Module 3 – Class of 29.08.2019 to 05.09.

2019

The term minor/minors is nowhere defined in the contract act. But taking into consideration the
wordings of section 11 of Indian contract act, a minor is a person who has not attained the age
of 18 years. The age of majority of a person is regulated by section 3 of the Indian majority act,
1857.

Section 3 of the INDIAN MAJORITY ACT, 1875 provides about the age of majority. It states
that a person is deemed to have attained the age of majority when he completes the age of 18
years, except in the following cases a person continues to be a minor until he completes the age
of 21 years.

• Where a guardian of a minor‟s person or property has been appointed under the Guardians
and Wards Act, 1890 or

• Where the superintendence of a minor‟s property is assumed by a Court of Wards.

Contract entered by Minor

An agreement with or by a minor is void and inoperative ah initio [Moltri Bihi vs. Dharomdas
Chose]. These agreements are considered to be nullity and non-existent in the eyes of law. These
cannot be enforced against a minor. In competency of a minor to enter into contract means
incompetency to bind himself by a contract. There is nothing which debars him from becoming a
beneficiary, e.g., a payee [SharafatAli vs. Noor Mohd.], an endorsee or a promisee in a contract.

No Ratification against Minor : An agreement by a minor cannot be ratified by him on

attaining the age of majority. They term ‘ratification’ may be defined as the act of confirming or
approving. The doctrine of no ratification’ implies that an agreement made by a minor (during
the period of minority), cannot b If a minor has received any benefit under a void agreement, he
cannot be asked to compensate or pay for it. Sec 65, which provides for restitution in case of
agreements found to be void, does not apply to a minor.e confirmed by him on attaining
majority.
No estoppel against a minor: Section 115 of the Indian Evidence Act, 1872, lay down the law
of estoppel but the Indian Contract Act make it clear that a minor is incompetent to contract thus
a minor cannot incur liability under any contract and the rule of evidence cannot be invoked to
defeat this section.

Minor as an insolvent: A minor cannot be declared as an insolvent. This is so because all

agreements with a minor are absolutely void. Moreover, the minor is not personally liable for
any debt incurred during the period of his minority.

Exceptions of minor’s agreement

Fraud by Minor: In English law, when the minor makes a false representation as to his age and
induces other parties to make a contract with him. The minor can be compelled to return the
benefit or property received under the contract only when it is identifiable and still in minor’s
possession. While in Indian law the minor’s agreement is void ab initio and therefore cannot be
enforced by either party even when minor falsely represents to be major and induces other
parties to make a contract with him.

Minor cannot be Partner : According to Section 30 of the Indian Partnership Act, 1932, a
minor cannot be a partner but can be admitted into the benefits of partnership.

In Commissioner of Income Tax v. Dwarka Das, it was held that an agreement of partnership
making a minor full-fledged partner is invalid qua all partners.

In Gurusaran Lal v. Seral Kumar, it was held that if the guardian of a minor agrees to get a share
of profits in lieu of interest on the minor’s advanced by the guardian to a partnership, the
agreement is not void.

Minor’s property liable for necessaries: Sometimes, a person supplies necessaries to a minor.
In such cases, the supplier of necessaries can claim reimbursement from the property of minor.

The minor can execute a negotiable instrument: According to Sec 13(1) of the Negotiable
Instruments Act, 1881, the term ‘negotiable instrument’ means and includes a promissory note, a
bill of exchange and a cheque. The minor is competent to draw, negotiate or endorse the
negotiable instruments.
It may, however, be noted that the minor will not incur any personal liability under such
instruments. But, the negotiable instruments executed in favour of the minor can be enforced by
him.

The liability of minor’s parents or guardians: As a matter of fact, the minor’s contracts do not
impose any liability on his parents or guardians even if the contracts are for ‘necessaries’. The
parents or guardians of the minor may pay money borrowed by him just out of moral obligations.
But there is no legal obligation to make such payments. It may, however, be noted that the
parents or guardians can be held liable when the minor child is acting as an agent of his parents
or guardians.

