Competence of Parties to Contract- MINORS- PART 1

 Section 10 of the Indian Contract Act requires that a valid contract must be made by parties (a natural or a juristic person) competent to contract. The conditions describing who is competent to contract are defined under Section 11 of the act. Section 11 of the act reads as further,

“Every person is competent to contract who is of the age of majority according to 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.”

Thus, the section declares three categories of persons as incompetent to contract:

1.     Minors- persons who have not reached their majority

2.     Persons of unsound mind

3.     Persons disqualified by law to which they are subject

We shall deal with each of these categories in detail.

 

Who is a minor?

Any person not fitting the category given under Section 3 of the Indian Majority Act, 1875 is a minor. Section 3 describes minor as-

(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 Indian Majority Act makes the age of majority uniform for almost all over India. However, in the case where a guardian is appointed of a minor for his/her person and property while he/she is still a minor, the age of majority is raised to 21 years. 

Nature of minor’s agreement- void or voidable?

No person who has not attained the age of majority is competent to contract i.e. minors are incompetent to contract. This proposition can be inferred in two possible ways;

Firstly, that minor is incompetent to contract which would render any contract void. In that case, the minor will not be able to sue or be sued for the enforcement of a contract.

Secondly, that the minor is incompetent to contract in the sense that he cannot be held liable under the contract but the other party can be in which case the contract would be voidable. In this case, the minor will not be able to be sued, however, he/she will be able to sue the other party for enforcement of the contract.

Neither section 10 nor 11 makes it clear if the contract made by a minor is void or voidable. This is a controversial question and it has been answered by the Indian Courts several times. Two such cases might be referred to-

 

1.     Mohori Bibee v. Dhurmodas Ghose

In this case, D, a minor misrepresented his age and mortgaged his house in favour of B, a moneylender to secure a loan of Rs. 20,000. While advancing the proposed amount the attorney of the moneylender came to know that D was a minor and yet he still executed the deed. Subsequently, an action was initiated by D and his mother that at the time of execution of the mortgage D was minor and thus the deed should stand cancelled. The relief was granted by the trial court and the appellate court after which an appeal was filed in the privy council. By the time the appeal was instituted the moneylender died and the suit was carried on by his legal representatives.

The privy council held that the relief of cancellation had to be granted to D as he was entitled to it under Section 39 of the Specific Relief Act, 1877 [S. 31 of 1963]. The money lender had requested that the relief should be made subject to the condition that the minor shall repay the amount that is already advanced during the execution of the deed. The moneylender relied on two sections;

Firstly Section 64 of the ICA, according to this section a person who has the right to rescind a voidable contract does so has to restore any benefit received by him to the other party. The privy council held that this section does not apply to this particular case or any other case relating to an agreement made by a minor since an agreement made by a minor is void.

Secondly, the attorney of the moneylender relied on Section 65 of ICA. This section provides that if a party has received some benefits under the contract then he/she shall have to restore it if the contract becomes or is discovered to be void. The Privy Council opined,

"that this section, like Section 64, starts from the basis of there being an agreement or contract between competent parties, and has no application to a case in which there never was, and never could have been, any contract."

Thus, it was held by the privy council that an agreement made by a minor is void ab initio (void from the very beginning).

 

2.     Sirkakulam Subramanyam v. Kurra Subba Rao

In this case, the respondent’s father owed a debt to the appellants (promissory notes) and some other people (mortgage debt) before he died. To pay the debt, the respondent and his guardian i.e. his mother sold a piece of land to the appellants to pay back the loan also requiring the appellants to pay off the mortgage debt. It was consequently paid off by the appellants and they took possession of the land. The minor later on brought an action against the appellants to claim possession of the land. It was held by the privy council that the contract was made for the benefit of the minor and was made by his guardian who was competent to contract on behalf of him and was thus binding upon him.

Thus, a contract made for benefit of the minor and by his guardian in his/her power to do so is binding upon the minor.

Hence, a contract made by a minor is void ab initio, however, if it is made through a guardian in his/her capacity to do so then it shall be held binding.

