THE THREE C’s (CAPACITY/CONSIDERATION and CONSENT)

CAPACITY (MINOR- below 18 years of age)

Figure 4

1 Agreement with a minor is void – ab – initio A contract is based on

meaning it is void from the beginning i.e no rights legally binding mutual
emerge from the agreement. agreement of promises. It
can be only valid if the
parties know the
consequences of their
acts. A minor does not.
2 Even if a minor states that he is a minor he is not Mohori Bibi vs
stopped from pleading that he is a minor. Dharmadass Ghose.
( Principle of estoppel)
3 An agreement with a minor cannot be ratified on Suraj Narain vs Sukhu
his becoming a major. Ahir
4 A parent or guardian cannot be asked to fulfill the
agreement made by a minor.
5 A minor’s estate is liable for necessaries provided Also a quasi contract.
to a minor. Roberts vs Gray.

6 A minor can be a partner for benefits but not for Raghava Cheriar vs
dues. He can be a beneficiary but he cannot be Srinivasa
made liable for the liabilities of a partnership.
7 A minor can be an agent. But he will not be Dealt under the chapter
responsible to his principal. on Agency.
The cases pertaining to contracts with minor are perhaps the most interesting. Let’s
examine them in light of the provisions of the table above:

Mohori Bibi vs Dharmadass Ghose : A landmark case in this a minor obtained a

loan from a moneylender by giving his property on mortgage. The moneylender’s
lawyer realizing that the minor is underage informed the moneylender who
thereupon took in writing from the minor that he is indeed a major. Subsequently
the minor refused to pay back and sought his property back. It was held by the
court that even if a minor has declared that he is a major he is not stopped from
pleading his minor status and hence the agreement was held void. However the
moneylender pleaded that at least the sum that he had lent be returned back. The
court did not agree because the moneylender being fully aware had taken
advantage. Now if the money is traceable with the minor (i.e still with the minor)
then the court under the principle of restitution will ask the minor to return the
money back because a minor cannot be allowed to benefit from his own fraud and
take advantage of the law.

However if the money or property is not traceable then to ask the minor to
compensate would amount to enforcing the contract which is void in the first place.
(Ajudhia Prasad vs Chandan Lal) & (Gokeda Latcharao vs Bhimayya).

In the case of Khan Gul vs Lakha Singh ( Lahore High Court 1928) the minor
fraudulently concealed his age and contracted to sell his land to the
plaintiff(complainant). The minor received the money (consideration) but failed to
fulfill his part of the bargain. The judje in this case found the agreement void but at
the same time if the minor is claiming justice under one law should he not restore
the consideration back to the complainant.

Therefore the Law Commission (which recommends changes in laws based on

conflicting issues faced by courts) incorporated the conflicting situation of
restitution vs safeguarding interests of minor by making amendments to the
Specific Relief Act and not the Indian Contract Act. That is the remedy was not
within contracts but in the Specific Relief Act. Sec 33 of the Specific Relief Act has
clarified this issue that benefits received under a void and voidable contract need to
be restituted or given back before the minor can claim justice. But if there has been
a deliberate attempt to mislead the minor or take advantage then the courts may
not order restitution.

In Raghava Cheriar vs Srinivasa case a minor gave money in return for a property
mortgaged in favour of the minor. Here the contract was enforced because
contracts benefitting minor are enforceable.
Similarly in Walidad Khan vs Janak Singh a minor paid a sum of money to
purchase land but later was ousted from the land by a third party . The court held
that he was entitled to receive the money paid by him from the person who sold it
to him.

But in Raj Rani vs Prem Adib a film producer entered into a contract with the father
of a minor girl in which he allotted a role for the girl in the film. Subsequently the
film producer gave the role to someone else. The father brought a suit for breach.
It was held that the father could not enforce the contract as he had no
consideration (dealt in the next chapter) and the daughter could not be asked to
perform as the contract is not enforceable and accordingly consideration to her is
also not enforceable. However considering a variation to the above if the minor girl
had played the role but had not been paid then the contract then the agreement
would have been enforceable as it is for her benefit.

Ratification

A contract which was void cannot be ratified subsequently. It would be a

contradiction. And if the contract is signed once again on maturity then it would
require fresh consideration as it is a new contract.(Suraj Narain vs Sukhu Ahir.) In
this case a minor borrowed money executing a simple bond( promise) to pay and
on gaining the age of majority executed another bond to pay the sum. The full
bench of the Allahabad High Court held that the first bond was void as he was a
minor and the second was void for want of consideration.

Necessaries of life.

The law has to take care that while protecting a minor he ought not to suffer for
want of necessaries as that would make the law harmful. Therefore where a person
provides a minor with necessaries of life he is entitled to recover from the minor’s
estate though one cannot make the minor liable personally. For example in Roberts
vs Gray a minor agreed with an expert billiards player to go on a world billiards
playing tour for which the expert spent time and money making arrangements. But
the minor backed out. The expert was entitled to recover his cost as the purpose of
the contract was to make the minor suitable for the game by educating him. The
section under Quasi Contracts deals with this under the
Indian Contract Act.
 Figure 5: INCAPACITY (BESIDES MINORS)

 Visually impaired,
 Oldage
Physical  pardanashin woman.

 Minor
Mental
Of natural person  Unsoundness of mind due to
disease/intoxicants /lunacy

 Insolvency
Legal  Alien Enemy
Incapacity**

Ultra Vires – meaning beyond the powers as stated in the

charter of the creation of the company/trust/LLP or legal
entity such as registered trade union.
Of juristic person*

Winding Up of the company/trade union or legal entity means

that they cease to exist in the eyes of law and are thus
prohibited from entering into contracts.

*A Juristic person is an artificial legal person created by law.

**Persons having no capacity to enter into a contract.

Some more examples

a) Z, a minor under a contract of sale delivered goods to the buyer. The

buyer refuses to pay stating that the seller being a minor the contract
is void. Held that the minor was entitled to maintain a suit for the
recovery of price. [Abdul Ghaffar v. Prem Piare Lal, A.I.R.(1934) Lah.
480]. The law on minors is to safeguard the interests of the minor and
since he is a beneficiary his rights would be enforceable.
b) P. a minor borrows Rs. 7, 000 from Q and executes a promissory note
in favour of Q. After attaining majority, he executes another
promissory note in settlement of the first note. In this case the first
 promissory not and the transaction itself was void because P the minor
does not have the capacity to enter into a contract. The second
promissory note is void for want of consideration. [Indran
Ramaswamy v. Anthiappa Chettiar, (1906) 6 M.L.J. 422]
c) Z, a minor fraudulently representing himself to be of full age, induced
X to lend him £ 400. He refused to repay it and X sued him for the
money. Held, the contract was void and Z was not liable to repay the
amount. [Leslie v. Shiell, (1914) 3 K.B. 607]. Lawrence J. observed in
this case;” Whenever the infant is still in possession of any property in
specie which he has obtained by his fraud, he will be made to restore
it to its former owner. But I think it is incorrect to say that he can be
made to repay money which he has spent, merely because he received
it under a contract induced by his fraud.” Refer to Mohori Bibi vs
Dharmadass Ghose case mentioned earlier.
d) P, a minor entered into a contract with Q, a noted billiards player, to
pay him a certain amount of money to learn the game and play
matches with him during his world tour. Q spent time and money in
making arrangements for billiard matches with him during his world
tour. Held, P was liable to pay as the agreement was in effect for
“teaching, instructing and employment and was reasonable and for the
benefit of the infant.”(Roberts vs Gray)