Navigating Legal Landscapes: Contracts And Minors

NAVIGATING LEGAL LANDSCAPES: CONTRACTS AND MINORS

INTRODUCTION

According to the Indian Contract Act, 1872, a contract is basically an agreement which is enforceable in a court of law; an agreement is every promise or set of promises that form the consideration for each other. But before signing a contract or making an agreement, there is something that the parties should pay attention to avoid fraud, which is checking the competency of the other party, or their own competency too. The parties should make sure whether they are competent to sign a contract or not. If any one of the parties is not competent to contract, then both the parties may have to face some unfavourable consequences. Competency to contract or Capacity to contract is defined by the section 11 of the Indian Contract Act, 1872.

SECTION 11 OF INDIAN CONTRACT ACT, 1872

Section 11 is as follows:

"Who are competent to contract— 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."

There are some restrictions under this section as to who can and cannot be a party competent to contract such as

● a person should be of age of majority

● should be of sound mind,

● should not be disqualified from contracting

These provisions of section 11 of Indian Contract Act are discussed in detail in the following paragraphs of this article.

AGE OF MAJORITY

To be able to enter into a contract, a person should not be a minor. A contract made by a minor is void ab initio (to be treated as invalid from the inception of the contract). Who is a minor?

Section 3 of the Indian Majority Act, 1875 provides about the age of majority. It states as

follows-

"Age of majority of persons domiciled in India— (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.”

The age of majority differs according to the countries. As for India, minors reach the age of majority when they attain the age of 18 years. It is only after one reaches the age of majority that he or she can create valid contracts. The contracts made by a minor are void and are not enforceable in a court of law. This point was made clear in the landmark case of Mohiri Bibee and Ors. Vs. Dharmodas Ghose.

Mohiri Bibee and Ors. Vs. Dharmodas Ghose

Facts of the case:

● A minor named Dharmodas Ghose mortgaged his possessions in order to get a loan from his uncle, Brahmo Dutt. Afterwards, Mohori Bibee, the plaintiff, purchased the mortgage.

● Dharmodas Ghose was under the legal age of eighteen when he entered into the deal. The attorney for Brahmo Dutt, Kedar Nath Mitter, was fully aware of his incapacity under law to sign contracts or mortgage his assets.

● Legal action was taken by Dharmodas Ghose and his mother against Brahmo Dutta on the grounds that the mortgage that was performed when Dharmodas was still a minor was invalid and illegal, necessitating the annulment of the contract.

● During the proceedings, Brahmo Dutta passed away, and the appeal was continued by his executors.

● The complainant argued that the defendant should not be given any concessions because Dharmodas's age had been purposefully misrepresented. Additionally, they further contended that the Plaintiff had subsequently ratified the mortgage.

The decision of the Court:

● The trial court declared the mortgage to be void because it was signed by a minor.

● Brahmo Dutta filed an appeal with the Calcutta High Court because he was unhappy with the decision. The Calcutta High Court denied Brahmo Dutta's appeal and maintained the Trial Court's ruling that the mortgage contract was null and void.

Issues of the case:

● Whether the mortgage deed was void under section 2, 10, 11 of Indian Contract Act,

1872 or not?

● Whether the defendant was liable to return the amount of loan under section 64 and 65 of Indian Contract Act 1872 and Section 41 of Specific Relief Act 1877, which he had

received by him under such deed or mortgage or not?

● Whether the mortgage commenced by the defendant was voidable or not?

Regarding the issue of whether the deed or mortgage was void or not, the honourable court decided that the contracts of mortgage were void ab initio as they were made by a minor.These contracts had no legal validity in a court of law.

The issue of return of loan taken by the minor was a bit complex. Section 64 of Indian Contract Act 1872 states-

"Consequences of rescission of voidable contract— When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained of which he is a promisor. The party rescinding a voidable contract shall, if he has received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received."

The judges observed that Section 64 is applied in cases of voidable contracts. Since a minor's agreement is a void contract, Section 64 won't be applicable in this case.

Section 65 of Indian Contract Act 1872 states-

"Obligation of a person who has received advantage under void agreement or contract that becomes void— When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.”

Again, as it was observed in Section 65, this section is applicable on competent parties only. Since a minor is not a competent party to contract, this section is not applicable in this case as well.

The defendants also claimed mortgage money under Section 41 of Specific Relief Act 1877. This section is as follows-

"On adjudging the cancellation of an instrument, the Court may require the party to whom such relief is granted to make any compensation to the other which justice may require.”

This section gives the court the discretion to order compensation. But under the circumstances of this case, the court did not see it fit to order compensation because the defendants entered the contract knowing the plaintiff was a minor. Hence, this section was also not applicable.

RATIFICATION OF A MINOR'S CONTRACT

The court came to the conclusion that a minor's agreement cannot be ratified

● by the minor himself after he attains majority

● by his guardians till he is a minor

DOCTRINE OF ESTOPPEL

Section 115 of Indian Evidence Act lays down the law of estoppel-

"Where 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."

It is generally agreed upon from the varied rulings of the various High Courts that the law of estoppel does not apply to a minor. Even if he falsely claimed to have reached the age of majority when the agreement was made, he is nevertheless able to use the defence of the minority to escape accountability under it.

CONCLUSION

A contract is an agreement subject to various conditions. While making a contract one should be eligible to make it. Age of minority prevents a person from making as well as entering a contract. In India, only people above 18 years of age can make a contract and if someone before reaching the said age makes a contract, it will be void and not enforceable in a court of law.

References

1. Eighth Edition, Bangia, R.K. CONTRACT-I. Page Number- 107-110, Allahabad Law Agency 2021.
2. 7C WN441, (1903)L.R. 30 I.A. 114, 30M.I.A.114

The author affirms that this article is an entirely original work, never before submitted for publication at any journal, blog or other publication avenue. Any unintentional resemblance to previously published material is purely coincidental. This article is intended solely for academic and scholarly discussion. The author takes personal responsibility for any potential infringement of intellectual property rights belonging to any individuals, organizations, governments, or institutions.

The author of this blog is Suhasni Sharma. She is currently a 2nd year student pursuing her B.A.LL.B. degree from The Law School, University of Jammu.