Contracts With The Minor


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Lectures by Dr. Tabrez Ahmad

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Contracts With The Minor

  1. 1. Capacity to contract By Dr. Tabrez Ahmad, Professor of Law Contracts with the Minor Dr. Tabrez Ahmad, 1
  2. 2. Who are competent to contractSec 11 of the Indian contract Act 1872. Who are competent to contract – Every person is competent to contractwho is of the age of majority according tothe law to which he is subject, and who isof sound mind, and is not disqualified fromcontracting by any law to which he issubject. Dr. Tabrez Ahmad, 2
  3. 3. Cont… Thus, the section declares the following persons are not competent to contract minors, persons of unsound mind persons disqualified by law to which they are subject.Age of majority: The age of majority is generally eighteen years. Dr. Tabrez Ahmad, 3
  4. 4. Cont.. Sec. 3 of the Indian Majority Act, 1875 provides as follows:“Every person domiciled in India shall be deemed to have attained his majority when he shall have completed his age of eighteen years, and not before. Dr. Tabrez Ahmad, 4
  5. 5. Cont…Sec 10 requires that the parties to a contract must becompetent and sec 11 declares that a minor is not competentbut neither section makes it clear whether, whether if a minorenters into an agreement, it would be voidable at the option oraltogether void.What agreements are contracts –Sec 10- All agreements are contracts if they are made by the freeconsent of parties competent to contract, for a lawful considerationand with a lawful object, and are not hereby expressly declared tobe void.Nothing herein contained shall affect any law in force in [India] andnot hereby expressly repealed by which any contract is required tobe made in writing or in the presence of witnesses, or any lawrelating to the registration of documents. Dr. Tabrez Ahmad, 5
  6. 6. Cont… Sec 10 and Sec 11 had, therefore, quitenaturally given rise to a controversy aboutthe nature of minor’s agreement.The controversy was only resolved in1903 by the judicial committee of the PrivyCouncil in their well-knownpronouncement in Mohoribibi vDharmodas Ghose. Dr. Tabrez Ahmad, 6
  7. 7. Mohoribibi v Dharmodas Ghose (1903) Privy CouncilThe plaintiff, a minor mortgaged his houses in favour ofthe defendant a money lender, to secure a loan of Rs.20,000/-. A part of this amount was actually advanced tohim. While considering the proposed advance, theattorney, who was acting for the money-lender, receivedinformation that the plaintiff was still a minor.Subsequently the infant commenced this action statingthat he was under age when he executed the mortgageand the same should, therefore, be cancelled.The relief of cancellation had to be granted as theplaintiff was entitled to it. .( Under sec 39 of the originalSpecific relief Act 1877 courts were authorised to ordercancellation of void contracts. Now Sec. 31 of the Act of1963). Dr. Tabrez Ahmad, 7
  8. 8. The money lenders only request was that therelief should be made subject to the condition ofthe minor’s repaying him the sum of Rs. 10,500/-advanced as a part of the consideration for themortgage.Sec. 64 and sec 65 of the Indian contract act1872 and Sec 41 of the Specific Relief Act 1877[ S. 33 of 1963] were in question.Arguments:Judgment: Dr. Tabrez Ahmad, 8
  9. 9. Developments after Mohribibi case In its subsequent pronouncement in Subramanyam v Subba Rao AIR 1948 PC 25.the Privy council overruled earlier decisions and entertained no doubt that it was within the powers of the mother of a minor as a guardian to enter into a contract of sale for the purpose of discharging his fathers debts. Following this decision the Orissa HC in the case of Durga Thakurani v Chintamani, AIR 1982,158, held that Dr. Tabrez Ahmad, 9
  10. 10. Cont…endowment of property for religious purposes by guardians on behalf of minors, being within their competence of was specifically enforceable.The other High Courts have also expressed the view that the doctrine of mutuality should not have been imported into the matter where the contract was within the competence of the guardian and that there is no scope for this doctrine under sec. 20 of the Specific Relief Act 1963. Dr. Tabrez Ahmad, 10
  11. 11. In todays society it does not seem to bepossible, much less desirable for law toadhere to the categorical declaration thata minors agreement is always “ absolutelyvoid”.Minors are appearing in public life todaymore frequently than even before. Dr. Tabrez Ahmad, 11
  12. 12. Cont..The Privy council had therefore to modify itsearlier decisions.This trend is evidenced by the decision of theirLordships in Srikakulam Subramanyam v KurraSubba Rao (1949) 75. Lord Morton held thatSec. 11 of the Indian Contarct Act 1872 and theMohribibi case leave no doubt that a minor cannot contract and that if the guardian and themother had taken no part in this transaction itwould have been void. The contract being for thebenefit of the minor and within the power of theguardian was held to be binding upon him. Dr. Tabrez Ahmad, 12
