DR.

RAM MANOHAR LOHIA NAIONAL LAW

UNIVERSITY
2023-24

CONTRACT LAW 1
Project and Case Analysis on
Contract with Minor

SUBMITTED TO: SUBMITTED BY:

DR. PRIYA ANURAGINI GAURAV KUMAR

MODANWAL

ASSISTANT PROFESSOR [LAW] SECTION – A

RMLNLU ROLL NO. – 230101056

II SEMESTER

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ACKNOWLEDGEMENT

Firstly, I would like to thank my Prof. Ms. Priya Anuragini for giving me such
a golden opportunity to show my skills through this project. The project is a
result of an extensive research study, hard work and labour, that is put into to
make it worth reading.

I wish to acknowledge that in completing this project I had full support of

my friends as well as my teacher. This project would not have been completed
without the help of my university’s library and through the university’s internet.

Thanking you

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 TABLE OF CONTENTS

1. INTRODUCTION...................................................................................
............... 4

2. LAWS REGARDING MINOR’S

CONTRACT................................................5

3. DISTINCTION BETWEEN INDIAN AND ENGLISH LAW AS TO

MINOR’S
CONTRACT...........................................................................10

4. CASE
STUDIES.................................................................................................
....11

5. BIBLIOGRAPHY...................................................................................
...............16

6.

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 CONTRACT

 Section 2 (h) of the Indian Contract Act, of 1872 defines a contract as:
‘An agreement enforceable by law is a contract.’

 Contract is a combination of agreement and enforceability. The creation

of obligation on the part of the parties to an agreement to perform their
liabilities gives the cause of enforceability of an agreement. The nature of
the agreement is then changed into a contract.

MINOR

 According to Section 3 of the Indian Majority Act of 1875, a minor has

not completed his 18th year of age. So a person becomes a major after the
completion of 18 years of life. To this rule, there are two exceptions:

1. When a guardian of the minor’s person or property is appointed by a

court of law;

2. 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. In India Section 11 expressly provides that the age of majority of 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 entered into. But the later trend of
law for determining the age of 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.

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 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 hehas 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 the Act.

2. A minor cannot be compelled to compensate for or refund any benefit which

he has received under a void contract:

Section 64 and 65 of the Contract Act, which deal with restitution, apply only to
contracts between competent parties and are not applicable to a case where there
is not and could not have been any contract at all. It has also been observed in
many cases that the 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. Therefore, a minor on
attaining majority cannot 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:

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The case of necessaries supplied to a minor is covered by Section 68 of the
Contract Act 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, the person who has
furnished such supplies is entitled to be 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 minor is bound to support. What is a necessary article is to be
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 things exists, 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 other party in cases where an infant obtains a loan by falsely 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 minor:

As we are aware that an agreement by as minor is 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 minor, by his guardian or by the manager of his
estate will be 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:

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Law says that -‘A minor being incompetent to enter into contract cannot be a
partner in a partnership firm; but under Section 30 of the Indian Partnership Act
1932, he can be admitted to the benefits of partnership with the consent of all
the partners by an agreement executed through his lawful guardian 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. He cannot be made personally liable for any obligations of the firm,
although he may after attaining majority accept those obligations if he thinks fit
to do so.

8. Minor as an Agent:

A minor can be appointed as an agent (Sec184). 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.Surety for a minor:

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.

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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 obligations undertaken are within the powers of the guardian. 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 can not be a

shareholder of the company. Therefore a company can refuse to register,
transfer or transmission of shares in favour 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 contract by their parents and guardians is 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 Indian law
and the mere fact it is for his benefit would not entitle the minor to
sue under the contract.
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(ii) A minor may bind himself by a contract of apprenticeship if it is
before his benefit but he cannot be used for failing to serve as such.

(iii) Contract with minor does not create legal contractual 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.

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 DISTINCTION BETWEEN INDIAN AND ENGLISH LAW AS TO
MINOR’S CONTRACT

The English Law is the principal source of Indian Law. But the Indian Law
differs from the English Law on the subject of minor’s contracts on the
following points:

1. In India the minor’s contract is altogether void but in England it is

sometimes void and sometimes voidable. In England the loan of money
to a minor is void.

2. In India, a minor can ratify a fresh consideration of a contract entered into

during minority where as in England he cannot do so.