Mohori Bibee vs Dharmodas Ghose (1903) 30 Cal 539 (Pc)

Importance: Extent of Minor’s agreement validity

Facts: Dharmodas Ghose, was the respondent in this case. He was a minor (i.e. has not
completed the 18 years of age) and he was the sole owner of his immovable property. The
mother of Dharmodas Ghose was authorized as his legal custodian by Calcutta High Court.When
he went for the mortgage of his own immovable property which was done in the favor of
appellant i.e. Brahmo Dutta, he was a minor and he secured this mortgage deed for Rs. 20,000 at
12% interest rate per year. Bhramo Dutta who was a money lender at that time and he secured a
loan or amount of Rs. 20,000, and the management of his business was in the control of Kedar
Nath, and Kedar Nath acted as the attorney of Brahmo Dutta.Dharmodas Ghose's mother sent a
notification to Brahmo Dutta informing him about the minority of Dharmodas Ghose on the date
on which such mortgage deed was commenced. but the proportion or sum of loan that was
actually provided was less than Rs. 20,000. The negotiator or representative of the defendant,
who actually acted instead of on behalf of money lender has given money or sum to the plaintiff,
who was a minor and he fully had knowledge about the incompetency of the plaintiff to perform
or enter into contract and also that he was incompetent legally to mortgage his property which
belonged to him.After that, on 10thSept. 1895 Dharmodas Ghose along with his mother brought
an legal suit or action against Brahmo Dutta by saying that the mortgage that was executed by
Dharmodas was commenced when he was a minor or infant and so such mortgage was void and
disproportionate or improper and as a result of which such contract should be revoked or
rescinded. When this petition or claim was in process, Brahmo Dutta had died and then further
the appeal or petition was litigated or indicted by his executor's. The plaintiff argued or
confronted that in such case no relaxation or any sought of aid should be provided to them
because according to him, defendant had deceitfully or dishonestly misinterpreted the fact about
his age and because if mortgage is cancelled at the request by defendant i.e. Dharmodas Ghose.

Issues Raised:-Whether the deed was void under section 2, 10[5], 11[6], of Indian Contract Act,
1872 or not?

Whether the defendant was liable to return the amount of loan which he had received by him
under such deed or mortgage or not?

Judgement: According to the verdict of Trial Court, such mortgage deed or contract that was
commenced between the plaintiff and the defendant was void as it was accomplished by the
person who was an infant at the time of execution of mortgage.When Brahmo Dutta was not
satisfied with the verdict of Trial Court he filled an appeal in the Calcutta High Court.Then he
later went to Privy Council for the appeal and later the Privy Council also dismissed the appeal
of Brahmo Dutta and held that there cannot be any sought of contract between a minor and a
major person.The final decision that was passed by the Council were :-

1.Any sought of contract with a minor or infant is void/ void ab-initio (void from beginning).

2.Since minor was incompetent to make such mortgage hence the contact such made or
commenced shall also be void and id not valid in the eyes of law.

3.The minor i.e. Dahrmodas Gosh cannot be forced to give back the amount of money that was
advanced to him, because he was not bound by the promise that was executed in a contract.
Contract Entered by Person of Unsound Mind : (Section 12)

A person is said to be of sound mind for the purposes 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.

Examples:

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 drunken-ness lasts.

Going by the spirit of the section it is clear that a person is sound mind if he fulfills the following
two conditions.

He/she is capable of understanding the contract.

He/she is capable of forming a rational judgment about the effects of such contract on his
interest.

A person not satisfying any of these two conditions is not treated a person of sound mind.

Exception

It is important to note that a person who is usually of an unsound mind, but occasionally of a
sound mind, can enter a contract when he is of sound mind. No person can enter a contract when
he is of unsound mind, even if he is so temporarily. A contract made by a person of an unsound
mind is void.
Comparison between English law and Indian law: In England, mere unsoundness of mind is
no defense; the contract of a lunatic is binding upon him, unless he can show that at the time of
making the same, he was utterly incapable of understanding what he was doing and that the other
party knew of his lunacy. In India, a contract by a person of unsound mind is void.

Other Disqualified Persons

The persons who are disqualified from entering into contract due to certain other reasons may

be from legal status, political status or corporate status. Some of such categories of persons

are given below;

1. Alien Enemy: An agreement with an Alien Enemy is void.

2. Foreign Sovereign and Ambassadors: Foreign sovereigns and their representatives enjoy

certain privileges and immunities in every country. They cannot enter into contract except

through their agents residing in India.

3. Convicts: A convict cannot enter into a contract while he is undergoing imprisonment.

4. Insolvents: An insolvent person is one who is unable to discharge his liabilities and therefore

has applied for being adjudged insolvent or such proceedings have been initiated by any of

his creditors. An insolvent person cannot enter into any contract relating to his property.

5. Company or Statutory bodies: A contract entered into by a corporate body or statutory

body will be valid only to the extent it is within its Memorandum of Association