By Nandini Singh
The objective of a contract act is to ensure that the right and obligations arising out of a contract are maintained and legal remedies are provided to the affected party. Law of contract harmonizes the legal rules that make the promises enforceable and in case of breach of contract provides the relief and remedies. According to Sir William Ansem “A contract is an agreement enforceable by law which is made between two or more persons, by which rights are acquired by one party on the basis of promise to be performed by another party”. Nearly every sale around us is a result of a contract. The essentials of a valid Contract are: Offer and Acceptance Intention to create a legal relationship Lawful Consideration Competent parties Free consent Lawful Object Not being expressly declared void If talking about competency to contract then according to section 11, every person is competent to contract who is of the age of majority according to the 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. This ensures that the contract isn't voidable or unenforceable due to the incapability of one or further parties involved. According to the sections 11 and 12 of Indian contract act , the following persons are competent to contract: (1) A person should have attend the age of majority according to the law. In india , the age of majority is govern by Indian majority act ,1875 and a person is said to have attend the age of majority on completion of 18 years of age. (2) A person should be of sound mind at the time of entering into the contract. It is stated in section. 12 of the act and a person is said to be of sound mind when he can assess, understand and realize his actions and obligations imposed on him at the time of entering into the contract. (3) A person should not be disqualified by law. Although the above stated categories of persons are not competent to contract, yet they may sometimes be making some bargains, taking some loans, or be supplied with some goods by third parties, or be conferred with some benefits, etc. the position of such persons in such like situations is being discussed below:
THE POSITION OF MINOR
Section 3 of Indian majority act, 1875 ,states that the age of majority is 18 years . a person who has not attended the age of majority ,is minor. A person is deemed to have attained the age of majority when he completes the age of 18 years, except in case of a person of whose person or property a guardian has been appointed by the court, in which case the age of majority is 21 years. earlier a minor was referred to as infant which is later changed to a minor. A minor is incapable of understanding the nature of the liabilities arising out of an agreement. Hence a contract with a minor is VOID AB INITIO i.e. void from beginning and such contract cannot be enforced in a court of law. The result is that a party cannot compel a minor to perform his part of the obligation as stated in the agreement. For example; A is 17 years old and in 3 months , he will turn 18 but presently he is still a minor. He needs some money to go for a vacation. He approached a moneylender and he borrowed rupees 20 thousand. As security, he signs some papers mortgaging his laptop. A few months later he turns 18 and becomes a major and he files a suit declaring that the mortgage executed by him when he was a minor is void and such mortgage should be cancelled. In such case the court will agree and release A of the liability to repay the loan. Related
CASE LAW: MOHORI BIBI V. DHARMODAS GHOSE
In this case, Dharmodas ghose was a minor who approached a money lender Brahmo dutt for securing a loan amounting to 20,000. Dharmodas ghose in favor of moneylender signed some property in which he had mortgaged his property. Mr. Brahmo dutt had authorized Kedarnath to enter into the transaction through a power of attorney. Mr. Kedarnath was informed of the fact that Dharmodas ghose was a minor through a letter sent by his mother. The mother Mohori Bibi brought a suit on the ground that the mortgaze executed by her son is void on the ground that her son is a minor. The relief sought by the plaintiff was granted and the mortgaze was considered as void ab initio. Although an appeal was filed by Brahmo Dutt but the same was dismissed by Calcutta high court. A further appeal was made to the privy council and the privy council held thatA contract with a minor is void ab initio. Also transfer of property act 1872, states that a person competent to contract is competent to transfer a property. Hence, the mortgage executed by the defendant was void . This ruling has been used time and again in colorful cases to both advantages and disadvantages to minors. Another major judgment by the Privy Council regarding this matter is Mir Sarwarjan V Fakhruddin Mahomed Chowdhury. In this case, the contract to buy some irremovable property had been made by the guardian on behalf of the minor. latterly, that minor sued the other party for a decree of specific performance to recover possession. His action was rejected by the court. The court, in its judgment, said that it wasn't possible to bind the minor's property, both portable and irremovable, by any contract. This is because the minor isn't competent to contract, there was no mutuality, and as a result, the minor couldn’t gain specific performance of the contract.
NATURE AND AFFECTS OF MINOR’S AGREEMENT:
Competency of a minor
Accountability of a minor
Insolvency
Ratification of minor’s agreement
Necessity to a minor
Doctrine of estoppels
COMPETENCY OF A MINOR
According to Indian contract act minor are not competent to enter into a contract and any contract with a minor is void ab initio.
