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Minor’s capacity to contract

November 8, 2024

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This article is written by Shafaq Gupta. This article deals with the capacity of a minor to enter into a contract as per the Indian Contracts Act, 1872. It explores the nature and consequences of an agreement with a minor. It further looks over an important issue of the validity of such agreements along with providing a few examples of contracts that are beneficial to a minor.

Table of Contents

Introduction

In our day to day lives, we enter into several contracts. In India, the law of contracts is regulated by the provisions of the Indian Contracts Act, 1872 (hereinafter referred to as ‘the Act’). Section 2(h) of the Act defines a contract as an agreement which is enforceable by law. A contract is a combination of two elements i.e. an agreement and enforceability. But in today’s world we see a lot of minor children below the age of 18 years entering into a contract with other persons. They are doing so either for their own benefit or to enter into some kind of business or to fund their education or may be lured by any person to do so without knowing the consequences of their acts.

So, what would be the nature of their liability or are they even competent to enter into a contract? These are the questions that would arise in the minds of every reader. This article deals with the minor’s capacity to contract and the exceptions related to it. Let us dive deep into the understanding of the same and start by understanding the essential of being a competent party to contract under the Indian law followed by understanding the ambit of law related to a minor.

Capacity to contract under Indian Contract Act, 1872

Let us start by understanding who has the capacity to enter a contract as per the Indian Contract Act, 1872. For an agreement to be legally enforceable as a valid contract, Section 10 of the Indian Contract Act provides certain essential conditions which are as follows:

There must be an agreement.
There must be two or more parties to a contract.
The consent of the parties entering the contract must be free.
The parties must be competent enough to contract.
There should be a lawful consideration.
The agreement must be made for a lawful object.
It must not have been expressly declared void.

Therefore as per the law only those agreements which fulfill all the conditions specified under Section 10 of the Act can be said to be contracts. Therefore, all agreements are not contracts. Section 11 of the Act talks about the competent parties who can lawfully enter into a contract. The essentials of being a competent party to contract under the Indian law are as follows:

Age of majority i.e. above the age of 18 years;
Sound mind at the time of entering into a contract; and
Not disqualified under any law to which he/she is subjected.

The rationale behind keeping majority as an essential condition to be fulfilled before entering into a contract is that a child below 18 years of age is of a tender nature and unable to understand the nature and consequences of his act. Moreover, it is assumed that the minor is not in a position to fulfill his contractual obligations as he is not able to understand them. So, the bona fide interest of the minor was kept in mind while deciding the majority as a condition to a valid contract. A contract with a minor is void i.e. it has no legal effect.

Let us understand the same with the help of an example.

For example, a child who is 16 years of age wants to buy PlayStation games but his parents did not allow him. As a consequence, he mortgaged his mother’s gold ring to a moneylender and got Rs 40,000. After he attained the age of majority, he filed a suit against the moneylender that the contract was entered into while he was a minor and therefore, he is not under an obligation to fulfill it.

Since he was not of the age of majority, he was not capable of entering into a contract. He is not liable to execute his contract of mortgage because he was not mature enough to understand the legal implications of his actus reus. In order to understand the capacity of a minor to enter a contract, the need is to first of all, see who is considered to be a minor under the ambit of law.

Definition of a minor

So, who is a minor as per law? The word ‘minor’ has not been expressly defined under Section 2 of the Act. But Section 3 of the Indian Majority Act, 1875 expressly tells about the age of majority of a person domiciled in India. A person is considered to be a major if:

He possesses a domicile in India.
He has attained the age of 18 years.
In case, a guardian has been appointed for him or his property or he is under the superintendent of the Court of Wards, after attaining the age of 21 years.

Further, the date of birth of a person has to be counted as a full day in computing his age of majority. For example, X was born in India on 29 February,1852 and has an Indian domicile. The guardian was appointed for his property by the court. So, X would have attained majority at the first moment on 28th February, 1873.

From this, we can infer that a minor is a person who has not attained the age of 18 years and in case a guardian is appointed, a person who has not attained the age of 21 years. So what will happen if a minor enters a contract? Let us read further to understand the same.

