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VALIDITY OF MINOR'S AGREEMENT

Updated: Jun 22

Author: Mansi Rawat

Student (II Year, B.B.A.,LL.B), Fairfield Institute of Management and Technology, (GGSIPU)



In the aspect of law, a contract is a legally binding agreement between two or more parties which contains elements of a valid legal agreement which is enforceable by law. If we are talking about minor’s agreement, we should know, who is minor? What is an agreement? What is valid legal agreement? And then what is minor’s agreement? And validity of minor’s agreement? So,


Who is minor?

Minor, A person who is below the legal age of majority as per the set by the law or the jurisdiction and application, the one who do not have legal rights of an adult. Minors can be usually defined as someone who has not yet reached the age of majority and acquires all of the rights and responsibilities of an adult. A minor cannot be liable or be responsible for his or her own actions. The majority age is generally 18 years. But in some cases, as the drinking age in United States is usually 21 and the person above 18 sometimes called minors in the context of alcohol law, even if they are at least 18.

So according to the section 3 of the Indian Majority Act 1875, the MINOR is a person who has not completed the age of 18 years. The minority extends to 21 years if a guardian of a minor’s person or property is appointed.


What is an agreement?

The Indian Contract Act, 1872 defines the term ‘agreement’ in section 2(e), as “every promise and every set of promises, forming the consideration for each other.”


AGREEMENT = PROMISE + CONSIDERATION


PROMISE: According to section 2(b) of The Indian Contract Act, 1872 when a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise. The person who accepts the proposal is known as promisee. And the person who made the proposal is called promisor.

PROMISE = OFFER + ACCEPTANCE


Sec 2(a) of Indian Contract Act 1872, says that when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other person either to such act or abstinence, he is said to make a proposal.

Acceptance is defined in section 2(b) of the Indian Contract Act, 1872 as when the person to whom the proposal is made, signifies his assent there to, the proposal is said to be accepted.


CONSIDERATION: According to section 2(d) of The Indian Contract Act, 1872, when at the desire of the promisor, the promise or any other person has done or abstained from doing something or does or abstains from doing something or promises to do or abstain from doing something, such act or abstinence or promise is called a consideration for the promise. In simple words, it is nothing but a price that the promise agrees to pay to the promisor. Consideration in contract is the exchange of anything of value by each party.


What are the essentials of a valid legal agreement?

Essentials of a valid agreement are as follows:

  • Proper offer and proper acceptance with intention to create legal relationship.

Cases: - A and B agree to go to a movie on coming Sunday. A does not turn in resulting in loss of B’s time. A cannot claim any damages from B, since the agreement to watch a movie is a domestic agreement which does not result in a contract. In case of social agreement there is no legal relationship and there is no contract. {Balfour vs Balfour}

  • Lawful consideration: Consideration must be not unlawful, immoral, or opposed to the public policy.

  • Capacity: The parties to a contract must have the capability to make valid contract. The competency/capability or capacity has been defined in sec. 11, of The Indian Contract Act, 1872. ‘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.

  • Free consent: the consent of the parties should be free and genuine means they have agreed upon the same thing in the same sense and a consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake.

  • Lawful object: the object of agreement should be lawful and legal. Two person cannot enter into an agreement to do a criminal act. Consideration or object of an agreement is said to be unlawful if it

· Is forbidden by law, or

· is of such nature that, if permitted, would defeat the provisions of any law, or

· is fraudulent, or

· involves or implies injury to person or property of another, or

· court regards it as immoral, or opposed to public policy.

  • Possibility of performance: the term of the agreement should be capable of performance. An agreements to do act, impossible in itself cannot be enforced.

  • The terms of the agreements are certain or are capable of being made certain.

  • Not declared void: the agreement should be such that it should be capable or being enforced by law. Certain agreements have been expressly declared illegal or void by the law.

