Minor’s Contract

Priyamvada Yadav
First Semester (self-finance)
Contracts I

What is a Contract?
Section 2 (h) of the Indian Contract Act, 1872 defines a contract as: ‘An agreement enforceable
by law is a contract.’ Contract is a combination of agreement and enforceability. Creation
of obligation on the part of the parties to an agreement to perform their liabilities gives the
cause o f e n f o r c e a b i l i t y o f a n a g r e e m e n t . T h e n a t u r e o f a g r e e m e n t i s t h e n
changed into a contract.

Minor:
According to Section 3 of the Indian Majority Act, 1875, a minor is one who has not
completed his 18 th y e a r o f a g e . S o a p e r s o n b e c o m e s a major after the completion of
18 years of life. To this rule there are two exceptions:
i. When a guardian of the minor’s person or property is appointed by a court of law;
ii. When a minor’s property is taken over by the court of wards for management.
In either of these two cases minority continues up to the completion of the 21st year.
I n I n d i a S e c t i o n 1 1 e x p r e s s l y p r o v i d e s t h a t t h e a g e o f m a j o r i t y o f a person
is to be determined according to the law to which he is subject. The Courts of Law used to
decide the competency of contract by the law of domicile and not by the law of the
place where the contract is e n t e r e d i n t o . B u t t h e l a t e r t r e n d o f l a w f o r
d e t e r m i n i n g t h e a g e o f majority is:

a) In the case of contracts relating to ordinary mercantile transactions, the age

of majority is to be determined by the law of the place where the contract is made;
b) In the case of contracts relating to land, the age of majority is to be
determined by the law of the place where the land is situated.
Laws Regarding Minor’s Contract:
1.A contract by a minor is absolutely void:
A contract by a minor is absolutely void and inoperative. Further where a minor is charged with
obligations and the other contracting party seeks to enforce those obligations against minor, the
contract is deemed as void ab initio. A minor’s contract being absolutely void, neither he nor the
other party acquires any rights or incurs any liability under the contract. So a minor is neither
liable to perform what he has promised to do under a contract, nor is he liable to repay money
that he has received under it. The principle behind this ruling is, a minor is incapable of judging
what is good for him. A minor, however, can derive benefits under the Act. That means, a minor
can be a beneficiary i.e. a payee, an endorsee or a promise under this Act.

2. A minor cannot be compelled to compensate for or refund a n y b e n e f i t

which he has received under a void contract:
Section 64 and 65 of the Contract Act, which deal with restitution, a p p l y o n l y t o
c o n t r a c t s b e t w e e n c o m p e t e n t p a r t i e s a n d a r e n o t applicable to a case where there
is not and could not have been any c o n t r a c t a t a l l . I t h a s a l s o b e e n o b s e r v e d i n
m a n y c a s e s t h a t t h e court may, on adjudging the cancellation of an instrument at
the instance of a minor, require the minor to make compensation to the other party to the
instrument.

3.A minor cannot ratify an agreement on attaining majority:

Ratification means consenting to a past contract entered into during minority at a future date
on attaining majority. A minor’s contract being nullity and void ab initio has no
existence in the eye of law. T h e r e f o r e , a m i n o r o n a t t a i n i n g m a j o r i t y c a n n o t
ratify a contract entered into while he was a minor. The reason is that a
void contract cannot be validated by any subsequent action and a minor’s
contract is void ab initio.

4. Minor’s liability for necessaries supplied to him or to anyone whom the minor is
bound to support:
The case of necessaries s u p p l i e d t o a m i n o r i s c o v e r e d b y S e c t i o n 6 8 o f t h e
C o n t r a c t A c t which provides as follows-‘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, t h e p e r s o n w h o h a s f u r n i s h e d
s u c h s u p p l i e s i s e n t i t l e d t o b e reimbursed from property of such
incapable person.’ The minor’s property is liable for the payment of a reasonable price and
not the price for necessaries supplied to the minor or to anyone whom the m i n o r i s
b o u n d t o s u p p o r t . W h a t i s a n e c e s s a r y a r t i c l e i s t o b e determined from
the status and the social position of the minor.