Nature of minor’s agreement

Will a minor be eligible for a contract then? As we can see that Sections 10 and Section 11 of the Act do not expressly state whether a contract with a minor is void or voidable at the option of another party to a contract. This controversy was resolved in the landmark case of Mohori Bibee and Ors. vs. Dharmodas Ghosh (1903) which was delivered by the Privy Council. In this case, any contract with a minor was held to be void-ab-initio i.e. void from the very beginning. This thumb rule is generally followed. Though there may be some exceptions.

Mohori Bibee and Ors. vs. Dharmodas Ghosh (1903)

Facts of the case

In order to obtain a loan of Rs. 20,000, the plaintiff, Dharmodas Ghose, mortgaged his land in favour of the defendant, Brahmo Dutt, a moneylender. At that time the plaintiff was a minor but he concealed his age. The actual approved loan amount was less than Rs. 20,000. Mr. Kedar Nath, a lawyer, was representing Bhramo Dutt. He already had knowledge of the fact that the plaintiff was a minor at the time of entering into a contract with them.

When the mortgage was executed, the plaintiff filed a suit against the defendant and claimed the cancellation of the mortgage deed. He argued before the court that he was a minor at that time and thus the contract was null and void. Bhramo Dutt, the moneylender passed away and Mohori Bibee filed an appeal before the Privy Council as his representative.

On the other hand, the defendant contended that the plaintiff had misrepresented his age and took advantage of it by entering into a contract of mortgage. Consequently, he should not get further benefit of the cancellation of the contract. if he ought to get the benefit, he should at least be required to repay the advance sum of Rs. 10,500.

Judgement

The Privy Council laid down that the minors are not competent to contract as per Section 11 of the Act. Regarding the competency of parties, an express condition has been laid down in the Act which cannot be violated. Since a minor lacks the legal capacity to enter into a contract in the first place, any agreements made with them are void ab initio. Secondly, the lawyer representing Brahmo Dutt already knew about the minority of the plaintiff. So, the law of estoppel cannot be made applicable to this case as the true facts were already known beforehand and hence, no fraud was committed.

Thirdly, the court also stated that Section 64 (consequences of rescission of voidable contract) does not apply to this case because its applicability is limited to voidable contracts and not void contracts. It talks about the contracts which are voidable at the option of the person who later rescinds it, the other party to a contract is not under an obligation to perform it.

In the present case, the contract with a minor is void and the money advanced can’t be refunded. Moreover, Section 65 (obligation of a person who has received advantage under the void agreement, or contract that becomes void) of the Act is not applicable in the case of minors because these Sections presume that the contract was made between the competent parties at first hand. So, the minor was held not liable to return the amount of advance received. Now let us understand the topic in more depth to get a clearer picture of the capacity of minors to enter different contracts.

Other case of minor’s capacity to contract

In the case of Mir Sarwarjan vs. Fakhruddin Mahomed Chowdhuri (1911), a guardian, entered into an agreement on the behalf of his minor child to buy some real estate. The minor sued the other party for recovery of possession of that property and requested that the court order the other party to carry out the specific terms of the contract.

The claimed remedy was rejected by the Bombay High Court and the reason stated for this decision was that a minor cannot be bound by a contract that involves their property or by someone else managing their estate. A person holding managerial position of the property of the minor cannot enforce such a contract as there was no mutuality in the contract. Further, the minor cannot claim specific performance on attaining majority.

Contracts beneficial to a minor

In the Mohori Bibee case of 1903, the contract with a minor was held to be absolutely void. The scope of this judgement is limited to the situation where the parties try to enforce it against a minor and there arise some obligations which need to be fulfilled by the minor himself. However, a minor may be a promisee or a beneficiary.

