Contracts made by Minors

Minors suffer from mental deficiency. They have no Capacity to Contract. According to Indian law those persons who have not completed the age of 18 years are minors and in England Minority extends up to 21 years.

Contracts made by Minors as per England law

In accordance with England law Minor Contracts can be classified into 3 groups. namely; Valid Minor Contracts, Voidable Minor Contract and Void Minor Contracts.

Valid Minor Contracts: If Minor Contract is made for necessaries, then it is Valid.
  • Example: A case on this point is Nash Vs Inman. In this case A is a tailor and B is a minor and under graduate. In England Court is necessary to graduate and luxury to undergraduate. By means of that Contract B gets 11 coats from A on Credit basis. Thereafter B gets failed in the graduation examination and doesn't pay amount to it. A files a suit. Court decides that coat is not necessary and hence the Contract is Void.
  • Another case on this point is Robert Vs Grey. In this case A is a billiards player and B is a minor. As per their Contract A has to provide for coaching to B upon certain consideration where B has selected billiards game as his livelihood. Afterwards B fails in paying amount to A. Court decides that the Contract is related to necessaries and therefore Valid.
  • Another case on this point is Ryder Vs Woombwell.
Voidable Minor Contracts: Partnership agreements and marriage agreements made by minor are Voidable Contracts as per the provisions of England law. After becoming major, he may or may not execute that Contract. It should be noted that those Contracts are Voidable at the option of minor.

Void Minor Contracts: On all other situations, Contracts made by minor become Void.

Contracts made by Minors as per Indian law

Minor Contracts are ab-initio Void: Contracts made by minors are Void from the beginning itself.
  • Example: A case on this occasion is Mohirb bee bee Vs Dharmabas Ghosh.
Ratification is not Valid: A Contract made by minor cannot attain Validity though it is ratified after becoming a major. Since minor contract is ab-initio Void, ratification cannot bring Validity.
  • Example: Related case is Arumugan Vs Dorai Singh. In this case A is a money lender and B is a minor. A contract of loan gets formed between them before repayment of loan, B becomes a major and upon money lender`s request, B executes another deed in support of debt which is taken during minority. Upon his failure from A files a Suit on the basis of second deed which is given after attaining majority. Court decides that the Second bond also is not Valid because it is just ratification of Minor Contract.
Estoppel principle is not applicable to Minors: Though there is very strong evidence to say that a person is a major, without applying Estoppel principle, chance will be given to that person to prove minority.
  • Example: Related case is Sadiq Ali Khan Vs Jaikishore. In this case A and B are moneylender and minor respectively. Upon A`s suggestion, the minor executes a deed saying that he (B) is a major and thus obtains loan. Thereafter a Suit is filed for recovery. Court decides that the situation is out of applicability of Estoppel principle and hence a chance is given to B to prove his minority.
Restitution of fraud: Law has given and certain protection to minor. Minor should make use of such protection for defense purposes only and not for offence purposes. If minor fraudulently obtains property, then he is under obligation to return that property to person concerned. But the provision differs if it is matter of money.
  • Example: A case on this point is Lesly Vs Sheele. In this case A is a money lender and B is minor. A minor, convinces the money lender that he is a major and thus obtains loan. Here a minor has committed fraud. It should be noted that is matter of money. Hence the suit filed by money tender for recovery, is dismissed.
Minor as Partner: According to the provisions of partnership act , Partnership is result of agreement. As minor has no capacity to contract he cannot be a partner. But partnership act reads about minor partner. With the consent of all other partners, A minor may be admitted as a part to the benefits of the firm and with limited liability.

Minor as Share Holder: Obtaining shares in a Company – is also a Contract. (It is known that prospectus is invitation to make offer, share application is offer and Allotment is acceptance.) Therefore minor cannot attain membership in a company. But by obtaining fully paid up shares on the basis of transfer, minor can get share holder ship in a Company.

Minor as Agent: A minor can act as an agent according to the provision of law of agency principle should have capacity to contract. But no emphasis is seen with regard to agent`s capacity to Contract. Whenever agent enters into a Contract in his capacity as agent, It is implied that the Contract is made by principle himself. So minor can act as an agent.

Minor and Necessaries: According to Indian law also, If minor Contract is made for necessaries, It attains Validity.
  • Example: Related case is Polaram Vs Ayubkhan. In this case A is a law practitioner and B is a minor. A contract gets formed according to which A has to safe-guard B`s property for certain consideration from B. Afterwards B comes across default in paying remuneration to A. Court decides that though it is minor Contract, it is Valid because it is made for necessaries.
Minor and Negotiable Instruments: A minor can execute all types of negotiable Instruments in his capacity as agent.

Minor and Parents: To Contracts made by minors, their parents are not answerable. Other party to the Contract cannot proceed against minor`s parents to obtain consideration concern.

Minor as beneficiary: In a trust arrangement minor can be a beneficiary. Though he is a stranger to Contract, he can proceed legally against the trustee in case where trustee comes across breach of trust.

Minor and Torts: The only tort which can be committed by the minor is breach of Contract for all other torts minor is answerable and punishable

1 comment:

  1. your explanations are superb and i daily revises my topics of contract from your reading material

    ReplyDelete