 One of the essential of a valid contract, mentioned in section 10

of ICA is that the parties must be competent to make the

contract.
 Sec 10. What agreements are contracts

All agreements are contracts if they are made by the free consent
of parties competent to contract, for a lawful consideration
and with a lawful object, and are not hereby expressly declared
to be void. Nothing herein contained shall affect any law in
force in India, and not hereby expressly repealed, by which any
contract is required to be made in writing or in the presence of
witnesses, or any law relating to the registration of documents.
COMPETENCY MEANS
Sec 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 sound mind and is not
disqualified from contracting by any law to
which he is subject.
 It means that following three categories of
persons are not competent to contract:
1. A person who has not attained the age of
majority i.e. Who is a minor.
2. A person who is of unsound mind.
3. A person who has been disqualified from
contracting by some law
POSITION OF MINOR
 Who is a minor:
 A person who has not attained the age of majority is minor.
 Sec 3 of the Indian Majority Act 1875 provides about the
age of majority.
 It states that a person who has attained the age of 18 years
is considered as major.
 Before 1999, if a guardian has been appointed by the
court, age of majority was 21 years.
 But in 1999 Indian Majority Act is being amended and
now the age of majority is 18 years in all cases.
NATURE OF MINOR’S AGREEMENT
 It is clear that a minor is not competent to
contract.
 Many times question arises that what would be
the nature of minor’s agreement, whether the
agreement is void or voidable.
 This controversy was set at rest by the decision of
the privy council in Mohori Bibee v.
Dharmodas Ghose in 1903.
MOHORI BIBEE V. DHARMODAS GHOSE (1903)

 Dharmodas, while he was a minor, mortgaged his property in

the favour of one Brahmo Dutt, who was a money lender to
secure some loan.
 At the time of the transaction the attorney, who acted on the
behalf of the money lender had knowledge that Ghose is a
minor.
 Minor initiated an action against the money lender stating that
he was a minor when the mortgage was executed by him.
 Therefore the mortgage was void and the same should be
cancelled.
Cont..
 Money lender among other points contended that:
1. The minor had fraudulently misrepresented his
age, the law of estoppel should be applied
against him.
2. If the mortgage is to be cancelled, the minor
should also be asked to refund the loan which he
had taken.
DECISION OF THE COURT
 On first contention court held:
 Law of estoppel was not applicable against the
minor. As the attorney of the money lender knew
the fact that Ghose was a minor.
 Court held that when any fact is known to both
the parties then a false representation made to
that effect is not a fraud.
 Second contention of money lender was minor should be asked
to refund the money under secs 64 and 65 of ICA and sec. 41 of
Specific Relief Act 1877.
 Sec 64: Consequence of rescission of voidable contract
 When a person at whose option a contract is voidable rescinds
it, the other party thereto need not to perform any promise
therein contained of which he is the promisor. The party
rescinding a voidable contract shall, if he have received any
benefit there under from another party to such contract restore
such benefit, so far as may be, to the person from whom it was
received.
DECISION OF THE COURT ON 2ND CONTENTION

 Court held that application of sec 64 is restricted

to voidable contracts only.
 Since the agreement of a minor is void and not
voidable, there arises no question for the
restoration of the loan under the said section of
ICA.
APPLICATION OF SEC. 65 IN PRESENT CASE

Sec 65: Obligation of person who has received

advantage under void agreement, or contract
that becomes void
When an agreement is discovered to be void, or
when a contract becomes void, any person who
has received any advantage under such agreement
or contract is bound to restore, it, or to make
compensation for it, to the person from whom he
received it.
COURT’S DECISION ON THIS CONTENTION
 Court held that application of sec 65 is restricted
between the parties who are competent to
contract.
 Since minor is a person who is not competent to
the contract so court also rejected the application
of sec. 65 to present case.
 So minor therefore could not be asked to repay
the amount even under sec. 65.
 Law commission in its 13th report (1958) disagreed
with the interpretation given by the privy council to
sec 65.
 In their view sec 65 covers the cases of minor also.
 Law commission demanded insertion of an
explanation to clear the position.
 But no amendment has been made so far in this
regard.
APPLICATION OF SEC 41 OF SRA 1877
 Sec 41: On adjudging the cancellation of an
instrument, the court may require the party to
whom such relief is granted to make any
compensation to the other which justice may
require.
 Court held that word “may” is used in the provision. So
it means grant of compensation is under the discretion of
the court only under the cases in which justice requires
so.
 In present case justice did not require the return of
money as money has been advanced with the knowledge
that Ghose was a minor.
 So money lender failed to recover the money from the
minor and directed by the court to return minor’s
property also
POSITION UNDER ENGLISH LAW
 General rule under english law was contract made by
minor was voidable at his option.
 This rule was modified by the Infants Relief Act
1874, which declare that following three contracts
are absolutely void in context of minor
1. Contract for repayment of money lent.
2. Contract for supply of goods (other than
necessaries)
3. Contract for accounts.
RATIFICATION OF THE MINOR’S AGREEMENT

