One of the essentials ingredients for a valid contract is that parties must be competent to form a contract. Section 11 of the Indian Contract Act, 1872, states that the capacity to contract between 2 parties fulfilling condition stated below:-

• Attaining the age of the majority
• Being of sound mind and 

Not disqualified from entering into a contract by any law that the person is subjected to

Table of content

Introduction

1) Who is Minor?

• Contract with minor is void.
• Case law: MOHIRI BIBI VS DHARMODAS GHOSH

2) Benefits to minor in contract

• Insolvency and minor
• Joint contract by minor and guardian
• Minor to major and status of contract(ratification)

3) Exception to general principles

• Minor being a promisee in a contract
• Contract by guardian
• Case law – GREAT AMERICAN INSURANCE VS MADAN LAL
• Contract of apprenticeship

4) Exception – minor’s liability.

• Quasi-contract
• Of unjust enrichment
• Section 68 INDIAN CONTRACT ACT.
• Case law -Nash v. Inman
• Case law- Ryder v. Wombwell
• Section -70 INDIAN CONTRACT ACT
• Compensation by minor for unjust enrichment.
• Case law- KHAN GHUL VS Lakha Singh 1928

1. Who is minor?

As per the Indian Majority Act, 1875, the age of the majority in India is 18 years. Even 24 hours less disqualifies him/her from party to contract. Attaining a majority for every contract is an essential condition precedent. As per Indian law, a minor’s agreement stands void. So a contract with a minor cannot be imposed, to make good on contract with the minor, exception is sec 68. When a minor attains majority, the same agreement cannot be imposed on him. A minor’s contract is void/null, not illegal.

Mohiri Bibi v. Dharmodas Ghosh

The case goes back to the year 1903 in which, the Privy Council held for the first time that a minor’s contract is void-ab-initio.

Respondent- Dharmodas Ghosh, a minor, mortgaged his property to the appellant, a moneylender. At that time, the appellant’s attorney had the knowledge about respondent’s age. The respondent sued through her mother, as guardian and pleaded that the mortgagee deed should be held void as the contract with the minor should be void (minor doesn’t have the capacity to understand the consequences of his action), so the contract being void, minor is not bound by the contract.

The court also held that the rule of estoppel does not apply to a minor either, when the appellant pleaded that the respondent represented himself as major, the doctrine of estoppel should apply to him. Court held that there must be no obligation that can be put upon the minor regarding the promise made by him, for any consideration given to him by the appellant, can be recovered by his estates only. Court also held that the respondent (minor) personally cannot be held liable for the void agreement.

2. A Minor could be a beneficiary of a contract

Though a minor is disqualified from being a party to a contract, he could be the beneficiary of to contract. Section 30 of the Indian Partnership Act, 1932, also states that while a minor cannot be a partner in a partnership firm, the benefits of the firm can be extended towards him.

Insolvency

A minor could not be declared insolvent, the reason being, minor cannot be in debt. Also, if any dues are pending then they can be recovered from the properties of a minor, and he cannot be held personally responsible.

Joint contract by a Minor and an Adult

For a joint contract between an adult and minor, executed by the guardian on behalf of a minor, the contract’s legal responsibility falls on the adult.

Ratification on attaining majority is not permitted Minor’s agreement is void, so, minor can not validate it through ratification on attaining majority. For example – a contract with a minor is void but when a person becomes major then no pressure can be put upon minor turn major to perform the same contract, only new contact can be drafted and can be performed. 

3. Exception to general rule

For the protection of the minor’s interest, certain exceptions are here.

When minor has performed his obligation: 

A minor can be a promisee but not a promisor. So if the minor has performed his part of the promise, but the other party hasn’t performed, then the minor being a promisee. He can enforce the contract and another, the party has to perform his promise.

Contract by Guardian

A contract was entered into by the guardian of the minor for his benefit. Minor can sue the other party when the other party does not perform its promise

Case law – Great American Insurance v. Madan Lal

The guardian on the behalf of her minor son entered into an insurance contract in respect of fire for a property belonging to the minor. The property was damaged in a fire, the insurer denied the compensation, saying that a contract with a minor void. But the court held that this contract was enforceable, and he is liable to pay compensation as it is for the benefit of the minor.

