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It covers about the concept of minority in contract law
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Competency is one of the essential condition of contracts i.e. parties must be competent to form a contract. Competency is defined in Section 11 of Indian Contract Act, 1872: Section 11: Who are competent to contract. – Every person is competent to contract who is of the age of majority according to law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. Thus, it can be deduce from this section that the following persons are incompetent to contract –
This section deals with personal capacity of three types: a) arising from age; b) arising from soundness of mind; and c) arising from provisions of law. Competency of contract and authority to contract are different from each other. This section deals about inherent incompetency to contract but it does not cover cases of legal artificial persons, who are competent to contract if authorised by statute or by their constitution. The capacity of a statutory person is different to that of an individual.
The need of this section is to protect those whose mental powers are underdeveloped or undeveloped who may do an injury to themselves by their decisions, by preventing them from doing themselves an injury by their legal declarations.^1 But exceptions of this section are necessary else no one would make a contract with such person even if it were essential. Any provisions of law must therefore balance these two interests, the interest of the protection of such incompetent persons, and the interests of the persons dealing with them.^2 (^1) Pollock & Mulla, The Indian Contract And Specific Relief Acts, 14th (^) edn, Vol. 1, p. 282 (^2) Pollock & Mulla, The Indian Contract And Specific Relief Acts, 14th (^) edn, Vol. 1, p. 282
As discussed earlier that the agreements of minors are void. There is no contract with minor and if there is no contract with minor then there should be no contractual obligation on either side.
If a minor misrepresent his age and induces another to contract with him then also a minor will not be liable but equity has intervened to prevent him from taking disadvantages of his fraud. English courts have not allowed the minor to retain the unfair advantage under equity in the transactions between adult and minor, where the minor seeks unfair advantage by misrepresenting his age.^4 In Stocks v. Wilson^5 , a minor obtained furniture and other articles from the plaintiff by misrepresenting his age and promised to pay GBP 300 for these. The goods were not necessaries. He sold a portion of the goods for GBP 30 and granted a bill of sale for the rest as security for an amount of GBP 100 lent to him by a third party. He then sold the goods to the grantee of the bill of sale. The court held that he was held liable in equity to account to the plaintiff for 130 GBP, which was the benefit of what had been obtained by reason of his fraud. What happened if a minor seeks unfair advantage by misrepresenting his age and used all the resources obtained by entering into agreement? How the resources will be traced? How the resources will be restored? Can the resources be restored? These doubts were cleared in case of R Leslie Ltd. v. Sheill.^6 The judgment of the case Stocks v. Wilson was criticised but not overruled. Lord Sumner has said that: …. when a minor obtains an advantage by falsely stating himself to be of full age, equity required him to restore his ill-gotten gains or to release to party deceived from obligations or acts in law induced by the fraud, but scrupulously stopped short of enforcing against him a contractual obligation entered into while he was an infant, even by means of a fraud. Restitution stopped where repayment began. His Lordship then proceeded: The money was paid over in order to be used as the defendant’s own, and he has so used it and spent it. There is no question of tracing it, no possibility of restoring the very thing got by fraud, nothing but compulsion through a personal judgment to pay an equivalent sum out of his present or future resources, in a word, nothing but a (^4) Pearce v. Brain, [1929] 2 KB 310 (^5) [1913] 2 KB 235, 108 LT 834 (^6) [1914] 3 KB 607
judgment in debt to repay the loan. I think this would be nothing but enforcing a void contract. So far as I can find, the Court of Chancery never would have enforced any liability under circumstances like the present, any more than court of law would have done so.
If a minor, by misrepresenting his age, procures a loan or enters into an agreement, is he estopped by Section 115 of the Indian Evidence Act, 1872^7 from setting up his minority? Will he be precluded from disclosing his true age in a litigation resulting from the contract? These questions had created a controversy. But the controversy is resolved by a preponderance of authority that there is no such estoppel against minor.^8 This is based on the principle that there can be no estoppel against a statute and the infant is not estopped from setting up the defence of infancy. The policy of law of contract is to protect persons below age from contractual liability and naturally the doctrine of estoppel cannot be used to defeat that policy.
