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Contract with Minor

Updated: Feb 17, 2022

Written by: Krishan Kumar Garg


Introduction


Contract is an agreement which is enforceable by law.[1] There are some basics requirements for a agreement to turn into a contract and those requirements are lawful objects, free consent, lawful consideration, offer and acceptance, legal relation and competency of parties. The parties must be competent to contract as stated by section 10 of contract Act. Section 11 of Act provides the competency of parties and it include three main elements i.e., the person should be of age of majority (18 years of age and above), should be of sound mind at time of contract, should not be disqualified from contracting by any law. So, before entering into a contract, it might be claimed that a majority is required.


Minor’s Contract


A minor is someone under the age of eighteen, and the majority is a requirement for every agreement/contract. According to Indian law, a minor's agreement is void, which means that it has no legal validity and that it is null and void because neither party to the contract can enforce it. Even when he reaches majority, he will be unable to ratify the same deal. The difference is that a minor's contract is null and void, but it is not criminal because no statutory requirement exists.


Mohiri Bibi v. Dharmodas Ghosh[2]


Facts of case- Respondent Dharmodas Ghose is a minor in the case. His mother was appointed as his legal guardian by the Calcutta High Court since he held sole ownership of immovable property. The appellant, Brahmo Dutta, runs a money-lending business in Calcutta and elsewhere, and his attorney was Kedar Nath.


Dharmodas Ghose executed a mortgage in favor of Brahmo Dutta on July 20, 1895, on the property to which Dharmodas was the owner, to secure the repayment of Rs. 20,000 at 12% interest. Dharmodas was a minor at the time of the deed. Brahmo Dutta was not present for the transaction, which was handled by his lawyer, Kedar Nath. Kedar Nath got a letter on July 15, 1895, that stated, "......Dharmodas Ghose is still an infant under the age of twenty-one, and anyone providing money to him will do so at his own risk and peril." Kedar Nath denied receiving the letter, but the court determined that he had physically received the letter. Kedar Nath had ordered Dharmodas Ghose to sign a long declaration on the day the mortgage was concluded, declaring that he had gained majority on July 17 and that money was being lent on his guarantee.


The mother of Dharmodas Ghose has filed a lawsuit against Brahmo Dutta. On September 10, 1895, he stated that Dharmodas Ghose was an infant on the day the mortgage was completed, and therefore the entire transaction should be regarded void. After reviewing the evidence, the court of first instance granted the requested relief. The appeal was dismissed, and Brahmo Dutta died soon after, leaving his legal executors to pursue an appeal with the Privy Council.


The court decided that no agreement is a contract unless the parties have competence under Section 11 of the Act, i.e., the contract in the case was void ab-initio.


Effects of minor’s agreement


Through landmark judgment of Mohiri Bibi v. Dharmodas Ghosh, the effects can be explain as-

There is no liability resulting from either tort or contract: A minor is incapable of consenting, and the nature of a minor's agreement is void and unenforceable.


The rule of estoppel: Estoppel is a legal rule of evidence that prohibits a party from alleging something that contradicts what he previously asserted. The court found that the notion of estoppel does not apply in cases when the individual knows the true facts ahead of time, such as in this instance where the defendant's attorney knew the plaintiff was a juvenile. As a result, this rule does not apply.

Restitution of benefit: When a person at whose option a contract is voidable rescinds it, the other party is not required to perform it, according to Section 64 of the Indian Contract Act. This applies to voidable contracts, but because a minor's contract is void, he cannot be asked to return the money to the moneylender.


Exception to General Rule


His agreement is null and unenforceable since he provided protection to a child. There are, however, some exceptions.


When minor has performed his obligation: A minor can be a promisee but not a promisor in a contract. As a result, if the minor has fulfilled his side of the promise but the other party has not, the minor, as a promisee, can enforce the contract.


A contract entered into by guardian of minor for his benefit: In that instance, a minor has the right to sue the other party if it fails to keep its commitment. In the case of Great American Insurance v. Madan Lal[3], the guardian of a child entered into an insurance contract protecting the minor's property against fire. When the property was damaged and the minor requested compensation, the insurer refused, claiming that a contract with a minor is null and void. However, the court later decided that the contract was enforceable and that he had pay compensation.


Contract of apprenticeship: Under the Indian Apprentices Act, 1850, a contract of apprentice entered by guardian on his behalf is binding on minor.


Necessities supplied to a minor


If a person who is incapable of entering into a contract is supplied with essentials of life by another person, the person who supplied is entitled to compensation from the incompetent person's property, including a child. However, if the minor does not possess any property, he is not obligated to reimburse the other party.


Minor as a partner


The way a contract is written forms a partnership, and one of the most important aspects of a contract is that both parties must be of legal age. However, under Section 30 of the Partnership Act, a minor might be admitted to the benefit of partnership for the time being with the approval of all of the partners. He will not, however, be held accountable for any of his actions.


Some cases


Srikakulam Subramaniam v. SubbaRao[4] - In order to pay off his father's promissory note and mortgage debt, the minor sold a piece of land to the promissory note holders in fulfilment of the loan. He was able to pay off the mortgage and take possession of the property. However, the minor later claimed that the contract was void due of his age, and he requested custody of the land. However, the court decided that this contract was lawful because it was for the benefit of the kid and was entered into by his guardian, his mother.


Kuwarlal v. Surajmal[5] - In the case of necessities provided to minors, it was decided that a residence given to a minor on rent for the purpose of living in it and continuing his education is a necessity, and thus he is entitled to rent payment from the minor's property.


Conclusion


The minor cannot be a party to contract, but he can avail the benefits of being a party to a contract of partnership by being a non-liable partner and minor could also receive benefits and contract in case of necessities, but the general rule is that minor is not competent to contract, therefore he cannot be a party to a lawful contract. The law is benefiting minor as he someone contracts with minor then the contract is void ab initio but when the contract is where a minor receives necessities from another than the other person who is major could get compensation for necessities.

[1] 2(h) of contract act. [2] ILR (1903) 30 Cal 539 (PC) [3] (1935) 37 BOMLR 461 [4] (1948) 50 BOMLR 646 [5] AIR 1963 MP 58

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