28 February, 2016

Position of Minor's agreement

The term minor/minors is no where defined in the contract act. But taking into consideration the wordings of section 11 of Indian contract act, a minor is a person who has not attained the age of 18 years.
The age of majority of a person is regulated by section 3 of the Indian majority act, 1857.
Section 3 of the INDIAN MAJORITY ACT, 1875 provides about the age of majority. It states that a person is deemed to have attained the age of majority when he completes the age of 18 years, except in the following cases a person continues to be a minor until he completes the age of 21 years
 · Where a guardian of a minor’s person or property has been appointed under the Guardians and Wards Act, 1890 or
 · Where the superintendence of a minor’s property is assumed by a Court of Wards.
Section 11 of the act expressly forbids a minor from entering into a contract. The effect of this express prohibition is that any contract entered into by a minor is void-ab-initio regardless of whether the other party was aware of his minority or not.
A contract with or by a minor is void and a minor, therefore, cannot, bind himself by a contract. A minor is not competent to contract. In English Law, a Minor in contract, subject to certain exceptions, is only voidable at the option of the minor. In 1903 the Privy Council in the leading case of Mohiri Bibi v. Dharmodas Ghose (190, 30 Ca. 539).Held : That in India minors contracts are absolutely void and not merely voidable. Dharmodas   Ghose  , a minor, entered into a contract for borrowing a sum of Rs. 20,000 out of which the lender  paid the minor a sum of Rs. 8,000. The minor executed mortgage of property in favour of the lender. Subsequently, the minor sued for setting aside the mortgage. The Privy Council had to ascertain the validity of the mortgage. Under Section 7 of the Transfer of Property Act, every person competent to contract is competent to mortgage. The Privy Council decided that Sections 10 and 11 of the Indian Contract Act make the minors contract void. The mortgagee prayed for refund of Rs. 8,000 by the minor. The Privy Council further held that as a minor’s contract is void, any money advanced to a minor cannot be recovered. 
1.   An agreement entered into by a minor is altogether void:- The word void when used in relation to a minor it should be understood as "void as against the minor". Contract within or by a minor is altogether void. The Indian Contract Act simply says that only a person who is a major is competent to contract. The main reason for holding a minor's agreement void is that where an agreement by a minor involves a promise on his part or his promise is a necessary part of the agreement it is void because a minor is incapable of giving a promise imposing a legal obligation.
2.   Minor can be a beneficiary:- Though a minor is not competent to contract, nothing in the Contract Act prevents him from making the other party bound to the minor. Thus, a promissory note duly executed in favour of a minor is not void and can be sued upon by him, because he though incompetent to contract, may yet accept a benefit.  
A minor cannot become partner in a partnership firm. However, he may with the consent of all the partners, be admitted to the benefits of partnership (Section 30 of the Indian Partnership Act).
3.   Minor can always plead minority:- A minor's contract being void, any money advanced to a minor on a promissory note or otherwise, cannot be recovered. Even when a minor procures a loan by falsely representing that he is full age, it will not stop him from pleading his minority in a suit to recover the amount and the suit will be dismissed.
But where a minor had fraudulently mortgaged and sold certain properties, the Court held that on the cancellation of the agreement at the instance of the minor the lender and purchaser must be compensated.
4.   Ratification on attaining majority is not allowed:- As a minor's agreement is void he cannot validate it by ratification on attaining majority. For instance, a minor borrows money and executes a promissory note. On attaining majority, he executes a fresh promisor note in substitution of the one executed as a minor. The second promissory note is also void being without consideration. But a person who supplies necessaries of life to a minor or to one whom the minor is legally bound to support, according to his station in life, is entitled to be reimbursed from the property of the minor not on the basis of any contract but on the basis of an obligation resembling a contract (Section 68).But a minor's property in liable for necessaries and no personal liability is incurred by him.
5.   Contract by guardian - how far enforceable:- Though a minor's agreement is void, his guardian can, under certain circumstances enter into a valid contract on the minor's behalf. Where the guardian makes a contract for the minor, which is within his competence and which is for the benefit of the minor, there will be valid contract which the minor can enforce. For instance a guardian can make an enforceable contract of marriage for a minor. Similarly, when the father of the bridegroom contracts with the father of the bride to pay the bride an allowance the bride can sue her father-in- law to recover arrears of the allowance.
But all contracts made by guardian on behalf of a minor are not valid. For instance, the guardian of a minor has no power to bind the minor by a contact for the purchase of immovable Property. But a contract entered into by a certified guardian (appointed by the Court) of a minor, with the sanction of the court for the sale of the minor's property, may be enforced by either party to the contract.
6.   Liability for necessaries:- Under Section 68, any person would be entitled to reimbursement out of the minor's estate, for necessaries supplied to him or to his family. Necessaries as defined by the English Sale of Goods Act, also means, goods suitable to the condition in the life of infant as required by him at the time of sale of delivery. It includes not only food and clothing but also education and instruction. Necessaries also include 'goods' and services. If minor had obtained payment fraudulently by concealment of age, he may be compelled to restore the payment but he cannot be compelled for an identical sum, if any, as it would amount to enforcing a void contract.
Courtesy:- Legal Point Foundation

No comments: