LAW OF CONTRACTS

Research Paper Topic- MINOR’S CAPACITY TO CONTRACT

 LAW OF CONTRACTS

TABLE OF CONTENT

Serial TOPIC Page No.

No.
1. ABSTRACT 3

2. INTRODUCTION 3

3. RESEARCH QUESTION 3

4. HYPOTHESIS 4

5. LITERATURE REVIEW 4-5

6. MINOR 6

7. MINOR’S AGREEMENT 7

8. COMPETENCY TO CONTRACT 7

9. EFFECTS OF MINOR’S AGREEMENT 7-10

10. EXCEPTION TO MINOR’S CONTRACT 10-12

11. LIABILITY OF A MINOR UNDER THE 13

NEGOTIABLE INSTRUMENT ACT
12. CAN A MINOR BE A PARTNER, AN AGENT OR 13
PRINCIPAL?
13. LANDMARK CASES 14

14. FINDINGS AND SUGGESTION 15

15. CONCLUSION 16

16. BIBLIOGRAPHY 17
 LAW OF CONTRACTS

ABSTRACT

Minors are forbidden to execute any type of contract, according to the Indian Contract Act. A
minor is an individual who hasn't even reached the maturity level or majority age. This research
paper is exclusively concerned with minors in contract and how minors are incompetent to enter
into a legal contract, exceptions and effects of minor’s contract and some landmark cases. This
paper also focuses on how some laws are still not significant as they create gaps which can be
misused by the minors.

Keywords – Minors, Contract, Void, Void-ab-initio, Competency.

INTRODUCTION

The capability of an individual to fully understand what he may achieve by consenting to enter a
contract with other people may be expressed as “capacity” in the framework of a contract. It is
specifically defined in Section 10 that the parties must “competent to contract” and directly
thereafter, in Section 11, the competences of the contract are established. The legal capacity to
engage into a contract is called contractual capacity. Minors have specific privileges and
responsibilities in respect to contracts set by the court. When an individual reaches the age of 18,
he is considered to have reached majority. Any agreement formed with a minor is invalid from
the start. Attention must be paid to specific consequences that are fundamental component of the
minor's ability to contract.

However, as years has passed, public perceptions gradually shifted, and today children can
choose their own well or evil before asking others, necessitating a revision in the legislation.
Additional regulations and requirements must be made in the legislation to safeguard children
from any deceptive conduct, but they should not be limited to and another side from entering into
contract.

RESEARCH QUESTION

1. What is the validity and capacity of minors to contract?

2. Is there any misuse of laws made for the benefit of minor that enters into a contract?
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HYPOTHESIS

 Any agreement formed with a minor is void-ab-initio. Minors take advantage of the
loopholes present in the Indian Contract Act for their own benefit.

LITERATURE REVIEW

( Naman Jain,2021) Minor is not grown sufficient to know what's great and what it
significant for his or her interests. In view of this, the legislation is there to defend minors,
ensuring that no one may reap the benefits of their youth by entering into an arrangement with
them. Although a minor cannot be legally obligated by an agreement, he can be a legitimate
benefactor. All transactions formed by minors are invalid, and the equity theory of restitution has
a broad applicability Employment contracts are lawful as far as they are
advantageous and beneficial the minor. For a minor, there is no bankruptcy. Contracts cannot be
executed against minors provided there are extraordinary cases. In today's developed society a
kid matures already prior reaching the age of majority. The whole legal system is designed to
assist minors; justices serve as their advisors, and the legislation serves as their protector.
However, it must be guaranteed that, while safeguarding the interests of minors, no undue
burdens be imposed on those who interact with minors. The rulings in the Leslie and Mohiri Bibi
cases should not be applied if a minor is aware of or fraudulently portrays the minority's purpose,
either explicitly or implicitly. Those decisions will only be considered obiter dictum.

( Sonal Bhaskar, 2021) The current rules governing minor's contracts are confusing and
inconsistent in several ways. Most of the issue with conventional legislation stems from
adult's apprehension of dealing with children for concern of monetary losses. The increasing
part played by minors in current time context as well as the challenges they face, has compelled
the legislation to be changed. The legislation must be broad sufficient to allow the kid to be held
accountable for his contracting obligations Authorities should be able to approve singles on the
 LAW OF CONTRACTS

request of either side. A clause like this would allow a grownup to defend itself as far as he didn't
go too extreme. The age of majority must not be determined just by the minor's age, but rather by
the minor's capacity to understand whatever he or she does at the moment the contract is made.
Current rules should be amended, or additional clauses added so that minors cannot use their
minority as a weapon but may only use it as a defense.

( Saroj Choudhary, 2013) In India's legislatures, great effort has been undertaken to zealously
preserve the interests of juveniles, as demonstrated by the inherent measures established in
different laws to defend minors' interests. Various court rulings involving children' interests
demonstrate how it is the judiciary' primary responsibility to safeguard minors' interests. Our
judicial system is strong adequate to defend kids' interests in all areas.

( Shivprasad Swaminathan, 2018) Interpreting Mohori Bibee as though it was an unquestionable

and rigorous concept has resulted in a fundamental oddity in Indian contract law. The opposing
fundamental preferences- protecting minors from hasty judgments, allowing minors accessibility
to valued products and activities and protecting those who honestly handle with minors—are all
badly balanced by an uncompromising law that declares all minors' contracts void.
Understanding the problem's sensitivity and the need to properly manage opposing concerns
Common law of England has evolved a rational solution to minors' contracts. Agreements for the
delivery of necessities to a minor have traditionally been considered as binding by the legal
system. By accomplishing, so the legal system insured that minors are never denied access to the
economy for the utmost necessary of important necessary commodities Individuals who were not
“competent to contract” could rarely enter into a legitimate, executable contract under the Act. It
is important to highlight that the Act did not clearly state what would happen if either of the sides
was not “competent” to contract, that is, if they lacked capacity to contract.
 LAW OF CONTRACTS

MINOR

A minor is defined as someone that has not reached the age of majority, as per Section 11 1. The
age of majority is defined differently in several nations. According to “Section 3 of the Indian
Majority Act, 1875” (as modified in 1999):

(1) “Every person domiciled in India shall attain the age of majority on his completing the age of
eighteen years and not before.”

(2) “In computing the age of any person, the day on which he was born is to be included as a
whole day and he shall be deemed to have attained majority at the beginning of the eighteenth
anniversary of that day.”

An individual who is a day or more under the age of majority is ineligible to engage into a
contract. For example, if an induvial is of 17 years and 364 days then he will be considered as
invalid to enter into a contract.

When an individual reaches the age of 18, he is considered to have reached majority; however, if
a guardian of a minor's person or property, or both, is assigned under the "Guardian and Wards
Act 1890", or the court of Wards assumes authority before the age of 18, the age of majority is
widened to 21 years.

Minor ought does not engage into a contract in order to give the minor with security so that no
one may profit from his minority. Because law assumes that children minds are not sufficiently
developed to grasp the essence of the contractual arrangements. This signifies just, unjust,
wrong, fake, real and fool. It is all about fairness. In one manner, it is in the advantage of the
minor to exclude or discard an individual who is a minor to close the agreement.

1
The Indian Contract Act, 1872
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MINOR’S AGREEMENT

An agreement formed with a minor is invalid from the start. A contract is not formed when a
minor enters into an agreement. It is a contract that has no lawful standing in a court room. It is a
contract that cannot be enforced in a court room. Though if the minor gains the majority, he
cannot ratify the very identical agreement.

COMPETENCY TO CONTRACT

It is stated in Section 11 2, “Every person is competent to contract who is of the age of majority
according to the law to which he is subject and who is of sound mind and is not disqualified from
contracting by any law to which he is subject.” The material part of Section 10, Contract Act,
may be set out: “All agreements are contracts if they are made by the free consent of parties
competent to contracts, for a lawful consideration and with a lawful object and are not expressly
hereby declared to be void”.

Minors must be safeguarded from unjustified benefit or being taken benefit of because they incur
from an incapacity to make an adequate judgement or draw a decision on topics that directly
affect their interests. Competence is the rule in contract negotiations, while incompetence is the
aberration.

EFFECTS OF MINOR’S AGREEMENT

The fact that a minor's agreement is useless and invalid has ramifications. There can be no
responsibility for violation of contract when there is no contract. There is no responsibility on
any party to follow out the contract. As a result, it's critical to pay attention to specific
consequences that are fundamental component of the minor's ability to contract.

1. ESTOPPEL AGAINST THE MINOR

The written legislation of “estoppel” forbids and prohibits somebody from claiming somebody or
something and claiming a right that opposes what they earlier asserted or contended under the
laws. Estoppel is a conflicting assertion made by an accused in order to rescue and shield oneself

2
The Indian Contract Act, 1872
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from legal consequences. When a minor claims to have reached majority, the issue that remains
is whether the rule of estoppels holds on him in order to ensure that he does not assert that he
was a minor at the moment of contracting. It is critical to ensure that this individual does not
undermine his words. According to, Section 1153, - “When one person has by his declaration, act
or omission intentionally caused or permitted another person to believe a thing to be true, and to
act upon such belief, neither he nor his representatives shall be allowed in any suit or proceeding
between himself and such person or his representative to deny the truth of that thing.”

The doctrine of estoppel doesn't really apply in Mohiri Bibi v. Dharmodas Ghose 4 since the
respondent acknowledged the true information concerning the complainant, namely that the
complainant was a minor. The Lahore HC ruled in Khan Gul v Lakha Singh that minors are
exempted from the rule of estoppel. Thus, Estoppel would not be granted in the case of a minor.

2. DOCTRINE OF RESTITUTION

The concept of restitution is dealt with in Section 65 of the Indian Contract Act 1872, and it
refers to the responsibility of the individual who has benefited from the invalid contractual
responsibility. If a minor illegally takes ownership of someone else's belongings or
commodities, he may be forced to return them. Cash, on the other hand, is difficult to locate and
the minor cannot be forced to return it. In the case of Leslie v. Sheill5, a child was effective in
misleading certain lender of money by falsifying his age in order to receive money. It was then
decided that because money is at stake, there was no way of retrieving or tracking it. When
money elements are involved, restitution does not entail.

But few cases doctrine of restitution was applied like, in Khan Gul v. Lakha Singh6, the court
mandated a minor to return Rs.17500/- that he had received in ahead of time for the property
transaction. When he declined to execute the deal, the court decided that whether the minor had
seized the items or the money, the theory of restitution should prevail. The court took a broad
interpretation of restitution, ruling that a child who took cash by mortgaging or selling property
owed the amount back.
3
The Indian Evidence Act, 1872
4
AIR 1903 ILR 30 Cal 539 (Pc)
5
[1914] 3 K. B. 607
6
AIR 1928 Lah. 609
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It was noticed by the Allahabad court in the matter of Jagar Nath Singh v. Lalta Prasad 7 that
“Where persons who are in fact underage induce others to purchase property from them, they are
liable in equity to make restitution to the purchasers for the benefit they have obtained before
they can recover possession of the property sold.”

3. MINORS ACCOUNTABILITY IN A TORT AS WELL AS IN BREACH OF

CONTRACT

It could perhaps not be claimed that the minor will be charged under tort law if the violation of
agreement is closely connected to the breach of a tort. It is not possible to turn an agreement into
a tort in order to sue a minor. A contract with a minor is invalid from the start and has no lawful
consequences.

In the case of Johnson v. Pye8, a minor fraudulently claimed to be of legal age in order to secure
a 300-pound borrowing. Later, it was decided that the youngster could not be forced to return the
money by initiating a deception case on him. As a result, a minor's contractual claim cannot be
transformed into torts. Minors are not responsible for torts arising from contracts since they
would be secondarily liable.

Jennings v Rundall9 was a case where a kid who had leased a horse for trying to ride injured her
by going too quickly. It was ruled that the kid could not be held liable for carelessness since this
would imply that the youngster was culpable for the breaking of the bailment agreement.

A horse was hired by a youngster in Burnard v Haggis10. The horse was only to be used for
mounting and not for “jumping and larking,” according to the ruling. Before being injured and
killed, the mare was made to go over a fencing. The youngster was found responsible for the
horse's demise since his actions were in violation of the contract he had made.

4. RATIFICATION OF THE MINOR’S AGREEMENT

7
(1908) 21 All. 21. 61
8
(1676) 1 Sid 258
9
(1799) 101 ER 1419
10
1863) 14 CB 45
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Ratification is necessary when a contract has the lawful ability to be cancelled, but the sides elect
to carry it out otherwise. If an agreement is void from the start, an individual's ultimate
confirmation of a deal engaged into while he was still a minor does not constitute a legal contract
on which a lawsuit can be brought. Because the contract signed into by the minor while he was
still a minor is unreasonable in law, there is no need to ratify it, and the money paid under the
previous contract cannot be transferred to the agreement into which the minor engaged after
reaching majority.

Agreements made by a minor are null and invalid from the start. It cannot be confirmed by
ratification once the minor reaches the age of majority. A minor is incompetent of forming or
executing a contract on his or her own. He cannot lawfully ratify an act conducted on his own
since the entire matter of ratification is predicated on the premise that the individual ratifying the
actions had power at the time the actions were executed. In Nazir Ahmed v. Jiwandas11, the
court held that “If the parties to a contract that has become void owing to a party's minority are
interested, they can draught a new contract when the party gains majority.”

EXCEPTIONS TO MINOR’S CONTRACT

1. BENIFICIAL CONTRACTS TO MINOR

A contract will be lawfully enforceable if it is helpful or favorable to a minor in certain manner.

The complainant (minor) can challenge the respondent for breach of contract if the other side
does not follow the laws and norms as well as the contract's provisions and requirements. It
makes absolutely no significance if the contract has some drawbacks for the kid; as far as it helps
him, he can pursue the respondent for violation.

A mortgage was completed in support of a minor who had provided the mortgage cash, as in the
case of Raghava Charior v. Srinivasa12. The issue came up as to whether or not the agreement
was lawfully valid and executable. The majority judgement stated that the agreement was legal
since it benefited the minor.
11
AIR 1938 Lah. 139
12
(1917) 40 Mad.308
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2. CONTRACT OF A MARRIAGE

Marriage contracts are seen as helpful to youth and so are lawfully binding A marriage contract
is traditional in most Indian tribes, and the legislation must accommodate to the person's
traditions and values in order to protect them. The issue prior to the Bombay High Court in the
case of Khimji Kuverji v. Lalji Karamsi 13 was as to if a contract of marriage engaged into by
her family on her account with a big person could be executed and if she could claim for breach
of contract. Her behavior was permitted in this instance.

3. APPRENTICESHIP CONTRACTS

The Indian Apprentices Act of 1850 authorizes such contracts for minors. These agreements are
lawfully enforceable. An apprenticeship contract is a work agreement involving an employer
and a youthful man aged 16 to 25 that has finished his or her obligatory education.
Apprenticeship contracts are signed by mother and father or guardian on account of minors in
order for them to be legally binding. The terms “contract of service” and “apprenticeship” are
used interchangeably in English law. The respondent in Roberts v. Gray14 was a minor who
volunteered to accompany a reliable and experienced billiards expert on a global trip and fight
with him. The claimant invested both time and resources in making the preparations, but the
respondent refused to honor the agreement. The respondent was found to be responsible since the
agreement benefited him in some manner through effective education and training As a result,
the plaintiff was successful in obtaining the damages for breach.