  • Necessary legal formalities: a contract may be oral or written. Where a particular type of contract is required by law to be in writing, registration, and attestation. If legal formalities are not carried out then the contract is not enforceable by law.

What is minor’s agreement?

Section 11 of the Indian Contract Act, 1872 says that “every person is competent to contract who is of majority according to the Law to which he is subject, who is of sound mind and not is disqualified from contracting by any law to which he is subject.

So, minor is not competent to enter into a contract.


AGE OF MAJORITY: According to section 3 of the Indian Contract Act, 1875 every person domiciled in Indian attains majority on the completion of 18 years of age.

EXCEPTION: 21 years in the following cases.

A. Where a guardian of minor’s person or property is appointed under the Guardian And Wards Act, 1890.

B. Where minor’s property has passed under the superintendence of the court of words.


Validity of minor’s agreement.

POSITION OF AGREEMENTS BY MINOR:-

I. If a minor’s has received any benefit under a void contract, he cannot be asked to return the same.

II. Fraudulent representation by a minor- no difference in the status of agreement. The contract remains void.

III. A minor with the consent of all partners, be admitted to the benefits of an existing partnership.

IV. Contracts entered into by minors are void- ab- initio. Hence no specific performance can be enforced for such contracts.

V. Minor’s parent/ guardians are not liable to a minor’s creditor for the breach of contract by the minor.

VI. A minor can act as an agent but not personally liable. But he cannot be principal.

VII. A minor cannot be adjudicated as insolvent.

VIII. Guarantee for and by minor: a contract of guarantee in favour of a minor is valid. However, a minor cannot be a surety in a contract of guarantee. This is because, the surety is ultimately liable under a contract of guarantee whereas a minor can never be held personally liable.

IX. Minor as a trade union member: any person who has attained the age of fifteen years may be a member for registered trade union, provided the rules of the trade union allow so. Such a member will enjoy all the rights of a member.

X. Minor can enter into contracts of apprenticeship, services, education, etc. :

A. A minor can enter into contract of apprenticeship, or for training or instruction in a special art, education, etc.

B. These are allowed because it generates benefits to the minor.

XI. VALIDITY: an agreement with a minor is void – ab – initio.


EXCEPTION

· Contract for the benefit of a minor.

· Contract by guardian: benefit of a minor b his guardian or manager of his estate.

· Within the scope of the authority of the guardian.

· Is for the benefit of the minor.

· Contract for supply of necessaries: food, clothes, bed, shelter, shoes, medicines and similar other things required for the maintenance of his life or for the life of his dependants, expenses for instruction in grade or arts, expenses for moral religions or intellectual education, funeral expenses of his deceased family members, etc. have been held by courts to be necessaries of life. However, the things like earnings for a male, spectacles for a blind person or a wild animal cannot be considered as necessaries.

· Liability of tort: A minor is liable for a tort. For example: Mayank, a 15 year old boy is driving a car carelessly and injured Yash. Now Mayank is liable for the accident.

Section 10 and 11 make it clear that any agreement made by a minor is void ab initio {not existent from the very beginning}. A case is mentioned below in which this was held that the combined effect of section 1o and 11 is to make the minor’s contract void.


CASE: Mohribibi vs. Dharmodas Ghosh {1903}


· FACTS: A minor borrowed Rs.20,000 from B and as security executed a mortgage in his favour. He became major a few months later and filed a suit for the declaration that the mortgage executed by him during his minority was void and should be cancelled. It was held that a mortgage by a minor was void and B was not entitled for recovery of money.

· In MOHRIBIBI CASE the privy council upheld the first notion, that an agreement with minor is void ab initio –

“Any other rule would have made the law asymmetrical, leaving to the whom of a child to pick and choose between agreements made by him”, it was observed.

· It was accordingly held, that the agreement made by a minor was void in nature and the money lender wasn’t entitled to the repayment of the money advanced.

· The law dealing with minors is based upon two principles-

· The law must protect the minor against his own inexperience,

· That the law should not cause unnecessary hardship to adults who deal fairly with minors.

