Rules Regarding Minor’s Agreement

Understanding the Legal Framework and Implications

Who is a Minor under Indian Contract Act, 1872?

In India, anyone under the age of 18 is considered a minor. Even if a person is 17 years and 364 days old, they are still regarded as a minor. The age of majority, which marks the transition to adulthood, is determined by the Indian Majority Act of 1875. According to the Indian Contract Act of 1872, minors are considered legally incompetent to enter into contracts. This means any agreement made with a minor is considered void and unenforceable. The law recognizes the need to protect minors' interests and well-being by restricting their contractual capacity until they reach the age of majority.

Nature of a Minor’s Agreement

An agreement made by a minor is considered void from the beginning and has no legal effect. This means that neither party is legally obligated to fulfill any duties arising from such an agreement. The law recognizes that minors lack the capacity to enter into binding contracts, thus protecting their rights and interests.

What are the Rules Regarding Minor’s Agreement?

1. An Agreement With or By a Minor is Void

According to Section 10 of the Indian Contract Act, a contract involving a minor is void. Section 11 further clarifies that a minor does not have the competence to enter into a contract. This was established in the case of Mohri Bibi v. Dharmo Das Ghose (1903), where a minor borrowed Rs. 20,000 and later sought to cancel the mortgage executed during his minority. The court ruled that the mortgage was void and that the minor was not liable to repay the amount.

2. Absence of Ratification

A minor’s agreement cannot be ratified even after they reach the age of majority. A void agreement cannot be made valid by ratification. However, a new promise supported by fresh consideration made after attaining majority can be binding.

3. Minor as a Promisee or Beneficiary

A minor can be a promisee or beneficiary in a contract and can enforce such a contract. Minors can be beneficiaries, such as payees or promisees, and can purchase immovable property or enforce a promissory note.

4. No Estoppel Against a Minor

If a minor misrepresents their age and induces another party to enter into a contract, the minor cannot be held liable. The principle of estoppel does not apply to minors, so they can use their minority as a defense to avoid the contract.

5. Specific Performance Except in Certain Cases

Since a minor’s contract is void, specific performance is not possible. A guardian cannot bind a minor by entering into a contract for the purchase of immovable property, and the minor cannot seek specific performance unless the contract was within the guardian's authority and for the minor's benefit.

6. No Insolvency

A minor cannot be declared insolvent because they are incapable of incurring debts. Any dues would be payable from the minor's personal properties, not from the minor personally.

7. Partnership

A minor cannot be a partner in a partnership firm, but under Section 30 of the Indian Partnership Act, they can be admitted to the benefits of a partnership.

8. Minor as an Agent

A minor can act as an agent but will not be held liable to their principal for their acts. They can handle negotiable instruments without assuming personal liability.

9. Minor’s Inability to Bind Parent or Guardian

A minor cannot bind their parent or guardian unless acting as their agent, even for necessaries.

10. Joint Contract by Minor and Adult

In a joint contract involving a minor and an adult, the adult is held liable, while the minor is not. For instance, in Sain Das vs. Ram Chand, the contract was enforceable against the adult but not the minor.

11. Surety for a Minor

In a contract of guarantee where an adult acts as a surety for a minor, the adult is liable to the third party.

12. Minor as Shareholder

Minors cannot enter into contracts and, therefore, cannot become shareholders. However, they can become shareholders through lawful guardians.

13. Liability for Necessaries

Minors are liable for necessaries supplied to them, but only to the extent of their value. The minor’s property, not the minor personally, is liable for the value of these necessaries.

Conclusion

In summary, the rules regarding a minor’s agreement include its void nature, exceptions for enforceability, limited liability for necessaries, inability to bind others, and specific considerations for torts, partnerships, and suretyship.