3. In India a minor on attaining majority can neither sue nor be sued on

contracts entered into by him during minority but in England he can sue
on the contract for damages.

4. In India a minor’s property is liable for the necessaries and not his
personal self acquired property but in England the minor is
personallyliable.5.In India there can be no specific performance by or
against the minor unless it is a contract entered into by a guardian on
behalf of the minor sand the minor’s benefit. In England there can be no
specific performance for want of mutuality in the contract.

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 CASE STUDIES

CASE I: Ramchandra v. Manikchand And Anr. on 9/2/1968

( This appeal is by the defendant. The trial Court has passed a decree for
specific performance.)

The suit was filed by the plaintiffs (respondents 1 and 2), when they were
minors, through their guardian, Smt. Phulibai, their mother. Smt. Phulibai had
entered into an agreement dated 30-9-1961 on behalf of the minors for
purchasing house property from the defendant (appellant) for a consideration of
Rs. 11,000. Rs. 1,000 was paid towards earnest and the rest of the amount was
to be paid at the time of the registration of the sale-deed.

The relevant term of the agreement was:

The purchaser shall construct a partition wall at his own cost and in the
presence and help of the vendor.

The plaintiffs' case was that the defendant did not obtain permission from the
Municipal Corporation and hence the construction could not be completed. The
suit for specific performance was filed. The defence was that the breach was
committed by the plaintiffs themselves and that they were not entitled to the
specific performance. The defendant, claimed that he was entitled to the
expenses incurred by them; and as the plaintiffs' guardian was not prepared to
pay the amount, the sale-deed was not executed. Thus, the breach was
committed by the plaintiffs. The trial Court found that the responsibility of
constructing the partition wall was that of the purchaser, even if the defendant
spent any amount, he did it at his own risk; and that, the plaintiffs were always
willing to purchase the property and hence decreed their suit for specific
performance.

The plaintiffs were not guilty of committing any breach of the contract and that
the defendant was not willing to execute the sale-deed as per the agreement.

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Solution: The trial court is right as the responsibility of constructing the wall
was of plaintiff (purchaser) and if seller spends the money he did it at his own
cost/risk and cannot claim the amount from the purchaser. Plaintiff has full
rights to claim the property of which she has paid the earnest money and
defendant (appellant) has to execute the sale deed as per the agreement dated
30/09/1961. The appeal should be dismissed.

CASE II: Subrahmanyam's case. (AIR 1948 PC 95)

A had executed promissory notes in the sum of Rs. 16,000 in favour of B. He

had also mortgaged certain property to a third party in the sum of Rs. 1,200. A
died on 4-10-1935. His widow entered into an agreement dated 29-11-1935 on
behalf of her minor son to transfer the mortgaged property to B for a
consideration of Rs. 17,000. Out of this amount, B was to utilize Rupees 1,200
in redeeming the mortgage and rest of the amount towards satisfaction of his
own debt under the promissory notes. A suit was filed on behalf of the minor for
possession of the property on the ground that the agreement entered into by his
mother was not binding on him. The defence was that B was protected under
Section 53A of the Transfer of Property Act. The trial Court held that as A and
his son, the minor, were members of a joint Hindu family, the minor was
bound to satisfy the debt. His guardian could have, therefore, validly transferred
the property, as the transfer would have been for the benefit of the minor. Even
though no sale-deed was executed in favour of B, he was entitled to protection
under Section53A of the Transfer of Property Act. This decision was reversed
by the first appellate Court and was confirmed by the High Court. The guardian
of the Hindu minor was, called upon to decide as to whether the expression 'the
transferor' would include a minor on whose behalf the agreement had been
entered into by the guardian.

If the transfer had been affected, the transfer would have been of the minor's
property, and not of his mother, and hence there was no reason why the minor
should not be treated as a transferor. The High Court was of the view that the
observations of the guardians are not applicable to all contracts entered into on
behalf of the minor. We have already pointed out that the guardian of a Hindu
minor could validly transfer his property if it was for legal necessity or benefit
of the estate of the minor; but he had no authority to purchase any property.