 As minor’s agreement is void ab initio, so it can

not be validated by ratification after the minor
has attained the age of majority.
 Consideration which was used under earlier
contract cannot be imported into a contract which
the minor entered on attainment of majority.
SURAJ NARAIN V. S. AHEER (1928)
 A person borrowed some money during his minority.
 After attaining majority he made a fresh promise to
pay that amount with interest.
 Question before Allahabad high court was whether
consideration received by a minor can be utilised in a
fresh promise after the attainment of majority.
 Court held that consideration received by minor is not
a consideration under sec 2(d).
 So it can not be used to make a fresh contract.
PART BENEFIT RECEIVED IN MINORITY AND REST IN MAJORITY

 If a person has received a part of benefit during the minority and

part after attaining majority, a promise to pay both the benefits
made after attaining majority is valid consideration and
enforceable.
 Kundan bibi v. Sree Narayan (1906)
 S received some goods worth Rs. 7373 from K during his
minority.
 After attaining majority he took a further sum of Rs. 76 from her
and executed a bond in her favour to pay this amount as well as
the amount for the goods he has received during his minority.
 Whether he is liable to pay whole amount?
DECISION
 Court held that S was liable for the whole debt
secured by the bond, because there was a new
consideration for the promise on which the
defendant was sued.
NO ESTOPPEL AGAINST A MINOR
 When a minor misrepresented his age, the question
arises whether he can be made liable under the law of
estoppel?
 Sec 115 of Indian Evidence Act-

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.
 From various decisions of different high courts it
is concluded that law of estoppel is not applicable
against a minor.
 In Vaikuntarama Pillai v. Authimoolam
Chettier (1915) Madras HC held that because the
minor is incompetent to contract, the law of
estoppel can not over rule the basic concept to
made him liable.
DOCTRINE OF RESTITUTION
 English Law: if a minor has received any benefit he
is liable to restore it back.
 but this doctrine is only applicable to goods or
property so long as they are traceable.
 Since money is difficult to identify so minor can not
be made liable to return the money he has received.
 If goods and property is consumed or transferred by
him to other person, then also a minor cannot be
made liable.
LESLIE V. SHEILL (1914)
 Defendant misrepresented his age and secured two
loans of £200.
 When sued by plaintiff for £475, court held that
money could not be recovered as if repayment was
allowed it would amount to enforce the contract to
repay the loan, which is not possible.
 Court explained that objective of doctrine of
restitution is to restore the ill-gotten gains and not
to enforce the contract.
INDIAN POSITION
 In India whether a minor can be asked to restore
the benefit has arisen under following provisions
1. Whether a minor can be asked to pay
compensation under secs 64, 65 and 70 of the
ICA
2. Whether a minor can asked to pay compensation
under secs 39 and 41 of Specific Relief Act 1877
 Position is clear in regard to Sec 64 as this section
is applicable to voidable contracts, and minor’s
agreement is void and not voidable.
 Sec 65 deals with void agreements, but as
interpreted in Mohiri Bibee’s case, this section is
also not applicable to the minors.
 Though insertion of explanation was demanded by
the Law Commission in this regard but Act has not
witnessed any amendment in this regard so far.
SEC 70
Obligation of person enjoying benefit of non-
gratuitous act
Where a person lawfully does anything for another
person, or delivers anything to him, not intending
to do so gratuitously, and such another person
enjoys the benefit thereof, the latter is bound to
make compensation to the former in respect of, or
to restore, the thing so done or delivered.
 It has been held by various high courts the sec 70
is also not applicable to minors. Because sec 68 is
there which is specifically meant to cover minor’s
position.
 But this interpretation seems illogical.
COMPENSATION UNDER SPECIFIC RELIEF ACT 1877