4. NECESSITIES OF MINOR

An individual that offers necessities of life suitable to a minor's way of existence is eligible to
reimbursement from the minor's assets, according to Section 68 15. This provision solely applies

13
AIR 1941 Bombay 129
14
1913 1 KB 520
15
The Indian Contract Act, 1872
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to the providing of “necessaries.” Items essential to a person's existence are ones without which
he or she would be unable to function.

Just the necessary is subject to responsibility although there is no explanation of the phrase
“necessary” in the Act. As a result, we can rely on court rulings to establish its exact
significance. In case of Chapple v. Cooper16, the term “necessity” was made clear- First and
foremost, food, (clothes), shelter, and etc. In India, a minor could never be held individually
liable for any items provided to him. The vendor will have to lose money if he does not have
enough assets to pay off his liabilities.

Two requirements must be satisfied for a minor's property to be liable for essentials:

 The contract has to be for the delivery of requirements for his survival.
 He must not yet have an abundant amount of these requirements.

The economic situation can be used to assess if item is necessary or not. The provider must show
that not merely were the commodities given acceptable for the minor's situation in life, but that
he was also undersupplied with items of that type. This was the principle established in the case
of Nash v. Inman, in which the plaintiff provided a university program student at Cambridge
University with a variety of outfits, notably 11 beautiful overcoats, despite the fact that he was
adequately clothed for his situation. The claimant was unable to collect any money from the
respondent because the court determined that a variety of outfits, comprising 11 waistline coats,
were not necessary and were provided by the claimant.

LIABILITY OF A MINOR UNDER THE NEGOTIABLE INSTRUMENT

ACT

A minor can sketch, approve, and bargain, and he can bound everybody but oneself, according to
Section 26 of the Act. By creating, drafting, receiving, delivering, and negotiating a written
contract, cheque, or bill of exchange, anybody who is competent of engaging into a
contract according to the legislation to which he is subjected can commit themselves and be
obligated.

16
(1844) 153 ER 105
 LAW OF CONTRACTS

CAN A MINOR BE A PARTNER, AN AGENT OR PRINCIPAL?

The manner a contract is written establishes a partnership, and one of the most important aspects
of an agreement is that both sides must be of legal age. However, under “Section 30 of the
Partnership Act”, a minor might be entitled to the advantage of collaboration for the duration and
be with the permission of all of the participants. He will not, however, be held responsible for
either of his actions.

A minor will never be a principle because, according to “Section 183 of the Indian Contract
Act”, anyone who wants to be a principal must be of legal age. Since a minor is unable to
contract, he also cannot hire an agent. However, under the terms of “Section 184”, a minor may
remain an agent, but the principal will be obligated by the minor's actions and will not be solely
responsible.

LANDMARK CASES JUDGEMENT

1. MOHORI BIBEE V. DHARMODAS GHOSH17

JUDGEMENT-
17
AIR 1903 ILR 30 Cal 539 (Pc)
 LAW OF CONTRACTS

“The Privy Council was that the contract with any minor is void-ab-initio (from the beginning).
The Dharmodas Ghose was not held liable for the repayment of the loan because the contract
was void-ab-initio.”

2. SRI KAKULAM SUBRAHMANYAM V. KURRA SUBBA RAO18

JUDGEMENT-

“In this case, Privy Council held that the contract entered by the guardian of a minor for the
benefit of a minor is valid. The Privy Council held that the contract was entered by the mother
of the respondent. It was made for the benefit of a minor.”

3. KUNWARLAL DARYAVSINGH VS SURAJMAL MAKHANLAL AND ORS19

JUDGEMNT-

“In this case, the property was given to a minor on the rent due to the necessities for living
and continuing study and a minor is liable to pay rent.”