According to Doctrine of Restitution if an infant obtains a property or goods by misrepresenting his age, he can be compelled to restore it, but only so long as the same is traceable in his possession. Whether the infant has sold goods or converted them, he cannot be made to repay the value of the goods, because that would amount to enforcing a void contract. The Section 33 of the Specific Relief Act, 1963 states that:-
contract and is the means of effecting it and is a parcel of the same transaction, the minor is not liable in tort.” But where the tort is independent of the contract, the mere fact that a contract is also involved, will not absolve the infant from liability. Thus, in the case if Burnard v_. Haggis_^13 where an infant borrowed a mare riding only, he was held liable when he lent her to one of his friends who jumped and killed her. Similarly in the case of Ballet v_. Mingay_^14 an infant was held liable for the tort of detenue for his failure to return certain instruments which he had hired and then passed on to a friend.
A minor can enforce a contract made in his favour for valuable consideration, the reason being that although he cannot incur liability, he is not debarred from acquiring title to anything valuable.^15 A minor can sue on a promissory note^16 or a bond^17 executed in his favour. A minor in whose favour a mortgage has been executed can sue to recover the principal and the interests of the amount advanced by him.^18 A person receiving goods from the minor is liable to pay the price.^19
A minor cannot be a partner, but can be admitted into the benefits of partnership.^20 An agreement of partnership making a minor full-fledged partner is invalid qua all partners.^21 But if the guardian of a minor agrees to get a share of profits in lieu of interest on the minor’s monies advanced by the guardian to a partnership, the agreement is not void.^22 (^13) (1863) 4 CBNS 45: 8 LT 328 (^14) 1943 KB 281 (^15) Firm Bhola Ram Harbans Lal v. Bhagat Ram, (1926) 99 IC 318, AIR 1927 Lah 24 (^16) Sharfat Ali v. Noor Mahomed, AIR 1924 Rang 136 (^17) Hanmant Laxman v. Jayarao Narshina, (1889) ILR 13 Bom 50 (^18) Madhab Koeri v. Baikuntha Karmaker, (1919) 4 Pat LJ 682 (^19) Abdul Ghaffar v. Firm Piare Lal Salig Ram, AIR 1934 Lah 480 (^20) The Indian Partnership Act, 1930, s. 30 (^21) Dharam Vir v Jagan Nath, AIR 1968 Punj 84 (^22) Gursaran Lal v. Seral Kumar, AIR 1956 All 136
Under the English statue law, subject to certain conditions, a minor can become a member of a friendly society, an industrial and provident society, a trade union or building society.^23 It is submitted that in India the law would not be different, provided such memberships are for the benefit of the minor or a requirement of conditions of service or for the welfare of the minor or his family. A minor may be admitted to the membership of certain societies. A person who has attained 15 years of age can become a member of trade union.^24
A contract to marry in the future made by a minor is void. But the agreement for the marriage of a minor is also prima facie for his benefit.^25 When the agreement of marriage of a minor involves statutory violation, e.g. the Hindu Marriage Act, 1955 the age of the girl has to be 18 years, the agreement is likely to be avoided. In this case, on the date of engagement the age of girl was not of 18 years but on the date fixed for marriage she would have completed 18 years. The agreement was held to be valid.^26
The definition of sound mind is given in section 12 of Indian Contract Act, 1872.
12. What is a sound mind for the purposes of contracting. —A person is said to be of sound mind for the purpose of making a contract, if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests. —A person is said to be of sound mind for the purpose of making a contract, if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests." A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind. A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind. Illustrations (^23) Pollock & Mulla, The Indian Contract And Specific Relief Acts, 14th (^) edn, Vol. 1, p. 293 (^24) The Trade Unions Act, 1926, s. 21 (^25) Avtar Singh, Contract and Specific Relief Act, 11th (^) edn, p. 160 (^26) Tulshiram v Roopchand, (2006) 2 Mah LJ 647
possible connection with the business involving such transactions. No judge, legal practitioners or officer connected with any court of justice shall buy or traffic in, stipulate for or agree to receive any share of, or interest in any actionable claim.^31 Officers and employees of the patent offices are incapable, during the period in which they hold their appointments, to acquire or take any right or interests in any patent issued by that office.^32
This section basically says about the capacity of person to contract or incompetency to contract. The need of this section is to protect those whose mental powers are underdeveloped or undeveloped who may do an injury to themselves by their decisions, by preventing them from doing themselves an injury by their legal declarations Some of the exceptions this have are beneficial at some place and unbeneficial at some place. Exceptions of this section are necessary else no one would make a contract with such person even if it were essential. Any provisions of law must therefore balance these two interests, the interest of the protection of such incompetent persons, and the interests of the persons dealing with them. (^31) The Transfer of Property Act, 1822, s. 136 (^32) The Patents Act, 1970, s. 75
