The Void Nature of Minor’s Contracts: A Comprehensive Overview

According to the Indian Majority Act, 1875, a minor is defined as a person, male or female, who has not completed 18 years of age. However, if a guardian has been appointed for the minor or the minor is under the guardianship of the Court of Wards, the person remains a minor until the completion of 21 years. The Indian Contract Act stipulates that no individual lacking the age of majority is competent to enter into a contract. This principle was conclusively established by the Privy Council in the landmark case of Mohori Bibi v. Dharmodas Ghose (1903) 30 Cal. 539, wherein it was held that a minor’s contract is void ab initio (absolutely void).

Key Case: Mohori Bibi v. Dharmodas Ghose

In this case, a minor, X, borrowed ?20,000 from Y, a moneylender, and executed a mortgage in Y’s favor as security. When Y sued for repayment, the Court declared the contract void ab initio, stating that X could not be compelled to repay the borrowed amount. Indian courts have consistently applied this precedent, particularly in cases where liabilities on both sides are outstanding, emphasizing the protection of minors’ interests. If the minor has already fulfilled their part of the contract, they can enforce the agreement against the other party.

Under the Transfer of Property Act, minors cannot transfer property but can accept transfers. This statutory provision reflects the broader principle of safeguarding minors’ interests.

Essential Points Regarding Minor’s Contracts:

1. Void Nature of Minor’s Contracts

• A minor’s contract is entirely void in law. A minor cannot be legally bound by a contract.

• If a minor obtains a benefit, such as money on a mortgage, they cannot be compelled to repay it, nor can their mortgaged property be held liable.

2. No Ratification Upon Majority

• Since a minor’s contract is void ab initio, it cannot be ratified after attaining the age of majority.

3. Principle of Estoppel Not Applicable

• Estoppel prevents a person from denying a statement made earlier. However, a minor can always plead minority, even if they misrepresented their age while entering into a contract. For instance, if a minor falsely claims to be of full age to secure a loan, they can still plead minority to avoid liability.

4. Restitution in Case of Fraud

• If a minor fraudulently represents their age to obtain a benefit, such as purchasing a car, the Court may order them to return the property (if still in their possession) on equitable grounds. Under Section 33 of the Specific Relief Act, 1963, the Court may direct the minor to restore benefits received under the agreement, to the extent that they or their estate have been enriched.

5. Liability for Necessaries

• Under Section 68 of the Indian Contract Act, a minor’s estate is liable to pay a reasonable price for necessaries supplied to them or those they are obligated to support. Necessaries are determined based on the minor’s status and actual needs. Examples include:

  • Costs for successfully defending a suit to protect the minor’s property.

  • Expenses incurred in legal defense or prosecution.

  • Marriage expenses in the case of a Hindu minor.

6. No Specific Performance

• Courts will not order specific performance of an agreement made by a minor, as such agreements are void.

7. Role of a Minor in Agency and Partnerships

• A minor can act as an agent but not as a principal.

• A minor cannot be a partner in a firm but can be admitted to the benefits of a partnership.

8. Exemption from Insolvency

• A minor cannot be adjudicated insolvent, as they are not personally liable for debts.

9. Contracts by Guardians

• Agreements made by a guardian on behalf of a minor are binding if they benefit the minor or meet legal necessities. For example:

  • Contracts for marriage, where customary, can be enforced if they benefit the minor (Rose Fernandez v. Joseph Gonsalves, 48 Bom. L.R. 673).

  • Apprenticeship contracts are also binding.

• However, contracts not meeting these criteria, such as a father arranging employment for a minor daughter (Raj Rani v. Prem Adib, (1948) 51 Bom. L.R. 256), are not enforceable.

Conclusion

The legal framework surrounding minor’s contracts in India emphasizes protecting minors from exploitation and ensuring their best interests. The principles established by the judiciary and statutory provisions collectively safeguard minors while recognizing their unique legal status. This balanced approach prevents minors from being unfairly bound by their actions while ensuring equitable remedies in cases of fraud or unjust enrichment.

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Article Compiled by:-

~Neel Lakhtariya

(LegalMantra.net Team)