NATURE AND EFFECT OF MINOR’S AGREEMENT

Author : Arisha Anam

INTRODUCTION

A minor’s agreement is a lot of guarantees or a legally binding agreement having one party as a minor. Minor is viewed as incompetent to contract under the Indian Contract Act, 1872. This is so in light of the fact that minors are not full grown enough to be dependable regarding lawful issues. A consent to turn into an agreement must be enforceable by law[1]. Consequently, one of the fundamentals of a substantial agreement referenced in Indian Contract Act, 1872 is that the parties to the agreement ought to be capable to make the agreement. The accompanying people are equipped to contract:

1. People who have attained the age of majority
2. People of sound mind
3. Person not precluded from any law for contracting[2]

Henceforth, a minor is not skilful to settle on a concurrence with another party and any understanding made by him will be void ab initio (from starting).

MEANING OF MINOR

An individual who is below the age of majority is a minor. An individual attains the age of majority when he finishes 18 years old under ordinary conditions. In any case, when a kid has been dealt with by a guardian appointed by the Court, the time of majority stands to be 21 years old. The child raised in orphanage, for instance, have 21 as their period of majority.[3] In such cases majority doesn’t emerge till 21 years old, regardless of whether the guardian dies.

NATURE OF MINOR’S AGREEMENT

VOID AB INITIO

A landmark case: Mohori Bibee v Dharmodas Ghose[4]

This case delivers a milestone judgment in regards with the impact of minor’s understanding and illuminated the issue whether minor’s agreement is void or voidable. In this case the petitioner (Dharmodas Ghose), when he was a minor, sold his property to moneylender, the respondent (Brahmo Dutt) to make sure about a credit of Rs. 10,500. Around then however, the attorney of moneylender got to know about the reality of his minority. Moneylender was at that point, sued by the minor for requesting reimbursement of credit. Brahmo Dutt had passed on when of Appeal and it was subsequently indicted by his agents. The respondent contended that:

1. Law of estoppels ought to be applied against minor, since he deceitfully spoke to his age and that he can’t deny his past portrayal by taking double position.
2. On the off chance that the home loan is dropped, the advance sum ought to be taken care of to him by the minor, under Sections 64 and 65 of the Indian Contract Act, 1872.

The Privy Council dismissed the respondent’s contention and held that:

• Minor’s agreement was held to be void ab initio and that offended party cannot be made to reimburse the sum back to litigant. Minor was permitted to argue his minority and consequently, the understanding was made void.
• Law of estoppels, as expressed in Section 115, Indian Evidence Act, was not appropriate for this situation, as lawyer had the information on the verified realities and was not deceive.
• Section 64 says that if an agreement is voidable at the option of a party, rescinds it, the other party need not to fulfil the promise and the party rescinding it, must re-establish the benefits accumulated by him under the contract to other party. The Privy Council held that, this Section would not be appropriate for the present case since it relates with voidable agreement and not void agreements. In addition, the section relates to competent party, and not incompetent parties.
• Section 65, which says that benefits, if any, accumulated through a void contract, must be restored to the other party. The Council dismissed the appropriateness of this section too in the current case, and held that minor can’t be approached to reimburse back the advance sum.
• The respondent guaranteed refund of loan  under Section 41, Specific Relief Act, 1877, which requires the party to whom relief is allowed to make any remuneration to other on adjudication of cancellation of an instrument. The Privy held that since information on earliest stages was known to lawyer, hence the return of money to the minor was not required.

Henceforth, agreement made with a minor is void ab initio.

MINOR AS BENEFICIARY OR PROMISEE

Minor can be a promisee or beneficiary to any contract  given that it gives some advantage to the minor. Testaments and Insurance, are for instance, valid contracts. Nothing in Contract Act, keeps him from making the other party bound to the minor. Accordingly, a promissory note executed for a minor is not void and can be sued upon by him, since he however incompetent to contract, may yet acknowledge an advantage.

MINOR AS PRINCIPAL, AGENT AND PARTNER

A minor can be an agent, yet he would not be liable for the acts done by him on account of his principal.[5] Thus, minor cannot be held only liable for his act. Principal will only be liable for the contract made by third party and the minor is liberated from any obligation. However, a minor cannot be a principal.[6] In a partnership firm, minor can be accepted as partner just with the assent of all and must be given, just with advantages of the firm, not with the liabilities.[7]

MINOR AS SHAREHOLDER

Law of contract debars a minor to become a shareholder as he is incompetent to enter into the contract. But if by mistake any minor became the shareholder then the company or firm has the right to rescind the transaction agreed upon. However, he(minor) can become the shareholder on behalf of his guardian. Moreover, minor cannot effectively purchase any shares in the company, it is necessary that the said shares must be gifted or transferred to him of which personal liability will not be on him. It is the right of the guardian to safeguard and protect the shares of minor.