 Sec 39 Any person against whom a written

instrument is void or voidable, who has
reasonable apprehension that such instrument, if
left outstanding, may cause him serious injury;
may sue to have it adjudged void or voidable; and
the Court may, in its discretion, so adjudge it and
order it to be delivered up and cancelled.
SEC 41 SRA 1877
 Sec 41: On adjudging the cancellation of an
instrument, the court may require the party to
whom such relief is granted to make any
compensation to the other which justice may
require.
DIFFERENT VIEWS ON COMPENSATION UNDER SEC 41

 There were two set of high courts, on one side

was Lahore High Court and on another side was
Allahabad High Court.
 Views expressed by both the high courts are
different from one another.
LAHORE HIGH COURT’S VIEW
 The question of compensation arose before
Lahore high court in the case of Khan Gul v.
Lakha Singh (1928)
 The plaintiff who had advanced a sum of Rs.
17,500 to a minor brought an action against him
to recover the amount.
 Whether minor can be asked to return the
amount on the basis of sec 39 and 41?
SIR SHADI LAL HELD:
 Minor was held liable to refund the same.
 Decision of Leslie v. Sheil was overruled with following
observations:
1. In view of sec 39, if a minor approached to court for the
cancellation of any instrument (as Plaintiff) then only
he can be asked to compensate the defendant, but in this
case minor was defendant but still he was held liable to
pay back the money, because it was held that the party
deserves to be compensated by a fraudulent minor on
equity basis.
2. While overruling the Leslie v. Sheill, court held
that asking a minor to return the money does not
amount to enforce the contract against him but is
only the restoration of the pre contract position.
ALLAHABAD HIGH COURT’S VIEW
 In Ajudhia Prasad v. Chandan Lal (1937)
 Court reconsidered the decision of Kahn Gul v.
Lakha Singh
 And observed that views expressed by Justice
Shadi Lal were not sound, as plaintiff may be
asked to pay compensation under sec 39 and 41,
it was against the spirit of sec 39 and 41 if
defendant was compelled to pay compensation.
 On another point, court validated the decision of
Leslie v. Sheill, court held that minor can be
asked to restore the goods which are traceable,
asking him to pay money is enforcing the
contract against a minor, which is not possible.
LAW COMMISSION’S RECOMMENDATION
 The views expressed by Justice Shadi Lal were
considered good by Law Commission in its 9 th
and 13th Report and recommended amendment in
the Specific Relief Act 1877.
 Accordingly Specific Relief Act 1877 was
replaced by Specific Relief Act 1963 and sec 33
was inserted as follows:
 Sec33: Power to require benefit to be restored or compensation to be made when
instrument is cancelled or is successfully resisted as being void or voidable.—
(1) On adjudging the cancellation of an instrument, the court may require the party
to whom such relief is granted, to restore, so far as may be any benefit which he
may have received from the other party and to make any compensation to him
which justice may require.
(2) Where a defendant successfully resists any suit on the ground—(a) that the
instrument sought to be enforced against him in the suit is voidable, the court may
if the defendant has received any benefit under the instrument from the other
party, require him to restore, so far as may be, such benefit to that party or to
make compensation for it;
(b) that the agreement sought to be enforced against him in the suit is void by
reason of his not having been competent to contract under section 11 of the Indian
Contract Act, 1872 (9 of 1872), the court may, if the defendant has received any
benefit under the agreement from the other party, require him to restore, so far as
may be, such benefit to that party, to the extent to which he or his estate has
benefited thereby.
PRESENT POSITION
 Minor is liable to restore the money, no matters
he acted in a case in the capacity of Plaintiff or
Defendant.
MINOR’S LIABILITY FOR NECESSARIES
 It has been already discussed that minor’s agreement is void
ab initio.
 However for the necessaries supplied to the minor,
reimbursement is permitted to the person supplying such
necessaries.
 It is not because of any contract between the parties.
 But because it deemed to be quasi contractual obligation.
 Chapter V of ICA recognises certain relations resembling
those created by the contract i.e. Quasi contractual
relations.
SEC 68 ICA
 Sec. 68. Claim for necessaries supplied to 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.
ESSENTIALS OF SEC 68

