Introduction:
A party’s legal competency to contract refers to its ability to engage in an agreement. A person’s capacity also means that they are legally competent. When someone has attained the legal age, their capacity is also determined. One of the essential criteria is that the parties must be competent to contract, according to Section 10 of the Indian Contract Act, 1972. Section 11 states the following:
“Every individual who has reached the age of majority under the laws that apply to him is of sound mind and is not barred from contracting by any law to which he is subject is competent to contract.”
It suggests that the following 3 groups of people are not capable to make an agreement:
(1)An individual who still hasn’t attained the legal age. i.e., a minor.
(2) A person of unsound mind, and
(3) An individual who has been legally prohibited from contracting.
Regardless of whether or not the aforementioned groups of people are not legally capable of contracting, they may occasionally make deals, accept advantages, and so on.
The Position of Minor
Who is Minor
A person who is under the legal age is referred to as a minor. Section 3 of the Indian Majority Act, 1875 defines the legal age. It ensures that an individual is considered to have reached majority when he is 18 years old, except if the court decided to appoint a guardian of a child person or property, in this situation, the legal age is 21 years old. “Under the legislation to which he is subject,” a person’s legal age is determined.
The majority age in England is eighteen years. Previously, the majority age in England was 21 years. But now “A minor is someone who is below the age of 18 years,” according to the Family Law Reform Act of 1969. A minor was previously referred to as an “infant,” but the law amended the term to “minor.” The Indian Majority Act was modified in 1999. The amendment removed the provisions which fixed the legal age of 21 years old in two exceptional cases. In all circumstances, a person now acquires majority at eighteen years.
Nature of Minor’s Agreement
Section 10 states that the contracting parties must be competent, while section 11 states that minors are not competent. However, neither clause specifies whether a minor’s agreement is voidable at his discretion or completely void. Therefore, this clause had inevitably raised questions regarding the essence of a minor’s agreements. The argument was eventually concluded in 1903 by the Judicial Committee of the highest court in MohoriBibee v DharmodasGhose (1903),[1]a well-known decision. A minor’s agreement has been declared null and void.
The facts of Mohori Bibee v Dharmodas Ghose were that the petitioner, Dharmodas Ghose, leased his property in favour of the defendant, Brahmo Dutt, a moneylender when he was still a child in order to acquire a loan. The petitioner was a child at the time of the agreement and the moneylender knew it. The minor filed a lawsuit against the moneylender, claiming that because the plaintiff was a child when the mortgage was completed, the mortgage was void and should be revoked. The defendant contended that-
1. Because the plaintiff falsely misrepresented his age, the doctrine of estoppel should be imposed on him, and no remedy should be granted to him:
2. If the plaintiff’s mortgage is terminated as requested, the child should be ordered to repay the Rs. 10,500 loan he took out.
The defendant’s arguments were dismissed. The minor’s agreement was declared null and void, and it was ruled that the plaintiff could not be ordered to return the debt he had taken.
When a Minor can Contract
Because any contract with a minor that is, anybody under 18 years old, is void from the start, any minor contract that is being executed is void ab initio (from the beginning), neither he can himself enter into an agreement nor does he authorise an agent to act on his account. A child will be unable to accept the same agreement even if he attains a majority. The difference is if a minor’s agreement is void and unenforceable, however, it is not illegal since no legal obligation exists.
Even if a child is incapable of entering into a contract, he could be the beneficiary of a contract. Therefore, a contract with a minor can be carried out for his or her interest. The purpose of creating a minor’s contract void is to prevent him from unfair transactions. As a result, a minor should only be provided protection insofar as it is essential to defend his interests, and not beyond that.
Consequences of a Minor’s Contract
Because a minor’s agreement is void, it should be exempt from any consequences. If no agreement exists, neither party should have any contractual obligations. As a result, all of the outcomes of a minor’s agreement must be dealt out without regard to any agreements.