  13. 13. Effects of minor’s agreementNo Estoppel against minorNo liability in Contract or in Tort arising out ofContract: If the tort is directly connected with thecontract and is the means of effecting it and is aparcel of the same transaction, the minor is notliable in tort.Doctrine of Restitution: If an infant obtainsproperty or goods by misrepresenting his age,he can be compelled to restore it, but only solong as the same is traceable in his possession.This is known as equitable doctrine ofpossession. Dr. Tabrez Ahmad, 13
  14. 14. Cont…Again the doctrine of restitution is not applied where the infant has obtained cash instead of goods. The well known authority isLeslie (R) Ltd. V Sheill (1914) 3 K.BAn infant succeeded in deceiving some money-lenders by telling them a lie about his age, and so got them to lend him 400 pound on the faith of his being an adult.Their attempt to recover the amount of principal and interest as damages for fraud failed.The attempt also failed under quasi-contract and doctrine of restitution.Rejecting the contention, lord Sumner said: I think this would be nothing but enforcing a void contract. Dr. Tabrez Ahmad, 14
  15. 15. Beneficial ContractsA minor is allowed to enforce a contract which is of somebenefit to him and under which he is required to bear noobligationThe person on whose behalf certain goods were insuredwas a minor court allowed the minor to recover themoney.Contract of marriage: contract of marriage could beenforced against the other contracting party at theinstance of the minor it can not be enforced against theminorContract of apprenticeship: The Indian Apprentices Act1850 provides for contracts in the nature of contracts ofservice which are binding on minors. Dr. Tabrez Ahmad, 15
  16. 16. Trade Contracts not included in Beneficial ContractsIn a general sense contracts which can bebrought within certain categories and are also forthe benefit of the infant can be supported.A trading contract does not come within any ofthese categories. The only contracts of an infantwhich can be enforced are which relate to theinfant’s person, as contracts by which heprovides himself with clothes, food, or lodging orcontracts of marriage, apprenticeship andservice. Dr. Tabrez Ahmad, 16
  17. 17. Option to retire from beneficial contracts on majorityA minor will have the option of retiring from acontract of beneficial nature on attaining majorityprovided that he exercises the option within areasonable time.Where a minor in pursuance of a marriagesettled his after acquired property and afterattaining majority he received large sum ofmoney under the will of his father which cameunder the settlement, and , therefore, heattempted to repudiate the settlement, TheHouse of Lords held that the repudiation comingafter 5 years after attaining majority was too late Dr. Tabrez Ahmad, 17
  18. 18. RatificationA person can not on attaining majority ratify anagreement made by him during his minorityRatification relates back to the date of themaking of the contract and, therefore, a contractwhich was then void can not be made valid bysubsequent ratificationIt would be contradictory in terms to say that avoid contract can be ratified.It is necessary, a fresh contract should be madeon attaining majority Dr. Tabrez Ahmad, 18
  19. 19. English LawIt is a presumption at law that everyperson is entitled to enter into a contractunless an exception applies. One of thoseexcpetions is for minors. The age ofcontractual capacity for individuals is theage of 21 at common law, however thiswas reduced to the age of 18 in 1969 byAct of Parliament. Reaching the age of 18is known as attaining majority. Minors arethose who have not attained the age of 18. Dr. Tabrez Ahmad, 19
  20. 20. Cont….Minors are permitted to enter intocontracts for limited purposes, and the testis one that focuses on the nature of thetransaction, and whether the minor is of anage such that they capable ofunderstanding it. Dr. Tabrez Ahmad, 20
  21. 21. Cont…The general law states that contractsentered into by children that are fornecessaries are binding on children, asare those for apprenticeship, employment,education and service where they arerightly said to be for the benefit of thechild. Dr. Tabrez Ahmad, 21
  22. 22. Cont…Contracts for necessaries are for the supply offood, medicines, accommodation, clothing,amongst other things but generally excludesconveniences, and products and services forcomfort or pleasure. Commercial or tradingcontracts are excluded. These latter contractsare voidable at the option of the minor, andwhether the minor may avoid the contractdepends on the nature of the contract. Dr. Tabrez Ahmad, 22
  23. 23. Contracts where the minor may avoid the affect of thecontract are for the acquisition of a legal or equitableinterest in property of a permanent nature, such asshares, land, marriage and partnerships. Other contractsrequire positive ratification in order to be enforceable,which includes contracts for debts and the sale of goodsthat are not for necessaries. The ratification must takethe form of an acknowledgement that the debt is bindingafter attaining the age of 18. Fresh consideration is notrequired for the ratification to be complete.Restraints of trade may be unenforceable against aminor, even if they would be enforceable against anadult. Dr. Tabrez Ahmad, 23
  24. 24. Thanks Dr. Tabrez Ahmad, 24