Laws Pertaining to Minor's agreement

This article is written by Purva Tambe currently pursuing BA. LLB from IILS Law College (Pune).

Picture Credit: Gustav

Who is considered as a minor?

A person is who is legally underage, who has not yet attained the age of majority, or who has been denied the ability to fully or freely contact. The term minor has been explained in Section 3, The Indian Majority Act, 1875.


Section 3 in The Indian Majority Act, 1875 says that;

Age of majority of persons domiciled in India.-

  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.

Minor’s agreements: Void

Section 11 of the Indian Contract Act, states that a minor is unfit to enter into a contract and that a contract with, or by a minor is invalid and untenable. In several legal rulings, this reality is acknowledged. Let's take the case of A vs. B is a prime example of the situation. In this scenario, A is a minor who mortgaged his house in favour of a moneylender to secure Rs.50,000 loan and the mortgagee got Rs.10,000. In the event of default, the mortgagee filed a claim for the recovery of his mortgage money and the disposal of properties. The privy council declared the agreement with the minor was void as against him and therefore mortgagee(A) could not recover the mortgage money.


Contracts for Necessities

Adhering to Section 68 of the Indian Contract Act, every person shall be entitled to reimbursement by the property of the minor for the necessities supplied to him or his family. Goods and services also consist of necessities. Thus, it is possible to impose a minor's agreement amounting to payment for necessaries.


If a minor by concealment of his age had obtained payment falsely, then he could be forced to recover the payment. He can not, however, be responsible for an equivalent amount, if any, since that would amount to the enforcement of a void contract.


Claim for necessaries supplied to a person incapable of contracting, or on his account:

If a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person.


Contracts beneficial to a minor

If a contract is beneficial to a minor, it may be imposed for a minor. For example, being a payee or a promisee in a contract is no constraint on a minor from being a beneficiary. A minor is therefore capable of purchasing immovable property and can sue upon tender of the purchased amount to recover the possession of the property. Likewise, it can be applied by a minor in whose favor a promissory note has been executed.


Restitution from a minor

Restitution in the usual sense means restoring the advantage a person has gained and its primary aim is, firstly, to restore the victim's position. i.e. 'Plaintiff' in the case of a contract, to the original position he enjoyed before entering into that contract, and secondly, to prevent the defendant from having unjust benefits that he is not entitled to, i.e. to prevent the undue advantage to the defendant.


If a minor has earned a gain under a void contract, the same can not be demanded to be refunded. However, if by fraudulently misrepresenting his age, a minor obtain any property, the court may order the minor to return the property to the other party as long as it is traceable in his hands. This theory of restitution is equitable.


If the minor has sold or converted the goods, the value of the goods will not be returned since it would amount to the execution of a void arrangement. Also, this doctrine does not apply when the minor received some cash instead of goods.


Principle of estoppel

Estoppel is a rule of proof, which, after inducing the other party to act on that promise, prevents a party from going back on its promise. The Estoppel law does not extend to the contract of a minor. A minor's contract is invalid and should thus not be excluded from pleading that such a contract is invalid on the grounds of his minority.


In the case of Debi Das v. Tulshi ram and others, it was held that on the question of estoppel, if the plaintiff was a minor at the time, there can be no estoppel against him and if he were a major at that time, the act of relatives could probably stop him.


Ratification

Ratification refers to the validation without the authority of some act that was previously done. The agreement of a minor is void ab initio and therefore unable to be ratified even if the minor reaches majority, as this would be equivalent to enforcing a void agreement. Once he reaches majority, with fresh consideration, he can enter into a new agreement.


Minor's liability under the Negotiable Instrument Act

Section 26 of the Negotiable Instrument Act, 1881 specifies that instruments such as a promissory note, bill of exchange, or cheque can be drawn, endorsed, delivered, and negotiated by a minor to bind all parties except himself. This section protects a minor from any responsibility arising under such instruments and provides him with immunity. Any person who can contract according to the law to which he is subject to can be bound by a promissory note, cheque, or a bill of exchange by a minor is made, drawn, accepted, presented, and negotiated.


Minor in the collaboration business

A minor in the business will not become a partner. However, with the consent of all other partners, he may be accepted for the good of the partnership company. This can be achieved by an arrangement signed on his behalf by his guardian with the company's current partners.


A minor would be entitled to his negotiated share of the company's property and income. He is not directly responsible for the company's commitments, but his share of the profit and property will be responsible for the company's debts. When he severs his link with the company, he will file a claim for accounts and for his negotiated share of property or profit. He has the right to review and copy the company's account books.


Minor responsible for necessities

If a minor or any other incompetent individual or any individual who is legally obliged to help is supplied with necessaries by another person, the person who supplied those supplies shall be entitled to be reimbursed from the assets of that incapable person (Section 68). It should be stressed that this provision makes only the assets of the minor person responsible, not the minor directly.


'Necessary' includes items such as food, clothes, lodging, schooling expenses, vocational training, sports training, medical care, the marriage of a minor's dependent or prosecuting a court case, etc., and not items of comfort or luxury, etc. However, depending on the socio-cultural status of the minor and the immediate circumstances faced by him, this is a very versatile concept and may include several things. Expensive clothing may not be appropriate as a routine for a middle-class minor but may become appropriate on the occasion of a family marriage or for a princely family matter.


'Required services' may also include critical services provided to a minor or dependent, such as legal services or medical care. This rule also aims to help persons who are incompetent to contract, a person can, in a certain crisis situation, supply a minor with certain necessaries without any agreement, or incur expenditure on such necessaries for him or his dependent to render assistance.


It is specified in section 68 that such a person will be entitled to a refund of an acceptable sum from the property of the minor. It is this assurance that will motivate individuals in their times of struggle to assist minors. 


Liabilities of Minors

The laws listed so far favour and safeguard minors. They mean that if a minor in cash or kind received a profit from another party, he will not have to provide the party with restitution, since the arrangement is completely invalid.


Even if a person dealing with a minor has been sincerely deceived by the minor's misrepresentation of age, he would be shielded by the non-application of the "law of estoppel" toward a minor.


However, the courts have also discussed the issue of restricting the protected status of a minor and awarding damages to the other party in the event of a minor’s fraud. In the case of a minor's agreement, sections 64 and 65 of the contract act dealing with the issue of restitution are not applicable. Therefore, certain relief is obtained under what is called the ‘equal restitution doctrine' to be offered to the other party. The courts are empowered to order restitution from a minor.


Conclusion

It can be inferred from the provisions of the Indian Contract Act, 1872, and pivotal precedents that the agreement with a minor is void ab initio, without any legal effects or consequences. These contracts are not enforceable against a minor. There is, however, a certain exception to this general rule, such as a minor being permitted to impose a contract that is of some value to him and for which he is not liable and whether a minor has earned some price by fraudulently misrepresenting himself as a major.


The court may, at his age, order the minor to return the property to the other party on reasonable grounds as long as it is traceable in his hands. The reasoning behind the voiding of the minor contracts is that a minor is believed to lack the requisite maturity which is essential while entering into contracts and may thus become a victim of adult fraudulent conducts and thus necessitates the granting of this special protection by law.


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