 

Effect of minor’s agreement

What is the legal effect of an agreement entered into by a minor? Ordinarily where a minor enters into an agreement then that contract is void and hence it should have no legal effects. Neither of the parties should be obligated for the performance of the contract. The effects of such agreements need to be understood in a detailed manner.

1.     No estoppel against minor

 

Suppose a minor enters into an agreement by misrepresenting his age. Can he/she be estopped to set up the defence of the minority? Section 115 of the Indian Evidence Act does not allow to take this defence as it says that

 

“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.”

 

However, the policy of the law of contracts is to protect persons below age from any contractual liability and there cannot be any estoppel against the statute, thus, a minor cannot be estopped to claim the defence of minority in any such suit. This principle was held in the case of Nawab Sadiq Ali Khan v. Jai Kishori. It was held by the privy council that,

“a deed executed by minors being admittedly a nullity according to Indian law is incapable of founding a plea of estoppel.”

 

The principle laid down, in this case was further upheld by the Bombay High Court in the case of Gadigeppa Bhimappa Meti v. Balangowda Bhimangowda.

 

2.     Tort liability

 

A minor is generally liable for torts but a breach of contract cannot be treated as a tort to hold a minor liable. This principle was laid down as early as in 1665 in England in the case of Johnson v. Pye. It was held by the court that,

 

"an infant who obtains a loan of money by falsely representing his age cannot be made to repay the amount of the loan in the form of damages for deceit".

 

This principle was further reiterated in the case of Jennings v. Rundall. In this case, the defendant (a minor) had hired a horse for a short journey but instead, he took on a much longer journey due to which the horse was injured. It was held by the court that the defendant is not liable since the action is covered under the contract. The court opined that,

"The plaintiff could not turn what was in substance a claim in contract to one in tort. You cannot convert a contract into a tort to enable you to sue an infant."

 

Hence, a minor is not responsible for anything which would lead to an indirect way of enforcing a contract. This principle is also generally followed in India.

For example, in the case of Harimohan v. Dulu Miya, the Calcutta High Court refused to hold an infant liable in tort for money that was advance to him under a bond. It was held by the court that

 

"If the tort is directly connected with the contract and is the means of effecting it and is a parcel of the same transaction, the minor is not liable in tort."

 

This principle does not however mean that a minor is exempt from any cases in tort where a contract is involved. As laid down by the Calcutta high court the minor is not liable only if it is directly connected with the contract.

For example, in the case of Jennings v. Rundall, the defendant is not liable since the action is unambiguously associated with the contract. Now suppose if a minor hired a horse for riding. But then he let his friend borrow the horse who used it for jumping then the minor would be liable because jumping was not covered under the agreement. (Burnard v. Haggis).

 

This article covered who a minor is, the nature of an agreement with a minor and two legal effects on minors if they enter into a contract.

The next article would deal with certain other effects on a minor; doctrine of restitution, beneficial contracts; and other concepts like ratification of a minor’s agreement and liability of minors for supply of necessaries.

BY,

LAWVASTUTAH

 

References-

1.     Indian Contract Act, 1872.

2.     Pollock & Mulla, The Indian Contract and Specific Relief Acts, 16th edition.

3.     Avtar Singh, Contract and Specific Relief, 12th edition.

4.     Halsbury’s Laws of India Contract, 2e 2015.

5.     Mohori Bibee v. Dhurmodas Ghose, (1903) 30 IA 114: ILR (1903) 30 Cal 539 (PC).

6.     Sirkakulam Subramanyam v. Kurra Subba Rao, (1947-48) 75 IA 115: ILR 1949 Mad 141 PC.

7.     Nawab Sadiq Ali Khan v. Jai Kishori, AIR 1928 PC 152: 30 Bom LR 1346: 109 IC 387.

8.     Gadigeppa Bhimappa Meti v. Balangowda Bhimangowda, AIR 1931 Bom 561.

9.     Johnson v. Pye, (1665) 1 Sid 258: 82 ER 1091.

10.  Jennings v. Rundall, (1799) 8 TR 335: (1799) 101 ER 1419.

11.  Harimohan v. Dulu Miya, ILR (1934) 61 Cal 1075.

12.  Burnard v. Haggis, (1863) 4 CBNS 45: 8 LT 328.