He can accrue the benefits arising out of the contract entered into by him, if he has to fulfill no obligations regarding it and full consideration is already paid for it. There are some contracts which are substantially beneficial to the minor and they are enforceable in a court of law. Beneficial contracts are an exception to the thumb rule laid down in Mohori Bibee’s case. In the present era, an agreement with a minor is not always null and void. Some case laws related to it are as follows:

In the case of A.T. Raghava Chariar vs. O.A. Srinivasa Raghava Chariar (1916), Justice Abdur Rahim of the Madras High Court opined that “what is meant by the proposition that an infant is incompetent to contract or that his contract is void is that the law will not enforce any contractual obligation of an infant.” So, it can be inferred that a minor can be allowed to enforce an agreement which is beneficial to him.

In another case of The Great American Insurance Co. Ltd. vs. Madanlal Sonulal (1935), the guardian entered into a contract of insurance on behalf of the minor to protect his property from fire. In the meantime, the insured property got damaged. The minor went to the court to claim compensation for it. But the insurance company rejected his claim by saying that a contract with a minor is null and void and hence, he has no claim. The Bombay High Court delivered the judgement that the insurer must pay damages because this contract was beneficial to a minor and carries a binding value.

In the case of Sri Kakulam Subrahmanyam vs. Kurra Subba Rao (1948), the minor sold a plot of hindu undivided family property to the holders of the promissory note as payment for the obligation, which included the promissory note and the mortgage debt owed by his mother, father, and minor. Later on, the minor demanded the ownership of the sold property and argued before the court that the contract was unenforceable due to his minority.

However, the Bombay High Court delivered the judgement stating that such a contract was valid in the eyes of the law. It is because the contract was entered by the mother, on behalf of the minor and moreover, it was beneficial to the minor. As a result, it has a binding value and is enforceable.

Let us look at the case of Rajkumar vs. Nathi Devi (2015), wherein the respondent made a gift deed while he was a minor. The plaintiff argued about the non-validity of the gift deed as a minor is incompetent to enter into a contract. Nevertheless, the Rajasthan High Court delivered the judgement that the respondent had a legitimate claim to the property that their father had left behind. The gift deed was beneficial to the minor and even if he does not sign it, a minor may still claim it as long as his name appears on the gift deed.

Some instances of beneficial contracts for a minor are as follows:

Contract of marriage

A contract for marriage is prima facie considered to be beneficial to a minor and hence, can be enforced by the minor. As we see even today, in most Indian communities, the parents of minors arrange marriages for them among their children as these customs have been prevalent for a long time. If a marriage is solemnized between a major and a minor, then that marriage is not void as per law but voidable at the option of the minor. So, the law must adapt to the needs of the customs and conventions generally followed by a large set of people.

In the case of Khimji Kuverji Shah vs. Lalji Karamsi Raghavi (1941), the issue before the Bombay High Court was whether the contract entered into by the minor’s mother on her behalf for her marriage with a guy who was major could be enforced or not. The court held that the contract of marriage is for the benefit of the minor and hence, the minor can enforce it by filing a suit in case of its breach.

Contract of apprenticeship

The contract of apprenticeship is also considered beneficial to a minor. Under the Indian Apprentices Act, 1850, a minor receives training or education that will benefit him in the future. These types of contracts are made for the advantage of the minor. An essential that needs to be mandated is that the contract of apprenticeship should be entered by a guardian on behalf of the minor. Only then it will be of a binding nature. This act was formed with the objective of enabling the children, especially those who were orphans and poor children, to learn trades, crafts and employment. Through this, they will be able to make their future better by gaining a livelihood.

Contract of partnership

According to Section 30 of the Indian Partnership Act,1932, a minor can be admitted to the benefits of the partnership. It can be explained with the help of the following pointers:

A minor can be admitted to the benefits of the partnership if all the other partners in the firm consent to it. But a minor himself can’t be recognized as a partner.
The minor is entitled to a portion of the property and profits earned by the firm as may be agreed by all the partners.
The minor has the right to go through and inspect the copies of accounts of the firm.
The minor has no personal liability for the acts of the firm.
After the minor attains the age of majority, he is bound to give public notice regarding the fact that whether he represents himself as a partner in the firm. He may either become a partner or choose not to be a partner in the firm.
If he fails to give such public notice, he will be considered a partner in the firm after the expiry of six months from attaining the age of majority.