No Estoppel Against a Minor
The issue is whether the rule of estoppel is applicable on a minor who misrepresents his legal age at the time of the agreement forbidding him from claiming that he was a child at the period of the agreement. If you make a statement today that misleads another person, you are not permitted to refute the statement tomorrow when the question of your accountability arises, as per Section 115 of the IEA. The question of estoppel has come up in a few circumstances. The child in the MohoriBibee case misled his age while getting a loan, although the person lending the loan was aware of his identity as a child. As a result, the court did not think it was essential to assess whether section 115 of the IEA applied in this situation because the defendant was not been deceived. The Lahore HC ruled in Khan Gul v Lakha Singh[2]that minors are exempted from the rule of estoppel. The rationale, on the other hand, was different. The doctrine of estoppel, which is a rule of evidence, is a basic provision as per the court, that must be read in light of the special law provided in the Indian Contract Act, which declares that a minor’s contract is invalid.
Doctrine of Restitution
Under the equitable theory of restitution, if a child receives an unfair benefit in a transaction, he is obligated to repay that benefit. It only applies to commodities and property received by a child as long as they’re being tracked and are still in his possession. Money is excluded from the notion because it is hard to distinguish money. Restitution could not be applied to goods and property that are used or transferred and cannot be traced.
Leslie v Sheill,[3]explains the doctrine. The respondent, a child, misrepresented his age in order to get two loans from the plaintiffs, that were money creditors. The petitioner filed a lawsuit for the full amount of the loan plus interest. According to the tribunal, the amount cannot be retrieved. If this is permitted, it may mean executing an agreement against a child, which is against the law.
Minors Accountability in a Tort as well as in Breach Of Contract
As previously stated, an agreement entered by a minor is void, and as a result, if a child breaches an agreement, he can’t be held accountable. When a minor commits a tort, he is held responsible in the same way and to a similar extent as a grown-up. A child’s actions can sometimes be both a breach of contract and the conduct of a tort. In Johnson v Pye,[4]a minor took a loan by falsely stating that he was of legal age. The court found that the child could not be forced to repay the loan given to him by filing a deceitful case against him. Similar was the decision in Jennings v Rundall, a child who had rented a horse for riding wounded her by riding too fast. It was decided that the child cannot be held responsible for negligence since that would suggest that the child was accountable for breaching the bailment contract.
Although when a complaint under tort law implies informal contractual enforceability it is not allowed, the suit for the same is not permissible.
In Burnard v Haggis,[5]a mare was rented by a child. It was ruled that the mare would only be used for riding and not for “jumping and larking.” The mare was forced to climb over a fence before being impaled and died. Because his acts were in breach of the agreement he had signed, the child was declared to be liable for the mare’s death.
Ratification of the Minor’s Agreement
Because a minor’s agreement is invalid from the start, it isn’t possible to ratify it by later approval once the minor has reached its legal age. A void agreement sometimes known as a dead letter, could not be resurrected and cannot serve as legal consideration for a future agreement, hence, an agreement entered into by a child while still in his or her minority could not be affirmed. It was stated in the case of Bhola Ram v Bhagat Ram.[6]Every transaction requires its own consideration, and consideration from a previous contract cannot be transferred to the contract that the minor joined upon reaching the majority. If an individual obtains a portion of a benefit while still in his minority and another portion after reaching majority, a commitment by the child to repay for all, if promised after reaching the majority, is legal and binding.
Minor’s Accountability for Necessities
A child is unable to enter into an agreement to pay for any services or goods provided to him, and his agreement is void. However, compensation is permitted to the individual who supplies the necessaries to a child. This is because it is considered a quasi-contractual duty rather than a binding agreement among both parties. Section 68 of the Contract Act provides for compensation for necessities provided to minors. Section 68 states that the necessities provided to a child “shall be suitable to his living situation.”In Clyde Cycle Co. v Hargreaves,[7]A racing cycle was believed to be required for a minor apprentice. Furthermore, InKunwarlal v Surajmal,[8]it was ruled that a residence provided to a child on rent given for the intention of living and completing his studies is considered a supply of necessities relevant to the child’s situation in life, and the rent for the property can be reclaimed.
