Status of contracts by minors

Bibliography and index

Submitted To
Mrs. Balwinder Kaur
Faculty of Law of contracts

Submitted By
Sahaj Puri
B. A. LL. B. (Hons.) Student
Semester V, Section C, Roll No. 137

Hidayatullah National Law University

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Acknowledgements
Thanks to the Almighty who gave me the strength to accomplish the project with sheer hard
work and honesty. This research venture has been made possible due to the generous cooperation of various persons. To list them all is not practicable, even to repay them in words is
beyond the domain of my lexicon.
This project wouldnt have been possible without the help of my teacher Mrs. Balwinder Kaur
the Faculty of Law of contracts at HNLU, who had always been there at my side whenever I
needed some help regarding any information. She burnt himself as Candle and enlightened my
path towards success. I would also like to express my gratitude towards administration which has
also been kind enough to let me use the facilities for research work.

Name -Sahaj Puri

Roll no. 137
Semester - V
Section - C

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Index to contents
1.
2.
3.
4.
5.
6.
7.
8.
9.

Introduction
Objective of study
Research methodology
Explanation of doctrine
Situation where there are multiple causes for injury
Situations where doctrine applies
Development of doctrine in India
Conclusion
Bibliography and Webiography

4
5
5
6
9
10
14
15
16

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INTRODUCTION
Section 2 (h) of the Indian Contract Act, 1872 defines a contract as: An agreement
enforceable by law is a contract. Contract is a combination of agreement and
enforceability. Creation of obligation on the part of the parties to an agreement to perform
their liabilities gives the cause of enforceability of an agreement. The nature of agreement
is then changed into a contract.
According to Section 3 of the Indian Majority Act, 1875, a minor is one who has not
completed his 18th year of age. So a person becomes a major after the completion of 18
years of life. To this rule there are two exceptions:
(i)

When a guardian of the minors person or property is appointed by a court of

law;

(ii)

When a minors property is taken over by the court of wards for management.

In either of these two cases minority continues up to the completion of the 21st year.
In India Section 11 expressly provides that the age of majority of a person is to be
determined according to the law to which he is subject. The Courts of Law used to decide
the competency of contract by the law of domicile and not by the law of the place where
the contract is entered into. But the later trend of law for determining the age of majority
is:
(a) In the case of contracts relating to ordinary mercantile transactions, the age of
majority is to be determined by the law of the place where the contract is made;
(b) In the case of contracts relating to land, the age of majority is to be determined by
the law of the place where the land is situated.

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OBJECTIVE OF STUDY :
The basic objective of my study is to carry out a detailed study of nature of contracts by minors
under law of contracts.

RESEARCH METHODOLOGY
This project work is descriptive & analytical in approach. Books, internet articles & other
references as guided by faculty of Law of contracts are primarily helpful for the completion of
this project.

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LAW REGARDING MINOR CONTRACT

1. A contract by a minor is absolutely void: A contract by a minor is absolutely void

and inoperative. Further where a minor is charged with obligations and the other
contracting party seeks to enforce those obligations against minor, the contract is
deemed as void ab initio. A minors contract being absolutely void, neither he nor the
other party acquires any rights or incurs any liability under the contract. So a minor is
neither liable to perform what he has promised to do under a contract, nor is he liable
to repay money that he has received under it. The principle behind this ruling is, a
minor is incapable of judging what is good for him. A minor, however, can derive
benefits under the Act. That means, a minor can be a beneficiary i.e. a payee, an
endorsee or a promise under the Act. A minor has no legal competency to enter into
a contract or authorise another to do so on his behalf. 1 Since minor is not competent
to contract, every such agreement entered into by a minor is void ab initio. 2

2. A minor cannot be compelled to compensate for or refund any benefit which he

has received under a void contract: Section 64 and 65 of the Contract Act, which
deal with restitution, apply only to contracts between competent parties and are not
applicable to a case where there is not and could not have been any contract at all.
It has also been observed in many cases that the court may, on adjudging the
cancellation of an instrument at the instance of a minor, require the minor to make
1 Sri Durga Thakurani Bije Nijigarh vs Chintamoni Swain And Ors. on 16 March, 1982,

AIR 1982 Ori 158

2

Mohori Bibee vs. Dharmodas Ghose (1903) 30 Cal 539

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compensation to the other party to the instrument. If the plaintiffs claim to order the
cancellation of mortgage is allowed, the plaintiff should be asked to refund the loan
taken by him, according to Section 64 and 65 of the Indian Contract Act, 1872.3