In the case of Shriram Sardarmal Didwani vs. Gourishankar Alias Rameshwar (1959), the Bombay High Court delivered the judgment that a minor is incompetent to contract as per Section 11 of the Indian Contracts Act, 1872 and therefore, a minor cannot be a partner in a firm or a company.

In another case of Bombay High Court in Commissioner Of Income-Tax vs. R. Dwarkadas And Co.(1968), it was held that a minor cannot become a full-fledged partner in any of the existing firms. Section 30 of the Act does not allow one to be a partner but to be admitted to the benefits of the partnership.

Exception to beneficial contracts

It’s time to dwell into the exceptions as well. Read below to understand them.

Ordinary trade contracts

The category of beneficial contracts does not expand to inclusion of ordinary trade contracts. In the case of Cowern vs. Nield (1912 2 KB 419), a minor was in control of the commercial business as a hay and straw merchant. The plaintiff delivered a check to the minor to supply clover and hay. The minor was only able to deliver clover which was rejected due to bad quality and failed to deliver hay. The plaintiff’s action for recovering back the amount of cheque failed because this contract was not particularly for the benefit of a minor but was an ordinary trade contract.

Effect of agreement with minor

You might be wondering what effect an agreement will have on a person who is a minor. So, the following are the effects of an agreement with a minor –

No liability arising out of either tort/contract

An agreement with a minor is null and void and it has no legal effect. It is because he/she is not capable of giving valid consent and if the consent is not valid, the status of the parties cannot be changed.

In England, in the case of Johnson vs. Pye (1665 1 Sid 258: 83 ER 1091), an infant obtained a loan of money by falsely representing his age. So, the court held that the infant cannot be held liable alternatively in the form of damages for deceit and does not have to repay the amount of the loan. It is because an agreement which cannot be enforced directly, cannot be enforced indirectly too.

In another case of Jennings vs. Rundall (1799 8 Term Rep 335: 101 ER 1419), Rundal, who was an infant, borrowed a horse for a short ride but took the horse for a longer ride and in that period, the horse got injured. So, the court did not hold the minor to be liable because in this case the cause of action arose in the law of contracts and it cannot be converted to torts. This general principle is also followed in India that if a minor cannot be sued under Contracts law, the same agreement cannot be enforced against him by changing the nature of the agreement into Torts.

In the case of Harimohan vs. Dulu Miya (1934), the Calcutta High Court did not hold the minor liable as per the law of torts for the amount of money lent on a bond. But if the tort committed by a minor is independent of the liability in contracts, he can be held liable.

For example, in the case of Burnard vs. Haggis (1863 4 CBNS 45: 8 LT 328), a minor borrowed a horse from his friend for the purpose of riding. But he further lent that horse to one of his friends, who jumped and ultimately the horse was killed in the incident. So, the minor was held liable for the tort committed.

No estoppel against a minor

Section 115 of the Indian Evidence Act, 1872 ( Section 121 of Bhartiya Sakshya Adhiniyam, 2023) basically defines the law of estoppel as the principle that forbids someone from providing misleading statements before the court by preventing them from making contradictory claims in court. They cannot contradict a statement made previously by them as it will amount to committing fraud against the other party. But when the facts of the case are already known beforehand, this law cannot be made applicable.

For example, the case of Mohori Bibee vs. Dharmodas Ghosh (1903). The general exception to this rule of estoppel is that it is not applicable to an agreement with a minor. So, a minor who misrepresents his age for the purpose of entering into a contract cannot be held liable by way of estoppel. In the case of Jagar Nath Singh & Ors vs. Lalta Prasad & Ors(1908), the Allahabad High Court held that the law of estoppel is not applicable to minors.

In a landmark case of Khan Gul vs. Lakha Singh (1928), the Lahore High Court opined that the Indian Evidence Act is a general law which is applicable to everyone. However, there is a specific provision regarding the competency of parties under Section 11 of the Indian Contracts Act,1972. It carries a specific objective and declares an agreement with a minor as void. Hence, the law of evidence cannot be made applicable to a minor as the special law prevails over the general law.