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Solution: A contract by a guardian on his behalf is valid provided the
obligations undertaken are within the powers of the guardian. 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. Here the agreement entered into by the mother of minors is
not binding on the minor as the agreement is not for their benefit. Minors are
not bound to satisfy the debt taken by their guardian. The transfer of the said
property to B is not for the benefit of the estate of the minor, thus null & void

CASE III: Suresh Chandra Pradhan vs Ganesh Chandra De And Ors. On

2/9/1949

Defendants 1 & 2 are minors & the suit contract is one entered into on their
behalf by their mother as guardian. The contract was for selling the property for
a sum of Rs. 75 out of which Rs. 35 was paid as advance & the balance was to
be paid later. Defendant 3 who is the sister's husband of defendants l & 2 has
purchased the suit property on3-2-1943 subsequent to the agreement in favour
of the plaintiffs. The genuineness of the consideration alleged to have been paid
there under were denied by the defendants & contested in the courts below. It
has been found by the trial Court that the agreement was true & that a sum of
Rs. 35 was paid as an advance under it. It was also found that the agreement
was executed in order to raise money to repay a decretal debt for Rs. 60 against
the minors in respect of which there was an execution pending at the time. It
was further found that defendant 3 was fully aware

of the agreement & took the sale deed in his favour with notice of the same. The
argument that has been advanced on behalf of the defendants is that no specific
performance can be decreed against the minors on the basis of a contract
entered into on their behalf by their guardian even though it may be for legal
necessity or for the benefit of the minor. This contention has been accepted by
both the Courts below & the suit has been accordingly dismissed. It has been
taken as settled law that a mere executory contract entered into by a guardian on
behalf of a minor imposing a personal obligation on the minor's estate is not
valid & binding & it makes no difference that it is for necessity or benefit.

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Solution: A contract by a minor is void but a contract by a guardian on his
behalf is valid provided the obligations undertaken are within the powers of the
guardian. 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. Here the contract entered into on
their behalf by their guardian is for legal necessity but no specific performance
can be decreed against the minors because Minor’s liability is only for the
necessaries supplied to him.

CASE IV: Lakhwinder Singh vs Miss Paramjit Kaur AIR 2004

Facts:

1. Plaintiff-respondent is owner in joint possession with defendant-respondent,

in respect of some land, inherited from her father’s property.

2. Plaintiff executed power of attorney dated 29.8.1991 in favour of her mother

in respect of her share in land.

3. The sale deed dated 9.9.1991 was executed by her mother in favour of the
defendant-appellant on the basis of power of attorney dated 29.8.1991.

4. The plaintiff was minor at the time when the sale deed was executed in
favour of the defendant.

Plaintiff’s Contention

1. The sale deed dated 9.9.1991 executed in favour of the defendant-appellant

on the basis of power of attorney dated 29.8.1991 is not binding on the plaintiff-
respondent because she was minor at the time of execution of the power of
attorney dated 29.8.1991 and therefore it was void.
2. It has been claimed the sale deed and mutation effected on that basis in
favour of the defendant-appellant have no binding effect on her rights because
Rattan Kaur was fully aware that the plaintiff-respondent was minor at that
time.

Defendant’s Contention

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1. Plaintiff-respondent was estopped from filing the suit by her act and conduct
as he held out to the defendant-appellant that she was major and fully competent
to execute the power of attorney in favour of her mother.
2. based on the representation made and believing her representation regarding
her age as the correct power of attorney was executed on 29.8.1991and on that
basis sale deed was executed by Rattan Kaur in favour of the defendant-
appellant on 9.9.1991.

Concrete Decision

Defendant’s contention(2) was rebutted by a court ruling that even if the minor
falsely stated that he is allowed to plead minority as a defence to avoid liability
under the agreement because the main aim of the court is to protect the interest
of the minor. On the vital issue as to whether the plaintiff-respondent was
qualified to execute the power of attorney on 29.8.1991 and therefore the sale
deed was valid, the Court recorded findings of facts that the date of birth of the
plaintiff-respondent is 26.2.1975 once it has been established as a fact then
under Section 2, 10 and 11 of the Indian Contract Act, 1872, plaintiff-
respondent would not be a person competent in law to contract and to execute
any power of attorney in favour of her mother Rattan Kaur authorising her to
alienate her share in the property. Therefore, it was held that the sale deed dated
9.9.1991 is void ab initio and cannot confer any right on the defendant-
appellant.

BIBLIOGRAPHY

1. The Indian contract Act, 1872

2. Contract and Specific Relief by Avtar Singh

3. www.manupatrafast.com

4. www.indiankanoon.org

5. www.wikipedia.com/minor’scontractinIndia

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