My name is Anurag Maharaj and I am from Bokaro, Jharkhand. I am a student of law at Lloyd Law School, Greater Noida. I have tried to define the “Position and the Nature/Effect of Minor’s Agreements under the Indian Contract Act” in this article.
A contract is a legally binding agreement that acknowledges and administers the rights and duties of the contracting parties. A contract is enforceable if it meets the conditions and the approval of the law. “Section 10 of the Indian Contract Act states that” all agreements shall be contracts if they are concluded by free consent for a legitimate reason and with a lawful intent of the parties competent to contract, and are not explicitly declared void” and Section 11 of Indian Contract Act 1872 defines “Who is competent to contract” .Everyone is competent to contract who is of the majority age in accordance with the law to which he is subject and who has a sound mind and is not disqualified by any law to which he is subject. Before entering into a contract, it can be said that the majority is necessary.
For the purpose of making a contract, a person is said to have a sound mind if, at the time he makes it, he is able to understand it and form a fair opinion about its impact on his interest.
Two conditions prevail here:-
- He had to be able to grasp the deal,
- He should be able to make a reasoned decision about the contract’s effect on his interest.
Age of majority:- Section 3 of the Indian Majority Act declares that every person is of majority age who has reached the age of 18. However, when a guardian is assigned to a minor or his property, at the age of 21, he obtains a majority. By looking at Indian law, the agreement of the minor is null and void, meaning that it has no value in the eye of the law, and is null and void as it can not be enforced by either party to the contract. And even though he secured a majority, he did not ratify the same agreement.
Illustration:- This case is the best example on the matter. In this case, a minor mortgaged his house to secure a Rs. 20,000 loan in favour of a moneylender and obtained Rs. 8,000 from the mortgagee. In case of default, the mortgagee filed a claim for his mortgage money to be recovered and for property sales. The Privy Council held that an agreement by a minor against him was completely null and therefore the mortgagee could not recover the mortgage money.
Nature/effect of minor’s agreement:-
1) The agreement of a minor on reaching a majority can not be ratified by a minor:
Ratification means consent or confirmation. A minor can not confirm an agreement after attaining majority that he actually made during his/her minority. This is because ratification relates to the date of the contract and therefore a contract that was null and void from the outset can not be validated by subsequent ratification.
A famous case in this respect is Suraj Narain v Sukhu Aheer. In this case, when he was a minor, a person borrowed money and then made a fresh pledge after gaining a majority to pay back the amount along with interest. The problem to be understood was whether the consideration obtained during minority could constitute a good consideration after majority attainment. The Allahabad High Court held that, after reaching the age of majority, consideration obtained by a person during minority can not be a legitimate consideration and can not be made legitimate for a fresh pledge. The Promiser was found not to be responsible for such a contract that would constitute a void deal
2) A minor’s agreement is void ab initio:-
A contractual agreement in India dealing with a person below the age of 18 is deemed void from the outset in the same way that a minor can not enter into a contract. This can be better understood with the above example.
3) Rule of estoppel:
If one person has intentionally induced or encouraged another person to assume by his act that something is real, he or his members will not be able to dispute the very reality in the future. It determines the Estoppel Principle. Nevertheless, minors are an exception to this law, and they can bargain with a minority, even if they misrepresented their age at the time of agreement.
4) No restitution:
When a contract is void, any person who receives any benefit under the contract must restore the same to the other party or render due compensation. Minors, however, are an exception to this doctrine. They are removed from the other party’s repayment of benefits.
5) Minor’s responsibility in tort:
The word ‘tort’ implies a legal error for which the party concerned can file a lawsuit. “If a minor signs an arrangement by misrepresenting his age, he can not be liable for damages for breach or in the form of damages for wrongdoing” (i.e., deceit) because this would be indirectly enforcing the agreement which is void. However, if a minor ‘s wrongful act (i.e., torture) is independent of the contract, then minor shall be liable in tort for damages. Example- A, a minor borrowed a mare from B for riding only under instructions to take care of it. B loaned his friend the horse, the horse got out of control of A and jumped and badly injured someone. Therefore, A has been held liable for misconduct.
6) Minor agent:
A minor can act as an agent, but he will not be responsible personally for any of his acts. In the usual course of business, the principal would be liable to third parties for the actions of the minor agent that he does.
7) Minor Partner:
Section 30 of the Partnership Act provides that, with the consent of all other Partners, a minor may be admitted to partnership benefits. His liability is limited to partner shares. He can’t get involved in the management
8) Necessities down to minor
Minor is liable to pay for the necessaries supplied to him by the other out of his property. “Necessaries” means things that are important to a person’s life intent and to his real requirements, and that are sold to him. For example, a house given to a minor on rent for his studies can be recovered from minor ‘s property in a requirement and rent
9. Minor Shareholder:
A minor in a corporation can not become a shareholder because he is incapable of entering into a contract. A business can also refuse to record, pass or forward shares in favour of a minor unless the shares are paid out in full. In the event that a minor inherits such securities, it may become a shareholder working through its legal guardian.
Exceptions to the general rule of minor’s agreement:-
1.Obligation by a Minor
A minor can be a promisee in a contract, but not a promisor and if he has fulfilled his promise portion, he can impose the obligation on another party.
2. A contract entered into for the benefit of the minor by his guardian:
In this case, if a party fails to fulfil its promise, the minor may sue the non-performing party.
3) Apprenticeship Contract
A minor shall only be engaged as an apprentice when his guardian has concluded a contract with the employer on his behalf. Such contracts would be binding on minors
A minor’s contract is void from the beginning except in cases of obligation by a minor, guardian’s agreement and apprenticeship. All the agreements are contracts if they are concluded for a lawful reason and with a lawful intent by the free consent of the parties competent to contract, and are not explicitly declared void. Now, every person is competent to contract who is of the majority age according to the law to which he is subject and who is of sound mind, and is not disqualified under any law to which he is subject from contracting.