardian, his mother, and therefore a legitimate one.
Suraj Narayan v. SukhuAheer – In the case in question, a person lent some money during his minority and, having reached the age of majority, made a fresh commitment to pay that amount and interest on it, but that contract was not enforceable on the ground that consideration obtained during the minority was not a good consideration.
Kundan Bibee v. Sree Narayan – S, when he was a minor, obtained some goods from K in connection with his company and was indebted to him, when he won the majority, he took some more money and made a bond to pay the entire sum to K. In an action taken by K to reclaim the amount, S argued that he was not entitled to pay as he appeared to be in his minority. However, because a new factor was attached, S was obligated to pay the entire sum.
Kuwarlal v. Surajmal – Regarding the necessities offered to minors, it was held that the house given to a minor on rent for his or her living and continuing his or her studies was part of the necessities and, thus, he or she is entitled to pay the rent of the minor’s home.
The status of a minor under The Indian Contract Act, 1872, is to be inferred that a minor cannot enter into a contract and that will be invalid ab initio. The minor cannot depend on the approval of the contract made by him during his minority to achieve a majority. The explanation for ratification is that it applies back to the past when the individual was still a minor so that a contract that was invalid could not be legitimized afterwards. If required, a new contract can be signed after meeting the age of the majority with fresh consideration. Furthermore, a minor arrangement cannot be named for particular results since it will result in an invalid agreement being concluded. The minor, however, would be found liable only for the claims of the necessaries.
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