CONTRACTS WITH MINOR

Written by: Anushka Patil

Introduction

The Indian Contract Act, 1872, regulates contractual relationships and obligations between the parties. A ‘contract’ is a legally enforceable agreement. Often complexities arise when a minor is included in an agreement, which is not permitted by the law. The Majority Act, 1875, states that any person who has attend the age of 18 years or above is considered to be a major otherwise a minor[1].

Section 11 of The Indian Contract Act describes the requirements of a legal contract one of which is to attain the age of majority to enter a contract, it is so to ensure that a minor does not enter any contract or agreements which may be beyond his comprehending capacities.

Minor’s contract

Any contract having minor as a party is considered to be void as it is not enforceable by law and therefore it holds no value. Although a contract with a minor is not illegal is considered void, even when the minor reaches the age of majority the same contract can not be enforced on him. Any person entering in a contract with a minor should realise that the contracts would be void-ab-initio. A minor as per The Transfer of Property Act, 1882 can not transfer any property but he is still able to receive property from others under a legal contract. Section 11(2) of the Indian Contract Act defines the term "competent," which consists of three elements which are:

· The person must be of legal age, which is 18 years old.

· The person should be of sound mind.

· The person should not be disqualified from contracting by any law to which he is subject.

· All the parties entering in the contract should have agreed to do so with free consent.

Effects of contracts with minors

Mentioned below are some general rules to keep in mind before entering into a contract with a minor although the contracts would be non-enforceable by the law.

· A minor is incapable of giving consent and hence any obligations towards the minor under a contract is unenforceable and therefore null.

· The Partnership Act also restricts minors from being partners in a firm. Although, the minor can receive the benefits of partnership upon attaining majority.

· The rule of estoppel under evidence law is not applicable to minor even if he is under a contract under the false pretence of age, no legal liability arises on them.

· The parents or guardians of a minor child can name them in a contract only if it benefits them. Even in a situation such as this the minor cannot be held personally liable.

Exceptions

Any contract with a minor is void but there are some exceptions to this rule:

· In a contract a minor can be a promisee but not a promisor, wherein if the minor fulfils his obligation as a promisee whilst the other party has not, then the minor can enforce the contract on the promisor while being in the position of a promisee.

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

Case laws regarding contracts with minors:

Suraj Narain Dube v. Sukhu Aheer and Anr[2]

In this case the plaintiff - Suraj Narain Dube on 24th June 1919, had lent a sum of rupees 40 with an interest rate of 2% per month to the defendant – Sukhu Aheer and Anr. After a period of four years on 17th June 1923, the defendant had executed a new bond of rupees 76 along with the previous loan of rupees 40 which had developed interest of rupees 36. By this time the defendant had reached majority. In 1927 Suraj Narain Dube filed a case against Sukhu Aheer and Anr at The Court of Small Causes in Jaunpur wherein the case was dismissed, the plaintiff further applied in Allahabad High Court who referred the case to a larger bench where the decision of The Court of Small Causes was upheld and the court stated that under Section 11 of the Indian Contract Act the previous contract fails the essentials of “Competency of Contract”, because the respondent was a minor at the time and any contract with a minor is void from the beginning and therefore the court dismissed the appeal with the cost.

Mohori Bibee v. Dharmodas Ghosh[3]

In this case the respondent - Dharmodas Ghose had executed a mortgage deed in the favor of a moneylender named Brahmo Dutt on 20th July of 1895 for carrying out business in Calcutta and elsewhere. his attorney Kedar Nath Mitter carried out the entire transaction on his behalf, while he remained absent from Calcutta throughout the transaction. The respondent mortgaged his immovable property i.e., his house for the repayment of rupees 20,000 at the rate of 12 percent interest. The amount had increased during the dispute during which the respondent - Dharmodas Ghose was a minor. The respondent’s attorney Kedar Nath Mitter had received a letter on 15th July 1895 from Bhupendra Nath Bose an attorney informing that the respondent is of minor age. But in court Kedar Nath denied receiving any such letter, but the court held that Kedar Nath had personally received the letter on 15th July 1895 and that the evidence was conclusive. In the first trial the court held that the contract was void as the plaintiff was a minor. further, the defendant filed another appeal to Calcutta High Court, in which the high courts verdict was to dismiss the appeal. Then the defendant once again appealed to the privy council who agreed with the high court judgment and dismissed the case by stating that the contract was void. Because the contract with any minor is void-ab-initio. Void-ab-initio is a Latin word meaning “void from the beginning.” As the contract was void-ab-initio Dharmodas Ghose was not held liable to pay the loan.

[1]The Indian Majority Act, 1875 [2]AIR 1928 All 440 [3]ILR (1903) 30, Cal 539 (PC)