INTRODUCTION OF THE CASE:


· APPELLANT: MOHORI BIBEE

· ADVOCATE FOR APPELLANT: WATKINS

· RESPONDENT: DHARMODAS GHOSE

· ADVOCATE OF RESPONDENT: W.W. BOX

· JUDGE: LORD MC NAUGHTON, LORD DAVEY, LORD LINDLEY, SIR ANDREW SCOBLE, SIR FORD NORTH,SIR ANDREW WILSON.

· COURT: KOLKATA

· REPORTED IN: (1903)

· DECLARED ON : MARCH 04-1903

· ACTS: INDIAN EVIDENCE ACT, 1877 (SECTION 115), INDIAN CONTRACT ACT (SECTION 11, 41,19,64,65)


ACTS AND SECTIONS

A. INDIAN CONTRACT ACT 1872

SECTION 11 – 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,1 and who is of sound mind and is not disqualified from contracting by any law to which he is subject.

SECTION 19 - Voidability of agreements without free consent. —When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.

SECTION 41 - Effect of accepting performance from third person. —When a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor.

SECTION 64 - The party rescinding a voidable contract shall, if he have 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.

SECTION 65 - 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.

B. INDIAN EVIDENCE ACT 1877

SECTION 115 - Estoppel. —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 representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing.


ABOUT THE CASE

The Dharmodas Ghose executed a mortgage in favour of Brahmo Dutt to secure the repayment of Rs. 20,000 at 12% interest with respect to some houses belonging to the respondent on 20th July, 1895. At that time the respondent was minor and after 2 months he attained the age of 21 years on September of the same year. In the absence of Brahmo Dutt from Calcutta, the whole transaction was carried out by his attorney KEDAR NATH MITTER and the money was advanced by his manager, DEDRAJ. It was claimed that while the transaction was being considered, the respondent’s mother and guardian, Smt. JOGENDRANUNDINEE DASI, has sent a letter through her attorney. Mr. Bhupendra Nath Bose, revealing the minority of the respondent and intimated to Mr. Kedar Nath Mitter that any money lent to the respondent would be at the lender’s own peril. The deed of mortgage contained a declaration by the respondent that he had attained majority and the mortgagee’s assent to lend him money was obtained upon assurance of the same. Mr. Kedar Nath Mitter was aware of the respondant’s status a a minor. On 10th September 1895, the respondent and his mother initiated an action for the declaration of the mortgage as void and sought cancellation of the same. This case was firstly presented in Lower Court and then in High Court of Calcutta and then in the privy council. Lower Court gave the judgement in the favour of Dharmodas Ghose and it was held that the contract was void. The court of first instance granted the relief sought by the respondent and the Appellate Court dismiss the appeal of the appellants. After the institution of the appeal, Mr. Brahmo Dutt died and this appeal was prosecuted by his executors his wife MOHORI BIBEE. This case was first filed by Dharmodas Ghose in the lower court and when then the wife of Brahmo Dutt (MOHORI BIBEE) who was his executor appealed in High Court. And then in the Privy Council.

JUDGEMENT

The judgement was, held by the privy council, that according to section 11 of the Indian Contract act 1872, the minors have no eligibility to enter into a contract. SECTION 11 of the Indian Contract Act 1872, “EVERY PERSON IS COMPETENT TO CONTRACT WHO IS OF THE AGE OF MAJORITY ACCORDING TO THE LAW TO WHICH HE/SHE IS SUBJECTED TO.” Hence, any contract with a minor is VOID AB INITIO. It is said that all the requirements under section 11 have to be fulfilled in order to constitute a valid contract.

Further, it was held that the contract with the minor is void. The minor has no capacity to contract and the mortgage was invalid. The minor cannot be compelled to repay the amount advanced to him because he is not bound by any sort of promise made by him under the contract. Also, the law of estoppel is not used for the minor.

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