Doctrine of restitution

When an infant misrepresents his age and as a result of it, obtains goods or property from the other party, he can be forced to repay it if those goods or property is still there in his possession. This is called the equitable doctrine of restitution. But if that infant sold those goods or property or converted them into any other form, then he cannot be held liable as a void agreement can’t be enforced.

A landmark case related to the doctrine of restitution is Leslie vs. Sheill (1914 3 KB 607 CA). In this case, the plaintiff entered into a contract with the defendant to lend him a sum of £400 and misrepresented himself to be a major. As a result, the defendant lent him £400. The King’s Bench held this agreement to be void and the money lent can’t be restored.

The court stated further that a minor cannot be held liable as per the Infants Relief Act, 1874 even if he misrepresented his age, specifically the contracts involving financial transactions. The defendant tried to recover his amount by way of seeking relief for fraudulent misrepresentation but failed as what cannot be done directly, cannot be done indirectly.

Even in the case of Mohori Bibee vs. Dharmodas Ghosh (1903), the minor was not ordered to restore the original amount of money advanced to him. However, in the year 1928, in the famous case of Khan Gul vs. Lakha Singh (1928), the Lahore High Court directed the minor to repay an amount of Rs 17,500 which he took as an advance for the sale of the land.

The controversy arose between various High Courts as in the case of Ajudhia Prasad & Anr vs. Chandan Lal & Anr (1937), the Allahabad High Court refrained from following this principle of restitution against a minor and declared that a minor was not liable to repay the money that he took by mortgaging his house.

The law commission of India agreed to the view of the Hon’ble Lahore High Court and the principle of restitution was incorporated under Section 33 of the Specific Relief Act,1963. The provisions with regards to the power of the Court, to require restoration of benefits received and fair compensation which are supposed to be made when an instrument is canceled are provided under Section 33 In the Specific Relief Act, 1963.

Section 33 of Specific Relief Act

It states that when the court decides to cancel an Instrument either completely or partially, then the party towards whom such relief is granted is required to either restore/claim any benefits. These are those benefits which he/she may have received from the other party or to make the required amount of compensation for it. Such conditions are put forth by the act to deliver justice to the parties, as a court is a place that is responsible for delivering justice to the people who approach it.

This Section also provides for the conditions under which, a defendant in a suit for the performance of a contract may claim for the cancellation of such a contract. The conditions mentioned in Section 33 are as follows:

When a plaintiff files a suit to enforce a contract against a defendant and the defendant tries to resist the contract by claiming such a contract to be voidable. In such a case if the court is also of the opinion that the contract/instrument under consideration is voidable, then the court may order for the cancellation of such a contract.
When a plaintiff files a suit to enforce a contract against a defendant and the defendant tries to resist the contract by claiming such contract to be void because of the defendant not being competent to participate in a contract under Indian Laws. Competence to enter into a contract is defined under Section 11 in the Indian Contracts Act, 1872. Competence to enter into a contract can be judged by conditions such as age, soundness of mind, etc. In such a case the contract shall be canceled by the court.

In the recent case of Maniyan Nadar vs. Harikumar (2015), the Kerala High Court stated that if the buyer was aware of the minor’s age and the minor did not engage in fraud or deception, the minor who rejected the transfer of his assets by a guardian is not under an obligation to refund the benefits he received from the transaction. The buyer is left with no power to take legal action against the child or his property in such a situation.

Minor as an agent or principle

What about the cases when a minor is the agent? Let us read Section 183 of the Act which basically talks about the contract of the agency. In a contract of agency, there is an agent who mediates the things between the principal and the third party. Therefore, both the principal and the third party must be competent to contract. They should not be of minor age and have a sound mind.

A minor cannot be the principal because he is incompetent to contract as per Section 11 of the Act. Therefore, a minor is not allowed to employ an agent under him. But if we read the subsequent section i.e. Section 184 of the Act, a minor can become an agent if he is of sound mind. The condition attached to this section is that the minor won’t be personally liable for any of his acts. The principal will be vicariously liable for the acts of the minor.

