Contract by Minor

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Contract by Minor

Section 11 of the Indian Contracts Act, 1872 states that any person can enter into a contract who is a major. But the majority has to be in lieu of the law which is under consideration.[1]

The law declared by the Privy Council in the Mohori Bibi [2] case that a minor’s agreement is“absolutely void” has been generally followed, but it has been growingly “confined to cases where a minor is charged with obligations and the other contracting party seeks to enforce those obligations against the minor.”[3]

It was observed by ABUR RAHIM J of the Madras High Court that “what is meant by the proposition that an infant is incompetent to contract or that his contract his void is that the law will not enforce any contractual obligation of an infant.

Accordingly, a minor is allowed to enforce a contract that is of some benefit and under which he is required to bear no obligation. In Raghava Chariar v.Srinivasa [4] the following question was referred for decision of a Full Bench of the Madras High Court:

Whether a mortgage executed in favour of a minor who has advanced the whole of the mortgage money is enforceable by him or by any other person on his behalf.”

The unanimous opinion of the Full Bench was that the transaction was enforceable by or on behalf of the minor.

WALLIS CJ said, “The provision of law which renders minors’ incompetent to bind themselves by a contract was enacted in their favour and for their protection, and it would be a strange consequence of this if they are to take nothing under transfers in consideration of which they have parted with their money.”

The same opinion was expressed by BEAUMONT CJ of the Bombay High Court:[5]

The provisions of the law which make a contract by a minor not binding not binding were no doubt intended to be for the benefit of the minors, and the courts in this country when faced with a contract which has been carried out by or on behalf of the minor, the performance of which by the other party is then resisted on the ground of minority, have struggled hard to avoid holding the contract wholly void to the detriment of the minor.”

Accordingly, the learned Chief Justice rejected the defence of an insurance company that the person on whose behalf certain goods were insured was a minor and allowed the minor to recover the insurance money.[6]

On the same principle it has been held that “a minor is capable for purchasing immovable property and may sue to recover the possession of the property purchased upon tender of the purchase money.”[7]

In Ulfat Rai v.Gauri Shanker,[8]where the court held that, “There is nothing in the Transfer of Property Act which makes a minor incapable of being a transferee of immovable property. He cannot transfer immovable property, it is true, but that is a different thing from recovering as a transferee.”

All cases proceed on the principle that a minor has already given full consideration to be supplied by him and there is nothing that remains to be done by him under the contract. He is now a mere promise and prays the court for recovering the benefit stipulated. But where the contract is still executor or the consideration is still supplied, the principle of the Mohori Bibi case[9] will thwart any action on the contract.

In Raj Rani v Prem Adib,[10]The plaintiff, a minor, was allotted by the defendant, a film producer, the role of an actress in a particular film. The agreement was made with her father. The defendant subsequently allotted that role to another artist and terminated the contract with the plaintiff’s father.”

The Bombay High Court held that neither she nor her father could have sued on the promise. If it was a contract with the plaintiff, she being a minor, it was nullity.

In Walidad Khan v Janak Singh [11] a minor has given consideration under a contract, but the consideration given to him has failed, he may have restitution. Thus, where a minor bought a zamindari property on payment of money, but he was ousted on a suit by a third party, it was held that “The minor was at any rate entitled to recover from the vendor the sum which he had paid as purchase money.”

For this principle to apply there should be total failure of consideration. Where, for example, in Steinburg v.Scala (Leeds) Ltd.,[12] where a minor purchased some shares in a company and then repudiated them and also asked for refund of the partly paid purchase price, the court held that the price which he has already paid is not refundable, because there was evidence that the shares were of some value. If the shares were totally worthless there would have been total failure of consideration entitling the minor to refund. But he was not liable to pay further demand or calls for payment.

When an infant has paid for something and has consumed or used it, it is contrary to natural justice that he should recover back the money which he has paid.”[13] This is the principle of the well-known case of Valentini v.Canali.[14]

The plaintiff, a minor, agreed with the defendant to become a tenant of his house and pay 100 pounds for the furniture therein. He paid 68 pounds in cash and gave a promissory note for the balance. The plaintiff occupied the premises and used the furniture for some months and then brought an action for the refund of the consideration paid by him.

The court ordered the cancellation of the promissory note, but refused to order refund the sum paid. “The infant plaintiff had the quantity use of furniture for some months. He could not give back this benefit or replace the defendant in the position in which he was before the contract. The legislature never intended, in making provisions for this purpose (for the protection of the infants), to sanction a cruel justice.” [15]


[References]

[1]Indian Contracts Act, 1872. Section 11.

[2](1903) 30 IA 114.

[3]Raghava Chariarv Srinivas (1916) 40 Mad 308.

[4](1916) 40 Mad 308.

[5]Great American Insurance Co Ltd vMandanlal(1935) 59 Bom 656.

[6]ChekhaAdinarayana v Oriental Fire & General Insurance Co Ltd, AIR 2006 AP 479(NOC).

[7]Thakar Das v Mt Putli, AIR 1924 Lah 611.

[8](1911) 33 All 657.

[9](1903) 30 IA 114.

[10]AIR 1949 Bom 215.

[11]AIR 1935 All 370.

[12](1923)92 LJKB944.

[13]LORD COLERIDGE CJ in Valentini v.Canali,(1889)24 QBD 166.

[14](1889)24 QBD 166.

[15]BEAUMONT CJ, commenting on this case.

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