3. A minor cannot ratify an agreement on attaining majority: Ratification means

consenting to a past contract entered into during minority at a future date on attaining
majority. A minors contract being nullity and void ab initio has no existence in the
eye of law. Therefore, a minor on attaining majority cannot ratify a contract entered
into while he was a minor. The reason is that a void contract cannot be validated by
any subsequent action and a minors contract is void ab initio. ratification of
a contract entered into by a person during his minority is void and unenforceable. In
the course of his judgment he referred to cases in which on receiving a further
advance a minor after attaining majority had ratified the contract entered into by him
during his minority and it was held that the ratification was valid and binding and he
did not adversely criticise those cases. consideration received by a minor during
his minority cannot be a good consideration for ratification after he has attained
majority. 4

4. Minors liability for necessaries supplied to him or to anyone whom the minor is
bound to support: The case of necessaries supplied to a minor is covered by Section
68 of the Contract Act which provides as follows-If a person incapable of entering
into a contract, or anyone whom he is legally bound to support, is supplied by another

Mohori Bibee vs. Dharmodas Ghose (1903) 30 Cal 539

4 Anant Rai And Anr. vs Bhagwan Rai And Anr., 11 September, 1939, AIR 1940 All 12
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person with necessaries suited to his condition in life, the person who has furnished
such supplies is entitled to be reimbursed from property of such incapable person.

The minors property is liable for the payment of a reasonable price and not the price
for necessaries supplied to the minor or to anyone whom the minor is bound to
support. What is a necessary article is to be determined from the status and the social
position of the minor.
The law as it stands permits a de facto manager to borrow money for the necessity or
benefit of the minor's estate so as to make the minor's estate liable for the loan when
he can do so without making out a contract between the minor and the creditor. 5

5. The Rule of Estoppel does not apply to a minor:

Section 115 of the Indian

Evidence Act explains that-The principle of estoppel is a rule of evidence. When a

man has, by words spoken or written or by conduct, induced another to believe that a
certain state of things exists, he will not be allowed to deny the existence of that state
of things. Lord Halsbury has written that-Estoppel arises when you are precluded
from denying the truth of anything which you have represented as a fact, although it is
not a fact. In India it has been held that the court can direct the minor to pay
compensation to the other party in cases where an infant obtains a loan by falsely
representing his age he cannot be made to pay the amount of the loan as damages for
fraud, nor can be compelled in equity to repay the money.

6. Specific Performance Order by Court will never be issued to a minor: As we are

aware that an agreement by as minor is absolutely void, the court will never direct
5 Minor Ramalingam Reddi By Next vs Babanambal Ammal, AIR 1951 Mad 431, (1950)

2 MLJ 597
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specific performance of such a contract by a minor. But a contract entered into, on

behalf of a minor, by his guardian or by the manager of his estate will be binding on
the minor and can be specifically enforced by or against the minor provide(i)

The contract is within the authority of the guardian or manager;

(ii)

It is for the benefit of the minor.

7. Minor as a Partner: Law says that -A minor being incompetent to enter into
contract cannot be a partner in a partnership firm; but under Section 30 of the Indian
Partnership Act 1932, he can be admitted to the benefits of partnership with the
consent of all the partners by an agreement executed through his lawful guardian with
the other partners. Such a partner will have a right to receive share of the property or
profits of the firm and can have an access to and inspect the books of account of the
firm. The minor cannot participate in the management of the business and can bear
losses of the firm only up to the extent of the capital contribution in the firm. He
cannot be made personally liable for any obligations of the firm, although he may
after attaining majority accept those obligations if he thinks fit to do so. Section
248 of the Indian Contract Act makes a minor who has been admitted to the benefits
of a partnership within the meaning of Section 247 liable on attaining majority for all
obligations incurred by the partnership since he was so admitted unless he gives
public notice within a reasonable time of his repudiation of the partnership.6

8. Minor as an Agent: A minor can be appointed as an agent (Sec 184). He can draw,
make, indorse and deliver negotiable instruments so as to bind all parties except
himself. In other words, it can be said that a minor can bind the principal by his acts

6 The Official Assignee Of Madras vs V.P.L.R.M. Palaniappa Chetty, (1918) 35 MLJ 473
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done in the course of the agency, but he cannot be held personally liable for
negligence or breach of duty.

9. Minor and the insolvency: A minor cannot be adjudicated as an insolvent as he is

incapable of entering into contracting debts. Even for the necessaries supplied to him,
he is not personally liable, only if his property is liable (Sec 68).

