Competency Of Parties to Contract: Minor's Agreement

Section 11:

Who are competent to contract.—Every person is competent to contract who is of the age of majority according to the 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.

Section 12:

What is a sound mind for the purposes of contracting.—A person is said to be of sound mind for the purpose of making a contract, if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests.
A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind.
A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind.

Illustrations

(a) A patient in a lunatic asylum, who is at intervals of sound mind, may contract during those intervals.
(b) A sane man, who is delirious from fever or who is so drunk that he cannot understand the terms of a contract, or form a rational judgment as to its effect on his interests, cannot contract whilst such delirium or drunkenness lasts.

Commentary on Section 11:

Competent party to make contract means

The person who is of the age of majority
The person who is of sound mind, and
The person who is not disqualified from contracting by any law to which he is subject.

The Phrase “contracting by any law to which he is subject” of Section 10:

When this law was enacted most of the part was governed by British but there were many princely states In India at that time. Hence This phrase has no meaning in the present days because the Indian Majority Act is applicable to all persons domiciled in India.

Case Law:

Case: Kashiba v. Shripat Narshiv (1894) I.L.R. 19 Bom. 697

Facts: A Hindu widow of age 17 years having a domicile in British India executed in Kolhapur (A princely state at that time and not a part of British India). According to the law of the domicile of British India, she was considered minor. But According to the law of Kolhapur state where the agreement was signed, a person of age less than 16 years was considered minor. Thus according to the law of Kolhapur state, she was competent to make the contract.
Court Order: Court held that as she is domiciled in British India, the contract made by her is regulated by the law of domicile (British India) and she was therefore not liable.

Agreements with Minor is Void ab initio:

Minor

According to the recent amendment in the Indian Majority Act, a minor is one who has not completed 18 (eighteen) years of age irrespective of whether or not a guardian has been appointed for the minor.
According to the Indian Contract Act 1872, section 11, a minor cannot be party to the contract, in other words, the agreement with a minor is void ab initio (from the start).
Minor’s agreement being absolutely void, neither parties acquire any right, or incurs any liability, under the agreement.

Illustration:

A boy approached a shop owner and pretended that he was major (in fact he was minor) and told that he was in need of money urgently and he was ready to sell his cycle (owned by him) for Rs. 1000/-. The shopkeeper saw the sports bicycle in good condition. He paid Rs. 1000 to the boy and took possession of the bicycle. According to the shop owner, all the conditions of a valid contract were satisfied.
The boy used that money in parting with friends and returned home. Parents asked him where is the bicycle. He started crying and told them that he had sold the bicycle to the shop owner for Rs. 1000/-. The parent and the boy went to the shop owner. They asked the shop owner to return the cycle. The shop owner said he had given Rs. 1000/- to the boy as consideration of the contract. If they want the cycle back they should pay Rs. 1000/- back.
Analysis: If this case goes to the court of law, the order will be in favour of the boy because though the boy has fraudulently misrepresented his age, it was shop owner’s duty to confirm the age before giving consent (it was his free consent). As the agreement was with the minor it was void ab initio. As there is no contract the shop owner has to give back the bicycle and he cannot compel the boy to pay Rs. 1000/- back.

Case Laws:

Agreement with minor are void ab initio:

Before the case discussed below it was held that a minor’s agreement is voidable at his option and not altogether void.

Case: Mohiri Bibi v Dharmodas Ghose (1903) 30 Cal. 539 (P.C.):

Facts: The plaintiff, Dharmodas Ghose, while he was a minor, mortgaged his property in favour of the defendant, Brahmo Dutt, who was a moneylender to secure a loan of Rs. 20,000. The actual amount of loan given was less than Rs. 20,000. At the time of the transaction the lawyer, who acted on behalf of the defendant, had the knowledge that the plaintiff is a minor.
The plaintiff brought an action against the defendant stating that he was a minor when the mortgage was executed by him and, therefore, the mortgage was void and inoperative and the same should be canceled. Meantime in the period of proceedings Brahmo Dutt died and the Appeal was prosecuted by his executors.
The defendant, mainly contended that the plaintiff had fraudulently misrepresented his age and therefore no relief should be given to him, and that, if the mortgage is canceled as requested by the plaintiff, the plaintiff should be asked to repay the sum advanced to him.
The agent of defendant advanced money to the plaintiff, an infant, fully knowing his incompetency to contract, against mortgage of property belonging to the latter. Plaintiff commenced this action to get the mortgage declared as void u/s 2, 10 and 11 of the Indian Contract Act – 1872 and repossession of property thereunder conveyed to the defendant.
Issues: Whether the mortgage was void u/s 2, 10, 11 of ICA?
Whether plaintiff to return the money received by him under such mortgage?
Court Order: The court (privy council) held that the agreement is void ab initio because of the fact that it is made with a minor. Hence the property was conveyed to the defendant and the money advanced to the defendant was allowed to keep with him.

No party can bring any action against each other for specific performance or for damages.

Case: Suganchand & Co. v Laduram Balkrishandas Firm, I.L.R. (1942) Na. 281

A contract involving guardians of minors:

Case: Raj Rani v Prem Adib, AIR 1949 Bom. 215.

Facts: The plaintiff, a minor, was allotted the role of an actress in a certain film by the defendant, a film producer. There was an agreement between the plaintiff and the defendant. Another agreement was made with her father. Subsequent, the role was given to another actress by the defendant and the agreement with the plaintiff and another with her father was terminated. This case was heard by Bombay High Court.
The agreement with plaintiff had valid consideration but it involved a minor. Hence it was a void agreement. The agreement with father had no consideration. Father’s promise was that his daughter (minor) will act and the minor girl was not legally competent to promise. Hence it was also void.
Court Order: It was held that neither the minor nor her father could sue on the promise. The agreement with the minor is null and void. If the contract was with the father, it was without consideration and thus, void. It was clarified that the promise of a minor to serve was not enforceable against her and thus, could not have furnished any consideration for the defendant’s promise to pay her a salary.