FINDINGS AND SUGGESTION

As we know that law of contracts that is the Indian Contract Act was formed on the basis of
English Law, but both countries analyze the same laws in a different way, and we came to such a
notation by seeing the case where property of restitution is applied. The laws in India are not as
exact and broad as they are in English laws. The laws should be pliable enough so that a minor
should be obliged to the contract’s liabilities. When a minor wants to contract or has the

18
(1948) 50 BOMLR 646
19
9 AIR 1963 MP 58
 LAW OF CONTRACTS

knowledge of how everything must take place and is in his interest and benefit then he should be
allowed to enter into the contract without any restrictions from the judiciary system. There must
be such powers in the hand of court where they can question the intention of the minor so that
the major who the other party is do not suffer the consequences when the minor has wrong
intention. Some changes must be made in the act so the minor cannot use his minority as sword
but only as a shield.

Different legislation states different age of majority, so there must be a definite age so as to
define a minor. There are many loopholes or gaps in section 65 of Indian Contract Act and
section 115 of Indian Evidence Act, because of which minors are able to take advantage of their
minority and all of this leads to a huge suffrage of majors. The judgements of Mohiri Bibi and
Leslie case must not be ever taken into consideration as they represent the idea of falsely
representing the age. The age of majority should be determined only by seeing the ability and
capability of mind at the time when contract is made.

According to the Indian Contract Act some contracts are made void and some not in case of
minors like, in contracts where necessity is involved it is beneficial to minor then contract is
binding in nature but when contracts of purchasing of lands is concerned the same is held as
voidable at the minor’s option. A strict regulation that renders all transactions involving minors’
null and invalid lacks to understand the complicated ethical factors at stake, and in the final,
prejudices the whole preferences of the child it tries to safeguard.
 LAW OF CONTRACTS

CONCLUSION

Thus, it can be concluded that a minor is individual who has not reached the age of eighteen;
hence, a contract with a minor is considered illegal and void-ab-initio. As previously stated, the
case of Mohiri Bibi v. Dharmodas Ghose established a basis of principles, and the Privy Council
declared for the very first instance that a minor's agreement is not enforceable and legal from the
start. The contract of a minor has estoppel and reparation implications. Torts cannot be
transformed from contracts with minors. A minor is immune from being prosecuted underneath
the Tort Law, and he cannot be held liable since the contract is void. However, there are several
circumstances in which a juvenile or his caretaker can be found responsible. Advantageous
contracts, labor or apprentice contracts, marital contracts, and necessary contracts are examples
of these types of contracts.

Agreements with minors, on either side, provide unique difficulties since youths may not
necessarily behave in their own greatest advantage. Various state’s legislation has well-defined
rules that serve as the foundation for working with multiple minor contract disputes. The
majority of these regulations are centered on English common law system. Justice will strive to
shield the other contracting party from the minor's conduct so that they really do not suffer
unnecessarily while dealing with the child.

All transactions formed by minors are invalid, and the equity theory of restitution must have a
broad applicability. The asset of a minor is accountable to an individual who supports the minor
with necessities. Employment contracts are permissible in the aforementioned situations as far as
they are advantageous towards the minor.
 LAW OF CONTRACTS

BIBLIOGRAPHY

1. S Swaminathan, & R Surana, Minors’ Contracts: A Major Problem with the Indian
Contract Act, 1872, 42 Statute Law Review (ed., 2021).
2. N Jain, Minor’s Liability in Contract: An Overview, SSRN ( ed., 2021).
3. S Bhaskar, Minors and Law of Minor Agreement, SSRN ( ed., 2021).
4. S Choudhary, Protection Given to Minors - A Legal Study, SSRN ( ed., 2013).
5. Capacity to contract with special reference to effects of Minor’s agreement ( Mar. 13,
2021),[Link]
minors-agreement.
6. M Jain, A Study of Minors Capacity to Contract ( Jul. 17, 2021),
[Link]
7. D Parek, Minor’s Capacity To Enter Into A Contract ( Jul. 20, 2016),
[Link]
8. T Gautam, A MINORS’ CAPACITY TO CONTRACT ( Dec. 8, 2020),
[Link]
9. K Mukherjee, A Contract with a Minor is Void ab Initio | Agreement with Minor ( Sep.
16, 2019), [Link]