RATIFIACTION OF MINOR’S AGREEMENT

Ratification implies to the acts which is previously done and accepting them. It must be accomplished for acts which were substantial at the time of forming the agreement. A minor cannot ratify agreement , made during minority, when he attains the majority. This is so in light of the fact that the agreement is void ab initio, i.e., from the beginning and can’t be approved subsequently. In such cases, another agreement has to be made after attaining  the age of majority by a minor. A void agreement is a dead letter which cannot be considered alive and cannot be ratified after substantial thought. Suraj Narain v Sukhu Aheer[8], is a well-known case in such regard. In this case, an individual obtained cash when he was a minor and in this way made a new promise after he achieved majority to pay back the money borrowed alongside premiums. The inquiry to decipher was that whether the consideration got during minority can comprise a decent thought in the wake of achieving majority. The Allahabad High Court held that, consideration got by an individual during minority can’t be a substantial consideration in the wake of attaining majority and can’t be made valid for the new promise. The promisor, was held to be not liable for such promise establishing void agreement.

RATIFICATION ON MINOR’S BEHALF

Section 183 of the Indian Contract Act, 1872 says that any individual who is of sound mind and is major may employ an agent. Subsequently, a minor’s agreement being void ab initio, a minor cannot employ any agent to work on his direction. Since, the acts once sanctioned, gets the legitimacy of a and act must be lawfully approved.

NO ESTOPPEL AGAINST MINOR

At the point when one individual has deliberately caused or allowed someone else to accept a thing to be valid by his act, he or his delegates won’t be permitted, in future, to deny upon that very fact.[9] This characterizes the Law of Estoppel. Be that as it may, minors are an exemption to this standard and they can argue minority, despite the fact that at time of making agreement, they distorted their age. In Vainkuntarama Pillai v Authimoolam Chettiar[10], the Madras High Court held that a minor being unfit to contract, can’t acquire any risk and the law of estoppels can’t overrule this provision.

In Sadiq Ali Khan vs. Jai Kishori[11], a minor executed a deed for the offended party who was ignorant of his minority. The respondent, the minor, had spoken to that he was a major and the offended party followed up on that representation. The law of agreement managed its protection to the respondent in spite of his fake misrepresentation.

NO RESTITUTION

At the point when an agreement gets void, any individual accepting any advantage under the agreement must restore the same to the other parties or should make due compensation.[12]However, minors are a special case to this regulation. They are excluded from restoring the benefits to the other party to the contract.

COMPENSATION BY MINOR IN CASE OF FRAUD

Although, a minor isn’t subject to reimburse benefits got under void agreement, Section 33 of the Specific Relief Act, 1963, accommodates the instalment of cash remuneration by a minor whether the minor is the offended party or litigant, when there is cancellation of instrument and the advantage is recognizable. The position is as under:

1. In the event that a minor goes to Court as offended party for cancellation of an instrument, the Court may, on pronouncing the wiping out, require the minor to restore the benefits and to make only remuneration to the other party.
2. At the point when minor is respondent and he opposes the requirement of suit on the ground of incompetency to contract, the Court may request that he restore the benefits to other party.

NECESSITIES SUPPLIED TO MINOR

Minor is subject to pay out of his property for the necessaries provided to him by the other.[13]“Necessaries” mean products basic with the end goal of life of an individual and to his genuine prerequisites, which are offered to him.[14] For instance, a house given to a minor on lease for his investigations, in a need and lease can be recovered from minor’s property. But for that two conditions must be followed up:

1. The agreement must be for the products reasonably vital for his help in the station throughout everyday life.
2. The minor must not have effectively a sufficient supply of these necessaries.

Necessaries mean those things that are basically required by a minor. They can exclude extravagances or on the other hand exorbitant or superfluous articles. Necessaries stretch out to every single such thing as sensible people would gracefully to a baby in that class of society to which the new-born child has a place. Costs on minor’s instruction, on burial service functions come surprisingly close to the word ‘necessaries’.

JOINT CONTRACT BY MINOR AND ADULT

In this case,  when a minor is in contract along with the adult then no liability arises upon the minor. The whole liability will be recurring upon the adult or major person in the contract. In Sai Das vs. Ram Chand,[15] where there was a joint purchase by two buyer, one of them was a minor, it was held that the vendor could authorize the agreement against the significant buyer and not the minor.

SUM IT UP

A minor’s agreement is void ab initio since they need foresightedness, information and aptitudes to go into lawfully binding agreement. With the exception of it in instances of necessities, apprenticeship and guardian’s agreement, minor’s agreement is a dead letter and have no bearing upon the parties to contract. A minor can be admitted to the benefits of agreement however cannot continue liabilities. As an agreement becomes contract just when made with the free assent of capable parties which is enforceable by law[16], an agreement made with the “incompetent” minor becomes nullified or invalid.

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[1] Section 2(h), Indian Contract Act, 1872

[2] Section 11, Indian Contract Act, 1872

[3] Section 3, Indian Majority Act, 1875

[4] ILR (1903) 30 Cal. 539 (PC)

[5] Section 184, Indian Contract Act, 1872

[6] Section 183, Indian Contract Act, 1872

[7] Section 30, Indian Partnership Act, 1932

[8] AIR 1928 All. 440

[9] Section 115, Indian Evidence Act, 1872

[10] ILR (1915) 38 Mad. 1071

[11] AIR 1928 PC 0152 

[12] Section 65, Indian Contract Act, 1872

[13] Section 68, Indian Contract Act, 1872

[14] Jagon Ram vs. Mahadeo Prasad Sahu, (1909) ILR 36 Cal 768

[15] (1923) ILR 4 Lah. 334

[16] Section 10, Indian Contract Act, 1872