1. Necessaries are supplied.

2. To a person who is incapable of making
contract or to a person who is dependant upon
such person incapable of making a contract.
3. Only reimbursement is permitted from the
property of that person i.e. No personal liability
arises.
UNDER ENGLISH LAW
 English law also permitted for the reimbursement
of necessaries supplied to a minor.
 According to sec. 1 of Infants Relief Act 1874, all
contracts entered into by infants for goods
supplied or to be supplied (other than contract for
necessaries) shall be absolutely void.
WHAT ARE NECESSARIES?
 According to sec 68, the necessaries supplied to a
minor should be suited to his condition in life.
 It does not mean bare necessities of life, but
means such things as may be necessary to
maintain a person according to his condition in
life.
 In Clyde Cycle Co. v. Hargreaves (1898) it was
held that racing cycle is necessary for an infant
apprentice.
 In Chapple v. Copper (1844) it was held that an
infant widow is bound by a contract for the burial
of her husband as the contract is for a necessity.
 In kunwarlal v. Surajmal (1963) it has been held
that the house given to a minor on rent for living
and continuing his study is deemed to be supply of
necessary.
 In Nash v. Inman (1908) a minor, who was already
having sufficient cloths was supplied with more cloths
by a tailor. It was held that the price of the clothes so
supplied could not be recovered.
 In Ryder v. Wombwell (1868) the defendant, an
infant, having an income of only £ 500 per year was
supplied with a pair of crystal, ruby and diamond
solitaires and an antique silver goblet. It was held that
these things are not necessaries suitable to the life
conditions of the infant, so the price for the same can
not be recovered.
CONTRACTS OF SERVICE AND APPRENTICESHIP

 In England, an infant is bound by the contracts of

apprenticeship and services as both are considered to
be beneficial to the minor.
 They are considered equivalent to the contracts of
necessaries.
 In India, rule in this regard is different from England.
 In India, contract of service is void whereas contract
of apprenticeship is valid (under Indian
Apprenticeship Act 1850)
RAJ RANI V. PREM ADIB (1949)
 the father of Raj Rani (minor) entered a contract
of service on behalf of his minor daughter with
Prem Adib, a film producer on her behalf.
 According to which Raj Rani was to act in a film.
 But no role was given to her and father sued the
producer.
 It was held that contract is
void and not enforceable.
POSITION OF MINOR IN PARTNERSHIP
 Partnership arises out of a contract.
 It is therefore necessary that parties to the partnership must be competent to
contract.
 A minor being incompetent to contract cannot become a partner in the
partnership firm.
 However a minor can be admitted to a partnership only to receive benefits as
beneficiary.
 According to sec 30 of the Indian Partnership Act, a minor can be admitted to
the benefits of the firm, but only with the consent of all the partners.
 On attaining majority, he has an option to become partner in the firm or to
severe his relations with the partnership.
 He must exercise this option within 6 months from attaining majority, failing
which he becomes partner of the firm automatically.
POSITION UNDER AGENCY
 A minor is not competent to contract, so what he
cannot do himself, he cannot do that even
through an agent.
 It means a minor cannot be a Principal.
 But as the duty of agent is only to link the
principal and third party, competency is not a
hindrance, means a minor can be an agent.
 But a minor cannot be a Del Credere Agent.
LIABILITY UNDER CONTRACT AS WELL AS UNDER TORTS

 Minor cannot be made liable for the breach of a

contract but if there arises liability under torts
also, he may be made liable under the law of
torts.
 If a person fraudulently misrepresented his age
and entered into a contract, though minor is not
liability to repay the loan but he may be held
guilty to commit fraud or deceit.
 But if making him liable under torts seems
indirect enforcement of the contract then also he
would be exempted from liability.
 In Johnson v. Pye (1665) a minor falsely stated
that he is of age of majority. It was held that he
cannot be compelled to repay the loan by
bringing an action for deceit.
POSITION OF PERSON OF UNSOUND MIND
 Sec 12. What is a sound mind for the purposes of
contracting
 A person is said to be of sound mind for the propose of
making a contract, if, at the time when he makes it, he is
capable of understanding it and of forming a rational
judgement as to its effect upon his interest. 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.
 Thank You