In this blog post, Disha Pareek, a student of Rajiv Gandhi National University of Law, Punjab, writes about a minor’s capacity to enter into a contract under the Indian Contract Act, 1972. She also lays down certain exceptions to the aforementioned provision.
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.
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Footnotes:
[1](1935) 37 BOMLR 461
[2] (1948) 50 BOMLR 646
[3] AIR 1928 ALL 440
[4] (1906) 11 CAL W.N. 135
[5] AIR 1963 MP 58