Contract of necessity for a minor

As per Section 68 of the Act, if a minor receives goods of necessity by any other person, then the minor is under an obligation to recompensate the person who supplied the necessaries. The various essentials laid down in the Section are:

The person must be incapable of entering into a contract i.e. we can say a minor/unsound person or there is a legal obligation on other person to support him
Necessaries are supplied by some other person for the basic and reasonable existence of such an incapable person.
That incapable person must not be enjoying these necessaries beforehand or he does not have the means to have them.
The person who supplied the necessaries is entitled to get compensation for it out of the property of an incapable person.

Meaning of necessaries

Let us get an in-depth understanding of the term ‘necessaries’ to get a better understanding of the concept. The word ‘necessaries’ has not been defined anywhere in the statute. In basic terms, it can be said to be the goods which are necessary for the existence of a human being i.e. food, clothes and a place to live etc. But this may vary from person to person according to their needs and situation. What may be a necessity for one person, it may not be for another. But the condition is that the requirement of that good must be reasonable for that person.

In a famous case of England, Chapple vs. Anne Cooper (1844 13 M&W 252 ), the meaning of ‘necessaries’ was explained in the following words – “ Things necessary are those without which an individual cannot reasonably exist. In the first place, food, raiment, lodging and the like. About these there is no doubt. Again, as the proper cultivation of the mind is as expedient as the support of the body, instruction in art or trade, or intellectual, moral and religious education may be necessary also then the classes being established, the subject and extent of the contract may vary according to the state and condition of the infant himself.

His clothes may be fine or coarse according to his rank; his education may vary according to the station he is to fill, and the medicines will depend on the illness with which he is afflicted, and the extent of his probable means when of full age. But in all these cases it must first be made out that the class itself is one in which the things furnished are essential to the existence and of reasonable advantage and comfort of the infant contractor.

Thus, articles of mere luxury are always excluded, though luxurious articles of utility are in some cases allowed.” From this definition, we can understand that ‘necessaries’ are things without which the person cannot survive. It includes both physiological things like clothing, food , shelter and intellectual things like any other skills required or education etc. Let us take a look at a few examples to understand the same.

Examples

Beema is a lunatic and Anu supplied him with the necessary goods for his existence. So, Anu has the right to get compensated out of Beema’s property.
Bhuvi is a minor who is an apprentice and needs a cycle to travel to his place of work but does not have the means to buy it and is also incapable of entering into a contract. Arjun supplied him with a cycle. So, Arjun can get reimbursed out of the property of the minor.
Money paid for the performance of funeral rites of the minor’s father.
House provided to the minor on rent for the purpose of his living while pursuing the studies.
Money supplied for defending any criminal process.
Giving loan to a minor on mortgage in order to save minor’s estate from enforcement of Court’s decree.

Case laws for necessaries

In the case of England, named Peter vs. Fleming (1840 6 M & W 42: 9 LJ Ex 81), the Court held that purely ornamental things cannot be a requisite for anyone. So, it was unnecessary and unreasonable to give a watch and a watch chain to a child on credit who was an undergraduate at a college. There are two conditions that need to be followed to render an infant’s estate liable for necessaries – firstly, that good must be reasonably necessary for the support in his life and secondly, he must not have sufficient sources to afford it.

In another English case of Nash vs. Inman (1908 2 KB 1 CA), the undergraduate child at Cambridge University was already supplied with the clothes necessary for his position. But another set of 13 fancy waistcoats were provided to him which was found unreasonable by the King’s bench and hence, the cost of those waistcoats was held to be irrecoverable.

In the case of Kunwarlal Daryavsingh vs. Surajmal Makhanlal (1961), it was held by the Madhya Pradesh High Court that supplying a house to a minor to live in for the bonafide purpose of being able to continue his education is a supply of necessity. Therefore, the minor is liable to compensate that person out of his own property.