5. The Rule of Estoppel does not apply to a minor:

Section 115of the Indian Evidence Act explains that-‘The principle of estoppel is a rule of
evidence. When a man has, by words spoken or written or by conduct, induced another to believe
that a certain state of thing sexists, he will not be allowed to deny the existence of that
state of things.’ Lord Halsbury has written that -‘Estoppel arises when you are
precluded from denying the truth of anything which you have represented as a fact,
although it is not a fact.’ In India it has been held that the court can direct the minor to
pay compensation to the o t h e r p a r t y i n c a s e s w h e r e a n i n f a n t o b t a i n s a
l o a n b y f a l s e l y representing his age he cannot be made to pay the amount of the
loan as damages for fraud, nor can be compelled in equity to repay the money.

6. Specific Performance Order by Court will never be issued to a m i n o r :

A s w e a r e a w a r e t h a t a n a g r e e m e n t b y a s m i n o r i s absolutely
void, the court will never direct specific performance of such a contract by a minor. But
a contract entered into, on behalf of a m i n o r , b y h i s g u a r d i a n o r b y t h e m a n a g e r o f
h i s e s t a t e w i l l b e binding on the minor and can be specifically enforced by or against the
minor provide-
i. The contract is within the authority of the guardian or manager;
ii. It is for the benefit of the minor.

7. Minor as a Partner:
Law says that -‘A minor being incompetent to enter into contract cannot be a partner in a
partnership firm; but u n d e r S e c t i o n 3 0 o f t h e I n d i a n P a r t n e r s h i p A c t 1 9 3 2 ,
h e c a n b e admitted to the benefits of partnership with the consent of all the
p a r t n e r s b y a n a g r e e m e n t e x e c u t e d t h r o u g h h i s l a w f u l g u a r d i a n with the other
partners.’ Such a partner will have a right to receives hare of the property or profits of the
firm and can have an access to and inspect the books of account of the firm. The
minor cannot participate in the management of the business and can bear losses of the firm
only up to the extent of the capital contribution in the firm.

8. Minor as an Agent:
A minor can be appointed as an agent (Sec 184). He can draw, make, indorse and deliver
negotiable instruments so as to bind all parties except himself. In other words, it can be said that
a minor can bind the principal by his acts done in the course of the agency, but he cannot be held
personally liable for negligence or breach of duty.

9. Minor and the insolvency:

A minor cannot be adjudicated as an insolvent as he is incapable of entering into
contracting debts. Even for the necessaries supplied to him, he is not personally liable, only if his
property is liable (Sec 68).

10. Contract by a minor and a major jointly:

Where a minor and a major jointly enter into a contract with another person the minor
has no liability but the contract as a whole can be enforced against the major.

11. S u r e t y f o r a m i n o r :
A contract by s minor is void, but a contract by a guardian on his behalf is valid. Where a
guardian enters into a contract in respect of his property on behalf of the minor, it is valid,
provided it is for his benefit or for legal necessity.

12. Position of minor’s guardian:

A contract entered into by the guardian of a minor on his behalf stands on a different footing
from a contract entered into by a minor himself. A contract by a minor is void but a contract by a
guardian on his behalf is valid provided the o b l i g a t i o n s u n d e r t a k e n a r e w i t h i n t h e
p o w e r s o f t h e g u a r d i a n . A contract made by the guardian is binding on the minor if it is
for the benefit of the minor or is for legal necessity.

13. Minor as shareholder:

According to Contract Act, a minor being incompetent to contract
c a n n o t b e a s h a r e h o l d e r o f t h e company. Therefore a company can refuse to
register, transfer or transmission of shares in favor of a minor unless the shares are
fully paid. A minor acting through his lawful guardian may become a shareholder of the
company, in case of transfer or transmission of fully paid shares to him.

14. Minor’s Position and Liability in Tort :

Tort is a civil wrong. So, minor’s position in civil wrong is that - ‘A minor is liable
for his tort, i.e. a civil wrong unless the tort is in reality a breach of contract.’

15. Minor’s marriage:

Minor’s contracted by their parents and guardians are valid. It is valid on the ground of the
custom of the community.

16. Relinquishment by a minor:

A release by a minor of his rights in a property is absolutely in fructuous in law.

17. Service contracts:

i. A contract for personal service by a minor is void under the Indian law and the mere fact
it is for his benefit would not entitle the minor to sue under the contact.

ii. A minor may bind himself by a contract of apprenticeship if it before his benefit but he
cannot be used for failing to serve as such.
iii. Held liable in case the minor is acting as their agent relationship between the parties.
Minor girls entering into a contract of service a person can leave the service at any time
without committing any actionable wrong.

18. Minor’s Parents:

The parents of a minor cannot be held liable for any contract that a minor enters into. However,
they can be held liable in case the minor is acting as their agent.