Contract of apprenticeship

Indian Apprentices Act, 1850, a contract of apprentice entered by a guardian on his behalf is binding on the minor but not personally only minor’s property is binding in this case.

4. Quasi-contract Exception to express contract ( minor’s liability)

There are certain obligations, specified in the Indian Contract Act, that are not contracts made by parties themselves expressly but are still enforceable through the operation of law. Such obligations are called quasi-contractual obligations. Sections 68 to 72 (Chapter V) of the Indian Contract Act, 1872.

The Principle of Unjust Enrichment

Quasi-contracts are based on the principle of “Nemo debet locupletari ex aliena jactura”– ‘No man should grow rich out of another person’s loss’. Therefore, liability in the case of quasi-contractual obligations is based on the principle of unjust enrichment. It essentially means that no man should get unjustly enriched at the cost of another person’s loss.

Features of a Quasi-Contract

It is based on justice, equity, good conscience and principles of natural justice.

Section 68 (Claim for necessaries supplied to person incapable of contracting, or on his account)

If the “necessaries” for a person, who is incapable of entering into a contract, are taken care of by any person, that person has the right to be reimbursed from the property of such incapable person. Where incapable people are Minor or Mentally disabled person or Dependants of such a person who is minor or mentally disabled.

“Necessaries” has not been defined in the Act, the necessaries to sustain life, basic things like food, clothing, education, etc. Things without which a person cannot reasonably exist.

Nash v. Inman

A minor, who was already having a sufficient supply of clothing suitable to his position was supplied further clothing by a tailor. It was held that the price of the clothes supplied could not be recovered. As these clothes supplied to her are not necessary to her

Ryder v. Wombwell

Defendant, an infant, having an income of only £ 500 per year was supplied a pair of crystal, ruby and diamond solitaires and an antique silver goblet. It was held these things could not be considered to be necessaries. So, no reimbursement from the property of the minor

Section 70 Indian contract act prevents unjust enrichment and it applies as much to individuals as to corporations and Government. It has been held that no action can be brought against a minor recover compensation from him under Section 70.  In the case of a minor, even the voluntary acceptance of the benefit of work done or thing delivered which is the foundation of the claim under Section 70 would not be present, and so, on principle, Section 70 cannot be invoked against a minor.

Compensation by minor for the unjust benefit.

The concept of restoring the unjust benefit by minor needed to be compensated to other party came from the case of

Khan Gul vs Lakha Singh 1928

A Person advanced some money to a minor and sued for recovery of the amount. Court held that the minor is liable to refund the amount.

In accordance with the recommendation of the Law Commission, the principle of compensation has now been incorporated in Section 33, Specific Relief Act, 1963. This provision now requires the payment of monetary compensation by a minor irrespective of the fact whether the minor is the plaintiff or the defendant in the case. The provision is as under:

Section 33 – Power to require benefit to be resorted or compensation to be made when instrument is cancelled or is successfully resisted as being void or voidable.-

(1) On adjudging the cancellation of an instrument, the Court may require the party to whom such relief is granted, to restore, so far as may be, any benefit which he may have received from the other party and to make any compensation to him which justice may require.

(2) Where a defendant successfully resists any suit on the ground

(a) that the instrument sought to be enforced against him in the suit is voidable, the Court may, if the defendant has received any benefit under the instrument from the other party, require him to restore, as far as may be, such benefit to that party or to make compensation for it;

(b) that the agreement sought to be enforced against him in the suit void by reason of his not having been competent to contract under mention section – 11 of the Indian Contract Act, 1872 7) (9 of 1872), the Court may, if the defendant has received any benefit under the agreement from the other party, require him to restore, so far as may be, such benefit to that party, to the extent to which he or his estate had benefited thereby.

So, either the minor is plaintiff or defendant any unjust benefit needed to be restored by him to the other party through the property and not personally.

Conclusion

 If a minor as plaintiff goes to the Court for the cancellation of an instrument, the Court may, require such a minor, to restore the benefit and to make such compensation to the other party as justice may require on adjudging the cancellation. The object of the present provision is to restore the parties to their original position, as far as possible. When the minor is the defendant and he resists the suit on the ground that he is incompetent to contract, the Court may ask him to restore such benefit to the other party, to the extent his estate has been benefited thereby. Through this provision the parties are tried to be put to the pre-contract position. Moreover, compensation in terms of money is also permitted.