Nature of liability for necessaries

There are two views prevalent regarding the nature of liability of a minor with regards to contract for necessaries. The first view states that the contract of necessaries is a quasi-contract and therefore, the claim for compensation for necessaries is not based on the consent of the minor. It arises just because the goods necessary for the life of the minor were supplied to him.

The second view states that the contract for necessaries is a contract only between the minor and the other party. They make a settlement between them to supply those goods to the minor and the minor is free from all liabilities. This view is generally followed in England.

Conclusion

In India, Contract law serves as the fundamental framework for regulating all types of agreements and contractual duties. It is well-established that the rights and obligations that result from contracts are the main focus of the Act. Thus, the legislators try to shield young and mentally incompetent individuals from acting by prohibiting them from signing contracts. They act in this way because these people are unable to weigh the implications of such an agreement. In order to acknowledge the significance of contracts for the purposes of necessities and sustenance, a few exceptions have been added to the contracts. This enables the minors to sign contracts with a guardian’s consent.

The legal disqualifications are designed to keep a specific group of people from signing a contract in the interest of public policy, the state, or the maintenance of law and order. The clauses have been consistently read by the judiciary as offering a strong mechanism for competent parties to enter into contracts. In addition, lawmakers need to investigate the ambiguity that emerges in the digital sphere when it comes to smart contracts in order to set standards for minors’ capacity to enter into online transactions. Laws must adapt to the times, and the Indian Contract Act of 1872, a pre-independence statute, needs to be reviewed to include elements that are appropriate for the modern digital era.

Frequently Asked Questions ( FAQs)

Can a contract with a minor be ratified later by him on attaining the age of majority?

A contract by a minor is void-ab-initio i.e. void from the very beginning. As it has no value in the eyes of law, it is considered a dead letter which cannot be revived. Any consideration offered as a part of that contract is not valid. Moreover, it cannot become valid at a later stage when the minor attains the age of majority as he cannot ratify it later. Though they can enter into a new contract but the old one cannot be ratified by a subsequent contract. The new contract made as a result of it would require fresh consideration.

In case of Suraj Narain Dube vs. Sukhu Aheer & Anr. (1928), a minor borrowed a sum of money executing a simple bond for it, and after attaining a majority executed a second bond in respect of the original loan along with the interest. The Allahabad High Court held in a 2:1 majority that the suit upon the second bond was not maintainable, as that bond was without consideration and did not come under Section 25(2) of the Act.

What is the liability of a minor under the Negotiable Instruments Act, 1881?

As per Section 26 of the Negotiable Instruments Act, 1881, a minor has the right to draw, endorse, deliver and negotiate negotiable instruments and bind all the parties to it except himself. It is because only those parties who are competent to contract are bound by such instruments and minors are as such incompetent to contract.

What is the position regarding contract with a minor under English law?

According to the common law, the contract with a minor was considered voidable at the option of the minor. Later, the Infants Relief Act, 1874 was enacted and it declared three types of contracts with minors as absolutely void. They are contracts for repayment of money lent or to be lent, contracts for the supply of goods other than necessities, and contracts for accounts stated.

Can a minor be declared insolvent?

No, a minor cannot be declared insolvent. This is because he is not capable of incurring debts and has no personal liability. Though the debts may be paid out of his personal property.

What is the liability of a minor if a joint contract is made by an adult and a minor?

If a joint contract is made by an adult and a minor, then it can only be enforced against the adult party to the contract and not against the minor. The same principle was held to be appropriate in the case of Sain Das vs. Ram Chand (1923).

Can a minor be a shareholder in a company?

As we saw in the article above, a minor cannot be a partner in a firm or a company, so he cannot hold shares of the company. However, he can exercise such power through a lawful guardian by transferring his fully paid shares in the guardian’s name.

Can a minor be employed as a labourer in any factory or a mine?

A minor who is not below 14 years of age can be employed as a labourer in a factory or a mine or as a plantation worker under the various provisions of the Factories Act,1948; the Mines Act,1952; and the Plantations Labour Act,1951.

References

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Minor’s capacity to contract

Introduction

Capacity to contract under Indian Contract Act, 1872

Definition of a minor

Nature of minor’s agreement