Position of Minor in Partnership
A contract gives rise to a partnership. Consequently, the partnership’s contracting parties must be capable of contracting. A child who is incapable to negotiate is not permitted to join as a partner. The agreement is unenforceable, and the deed enshrining their partnership is invalid even among the other main partners, if a minor is declared a full-fledged partner with other significant people. It was stated in Dharam Vir v Jagan Nath, (1968).
Minor’s Capacity to Contract Under English Law
Under English law of contract, a child or minor is anybody below the age of 18 years old. Until the Family Law Reform Act of 1969, the age of majority was 21. In general, a child is not bound by contracts he enters into, but the adult person with whom he enters into them is. Once a child reaches the age of majority, he might choose to ratify a contract established while he was still a minor. This rule applies to a number of contracts that a child is bound by, in addition to his abilities to repudiate those agreements. When an agreement provides minors with “necessaries,” or goods & services that are deemed essential or beneficial to them, they are bound by law. This clause is codified in Section 3 of the SOGA, 1979.
Although contracts for necessities can legally bind minors, It is possible that the conditions of such an agreement will be unenforceable. When a contract has exceptionally oppressive or unreasonable conditions, the courts may decide that a child is not lawfully competent of being bound by it. For instance, In a case where a child hired a car and crashed it through no fault of his own, the owner was unable to collect since the contract term placed the car fully at the risk of the child. A minor’s needs will not always be like those of another minor. Different outcomes may be produced based on the terms, such as age and immediate needs.
The 1874 Infants’ Relief Act further considers the following types of minor agreements “totally void” in England.
1. contract for money given or may be leased,
2. contract for commodities provided or being delivered (other than essential), and
3. contract for accounts stated.
Conclusion
It is not the case that a minor’s agreement is always “absolutely void” is conceivable, much less acceptable in today’s culture. Minors are more visible in public today than they have ever been. A child must travel to get his clothes fitted or cleaned, to go to the movies, and to leave his bicycle at a stand. He is responsible for coping with educational institutions and purchasing a wide range of items for the comfort of life and education. If the opposing party to the contract could dismiss the minor because the engagement is unlawful in any of these situations, minors’ legal protection from contractual liability would be put at risk.
The judgement of their Lordships in Srikakulam Subrahmanyam v KurraSubba Rao[9]reflects this trend. A minor child and his mother sold an area of land to the appellants in satisfaction of his father’s debts, which included promissory notes owed to the appellants and a mortgage owed to another, forcing the appellants to pay off the mortgage debt. Consequently, the appellants paid off the mortgagee and acquired possession. Following that, the plaintiff filed an action to reclaim the land. It was proved that the transaction was in the child’s best interests and that the guardian had the capacity to contract on his account. Section 11 and the MohoriBibee case were used as evidence that a minor cannot contract and therefore the transaction would be invalid if the custodian and parents were not involved. Because the contract was for the welfare of the child and was within the guardian’s power, they were held to be bound by it.
Other Sources:
- Dr. R.K. Bangia, Indian Contract Law, Allahabad Law Agency.
- Sylvine, Minor’s Capability To Enter Into A Contract, available on iPleaders, https://blog.ipleaders.in/minors-capacity-enter-contract/
- Avtar Singh, Contract Law and Specific Relief, Twelfth Edition.
References:
[1](1903) 30 I.A. 114 (P.C.)
[2]AIR 1928 Lahore 609
[3](1914) 3 K.B. 607.
[4](1665) 1 Sid 258.
[5](1863) 32 L.J.C.P. 189.
[6]AIR 1927 Lahore 24, 26
[7] AIR 1898, 78 L.T. 296.
[8]AIR 1963 M.P. 58.
[9](1947-48) 75 IA 115: ILR 1949 Mad 141 PC.
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