Nature And Effect Of Minor’s Contract

Nature and effect of minor’s Contract

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Under the Indian Contract Act, 1872, there are some special provision relented to Nature and effect of minor’s Contract. These provisions are specifically related to minors. so before discussing the provision related to Nature and effect of minor’s Contract, we have to know who is minor under the Indian Contract Act, 1872.

Meaning and definition of minor

According to Section 3 of the Indian Majority Act, 1875, a minor is a person, who has not completed the age of 18 years. The minority extended to 21 years if a guardian of minor’s person or property is appointed (Under the Guardians and Wards Act, 1890)

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Minor’s contracts are void ab initio

It means invalid, at the very beginning. Earlier a contract entered into with minors was voidable at his (minor’s) option. But in 1903, the Privy Council made it essential that all contracting parties should be competent to contract and hold a contract entered into with a minor is void ab initio. This view was laid down by the Privy Council in the leading case of-

Mohiribibi vs Dharamdas Ghose

In this case, a minor mortgaged his house for 20000 to the moneylender and received an advance of 8000. Later he avoided the contact and did not return the advance. In an action by the minor to set aside the mortgage deed, it was held that the contact is not enforceable on the ground that an agreement with a minor is void ab initio.

This views laid down by the Privy Council in the above case is popularly known as “the Rule in Mohiribibi vs Dharamdas Bhose”. However, if the minor has carried out his obligations, he can bring a suit against the other party for the enforcement of the other parties’ obligation

Example

A minor entered into a contract for the sale of goods and delivered the goods to the purchaser. It was held that he was entitled to bring a suit for the recovery of the price of the goods sold (Abdul Ghaffar vs Piare Lal) but an agreement to levy, where there has been no transfer of property, is not binding on the miner, so it cannot be enforced by the vendor.

The Courts have consistently held that any mortgage deed, sale deed, or promissory note in the favour of a minus is valid. The Court spread a special cloak of protection around the minor.

Therefore, any transaction in favour of a minor is valid. It has been held by the full bench of Madras High Court (Raghava charier vs Shrinivasa, AIR 1917) that a mortgage excused in favour of a minor who has advanced the mortgage money is enforceable by him or by another person on his behalf.

Thus, the contract entered into by a minor is void in respect of the following cases.

  • A contract entered into by a minor for the repayment of money lent or to be lent.
  • Contact for goods supplied or to be supplied and;
  • Contact for all accounts settled with infants.

Distinction between English law and Indian law

In England, some of the minor’s contacts are merely voidable whereas others are absolutely void. However in India, there was controversy in this connection up to 1903. In that year in Mohiribibi vs Dharamdas Bhose, the Privy Council finally ended this controversy by holding that the virtue of section 10 and 11 of the Indian Contract  Act,1872, minor’s contracts are void ab initio.

Nature and effect of minor’s Contract

Minor is promisee or beneficiary but not promisor

A minor can be a promisee or beneficiary but not a promisor. In other words, a minor can enjoy the benefit and privileges under the contract. But he cannot be held liable under the contract.

Property, promissory note, bonds, etc. in favour of minors

It is open to the donor to transfer by gift title and ownership in the property in favour of minors. A minor donee who can be said to be in law incompetent to consent under section 11 is however competent to accept a non-onerous gift. Acceptance of an onerous gift, however, cannot bind the minor.

The acceptance of the gift can be presumed to have been made by him or on his behalf without any overt and signifying acceptance by the minor. This presumption is based on human nature.  A man may be fairly presumed to assert to that to which he in all probability would assent if the opportunity to do so were given to him.

The Court observed, in case of (Raghava Charier vs  Srinivasa, AIR 1917) when a promissory note or a bond or other instrument is excluded in favour of a minor for consideration, which is paid, the promissory note or other instruments, may be enforced by the minor.

It should, however, be clearly understood that the transfer in favour of minors are valid only when the consideration for such transfer is not a promise but an act actually done, that is, the consideration is excluded and they are beneficial to the minor.

No rectification

Ratification means subsequent acceptance/approval/sanction.  a minor’s agreement is void and being a nullity has no existence in the eyes of law and therefore it cannot be rectified and it cannot support a fresh promise by the infant after attainment of majority.

At the time of entering into the contract, if the person is minor, the beneficiary of the minority would continue even after attaining majority. He needs not to rectify the liability (incurred during minority) after attaining his majority.

Thus, the promissory note excluded by a person on attaining his majority in settlement of an earlier promissory note excluded by him during minority in consideration of a sum of money received by him when a minor is not enforceable for want of consideration (Suraj Narain vs Sukku Ahir, 1928) it would be inconsistent with the general tenor and policy of the Contract Act to hold that thought the agreement would be void when they were made and cannot be ratified by the promisor on attaining majority, nevertheless the same result can be achieved by the promisor taking a ratifying loan from the promisee and promising to pay off that sum and irrevocable debt.

No Restitution

A minor need not to return or resituate the benefit received under a void or voidable agreement. If a minor obtain some property by fraudulent misrepresenting his age, he can be ordered to restore the property or goods thus obtained.

This is called the equitable doctrine. Under English Law, a minor may be compelled to restore the goods or property so long as they are traceable. Money being generally not reachable, a minor cannot be asked to restore it.

This was held in the well-known English case (Leslie vs Sheill, 1914) wherein the limit of the restitution was explained. In this case, the defendant minor fraudulent misrepresenting himself to be a minor, induced the plaintiff to lend him two sums of 200 pounds each.

The plaintiff filed the suit to recover 475 pounds being an amount advanced with interest. This action was resisted by the defendant on the plea of infancy. The Court dismissed the suit and pointed out that it was necessary to safeguard the weakness of the infant at large.

“Even though here and there a juvenile slipped thought” while dismissing the suit Lord Summer observed- So long back as 1676, it was decided that although an infant may be liable in tort generally, he is not answerable for a tort directly connected with a contract, which as an infant he would be entitled to avoid.

One cannot make an infant liable for breach of contract by challenging the form of action to one ex delicto.

No specific performance

A minor cannot be sued for specific performance of a contract. A minor’s agreement being void cannot be specifically enforced. But enforcement in favour of a minor is perfectly valid. In other words, agreements which are beneficial to the minor are valid.

The only difficulty is that a minor cannot claim specific performance of an agreement because specific performance being an equitable remedy can be granted only when there is mutuality, i.e. when each party is entitled to the remedy.

No vicarious liability

Vicarious liability means liability incurred for another, i. e. liability of one person for the acts of another. Parent or guardian is not vicariously liable for the liability of minors though it is for necessaries.

Exception

Minor’s liability for necessities generally, minor is not liable to meet any liability. However, he is liable for necessary supplies to him or his dependent. Necessaries include food, cloth, resistance, education, finance expense of parents, marriage expense of sister of the minor etc.

Minor is held liable for the necessaries under the principle of equity. Section 68 of the Indian Contract Act, 1872, imposes a contractual obligation on minors to meet his liability for necessaries.

Relevant case on this point is-

(Kedarnath vs A Jundhia, 1883)- It was held in this case that money given to minors for marriage expenses was recoverable.

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