10. Contract by a minor and a major jointly: Where a minor and a major jointly enter
into a contract with another person the minor has no liability but the contract as a
whole can be enforced against the major. when the contract is several and not merely
Joint and when the fact that the other part of the contract which is severable is
between persons who are minors, the minority of others cannot be a bar to the claim
for specific performance between the major parties.7

11. Surety for a minor: A contract by s minor is void, but a contract by a guardian on
his behalf is valid. Where a guardian enters into a contract in respect of his property
on behalf of the minor, it is valid, provided it is for his benefit or for legal necessity.

12. Position of minors guardian: A contract entered into by the guardian of a minor on
his behalf stands on a different footing from a contract entered into by a minor
himself. A contract by a minor is void but a contract by a guardian on his behalf is
valid provided the obligations undertaken are within the powers of the guardian. A
contract made by the guardian is binding on the minor if it is for the benefit of the
minor or is for legal necessity.
7 Dasarath Gayen vs Satyanarayan Ghosh And Ors. AIR 1963 Cal 325, 67 CWN 110
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13. Minor as shareholder: According to Contract Act, a minor being incompetent to

contract can not be a shareholder of the company. Therefore a company can refuse to
register, transfer or transmission of shares in favour of a minor unless the shares are
fully paid. A minor acting through his lawful guardian may become a shareholder of
the company, in case of transfer or transmission of fully paid shares to him.

14. Minors Position and Liability in Tort: Tort is a civil wrong. So, minors position in
civil wrong is that- A minor is liable for his tort, i.e. a civil wrong unless the tort is in
reality a breach of contract.

15. Minors marriage: Minors contracted by their parents and guardians is valid. It is
valid on the ground of the custom of the community.

16. Relinquishment by a minor: A release by a minor of his rights in a property is

absolutely in fructuous in law.

17. Service contracts:

(i)

A contract for personal service by a minor is void under the Indian law and the
mere fact it is for his benefit would not entitle the minor to sue under the contact.

(ii)

A minor may bind himself by a contract of apprenticeship if it be for his benefit

but he can not be used for failing to serve as such.

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(iii)

Contract with minor does not create legal contractual relationship between the
parties. Minor girls entering into a contract of service a person can leave the
service at any time without committing any actionable wrong.

18. Minors Parents:

The parents of a minor cannot be held liable for any contract that a minor enters into.
However, they can be held liable in case the minor is acting as their agent.

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DISTINCTION BETWEEN INDIAN AND

ENGLISH LAW AS TO MINORS CONTRACT
The English Law is the principal source of Indian Law. But the Indian Law differs from
the English Law on the subject of minors contracts on the following points:
1. In India the minors contract is altogether void but in England it is sometimes void
and sometimes voidable. In England the loan of money to a minor is void.
2. In India, a minor can ratify a fresh consideration of a contract entered into during
minority where as in England he cannot do so.
3. In India a minor on attaining majority can neither sue nor be sued on contracts
entered into by him during minority but in England he can sue on the contract for
damages.
4. In India a minors property is liable for the necessaries and not his personal self
acquired property but in England the minor is personally liable.
5. In India there can be no specific performance by or against the minor unless it is a
contract entered into by a guardian on behalf of the minor sand the minors
benefit. In England there can be no specific performance for want of mutuality in
the contract.

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Conclusion
A minors contract being absolutely void, neither he nor the other party acquires any
rights or incurs any liability under the contract. So a minor is neither liable to perform
what he has promised to do under a contract, nor is he liable to repay money that he has
received under it. Where a minor and a major jointly enter into a contract with another
person the minor has no liability but the contract as a whole can be enforced against the
major.
The court will never direct specific performance of such a contract by a minor. But a
contract entered into, on behalf of a minor, by his guardian or by the manager of his
estate will be binding on the minor and can be specifically enforced.
Also he cannot be compelled to compensate for or refund any benefit which he has
received under a void contract and cannot ratify a contract entered into while he was a
minor but minor cannot be adjudicated as an insolvent as he is incapable of entering into
contracting debts. Even for the necessaries supplied to him, he is not personally liable,
only if his property is liable.
If a person incapable of entering into a contract, is supplied by another person with
necessaries suited to his condition in life, the person who has furnished such supplies is
entitled to be reimbursed from property of such incapable person.

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Bibliography and Webiography

Bibliography

Tort Law - B. S. Markesinis; S. F. Deakin

Law of Torts - Gerald J. Postema
The Law of Torts Ratanlal and Dhirajlal The Law of Torts
Law of Torts - Dr. N.V. Paranjape

Webiography-

http://e-lawresources.co.uk/Tort-law.php
https://indiankanoon.org
http://definitions.uslegal.com
www.lawmentor.co.uk
www.academia.edu
www.lawteacher.net

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