ACCOUNTABILITY OF A MINOR
Minors are incapable of entering into a contract, thus they cannot be held accountable for any contract. Since they lack the legal competency to understand nature and consequences of the contract.
INSOLVENCY
Minors cannot be held personally liable for their debts and they cannot be held insolvent for the non payment of any debt.
RATIFICATION OF A MINOR’S AGREEMENT
Minor’s agreement is void ab initio that is void from the beginning and it cannot be rectify even if the minor attends majority. However, if a minor, upon reaching adulthood, makes a new promise supported by fresh consideration, that new promise will be binding.
NECESSITY TO A MINOR
The provision for necessaries supplied to a minor or to a person whom the minor is legally bound to support is governed by Section 68 of the Indian Contract Act. The term necessity refers to something that minor essentially need. If any person provides the minor with the necessity that person have the right to get reimbursement from minor’s asset. The necessities includes food, clothing, shelter , education, medication etc. however if the minor does not possess any asset he is not bound to make restitution for it.
DOCTORINE OF ESTOPPEL
The doctrine is not applicable in the case of minor’s agreement. Doctrine of estoppels stops a person from denying the facts that he has previously agreed in the agreement. As a minor is incompetent to enter into a contract. Hence, any fact agreed by him will not be considered and he cannot be held liable in any contract. Thus the doctrine of estoppels cannot be used against the minor. Minor as a Promisee or Beneficiary: A minor can be a pledge or devisee in a contract and have the right to apply such a contract. There are no restrictions on a minor being a devisee, similar as being a payee or pledge in a contract. thus, a minor is able of copping irremovable property and can sue for the recovery of possession upon extending the purchase plutocrat. also, a minor in whose favor a promissory note has been executed can apply it.
CONCLUSION:
There are several important rules regarding a minor’s agreement. In conclusion, 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.
PERSON OF UNSOUND MIND:
Under English law , persons who are of unsound mind are protected from entering contracts. Under section 12 of Indian contract act,If a person who is of sound mind for certain duration of time and is of unsound mind for the remaining duration . It is important when such person enter’s into a contract, he shall be of sound mind. The person should be able to understand the nature of contract. A person cannot be declared incompetent merely on the basis of their age , appearance, or any assumptions which is the result of their behavior. A person must be able to understand the liabilities arising out of the contract, he must be able to assess those information, retain those information, and use those information also to communicate his decisions ,it is necessary to have a sound mind to take any decisions , only a person of sound mind is competent to do so. Whenever the understanding of a person is affected by some disease, drunkness or some other cause, a contract cannot be formed.
CASE LAW: INDAR SINGH V. PARMESHWARDHARI SINGH
In this case , In Inder Singh v. Parmeshwardhari Singh1 a property worth about Rs 25,000 was agreed to be sold by the person for Rs 7000 only. His mother proved that he was a congenital idiot, incapable of understanding the transaction that he mostly wandered about. Holding the sale to be void, Justice Sinha explained the effect of section 12 in following passage: “ According to this section, thus the person entering into the contract must be a person who understands what he's doing and is suitable to form a rational judgement as to whether what he's about to do is to his interest or not. The pivotal point, thus, is to find out whether he's entering into the contract after he has understood it and has decided to enter into that contract after forming a rational judgement in regard to his interest. It doesn't mean that the man must be suffering from lunacy to disable him from entering into a contract. A person may to all appearances bear in a normal fashion, but, at the same time, he may be unable of forming a judgement of his own, as to whether the act he's about to do is to his interest or not. ” A contract signed under the influence of alcohol and drugs may not be valid. If a person claims that at that time, he was not able to understand the nature and consequences of the contract, then such contract would be void. The burden of proof is on such person to prove that he was incapable of understanding the nature of contract at the time of entering into such contract.
A PERSON DISQUALLIFIED BY LAW
A party may not be able to enter into contract even due to lack of political status , marital status , artificial status, professional status, due to their status wholly or partially according to section 11 are barred from contracting. Person disqualified by law: (1)Alien enemy (2)Convicts (3)Insolvent (4)FOREIGN SERVANTS AND DIPLOMATS ALIEN ENEMY An alien is a person belongs to other country. An alien enemy is a citizen of a country with which India is at war. Any contract made during that period with an alien enemy is void. if they are against public policy or remain suspended until the war and can be revived after the war is over. For example; if India is at war with country X then any contract between the country is considered void.
CONVICT
A convict while serving his sentence cannot enter into contract. However , they become competent to enter into contract once they complete their sentences. For example : if A is convicted for any offence then no contract can be made on his name, till their disqualification is lifted.
INSOLVENT An insolvent is a person who is declared bankrupt by the court. The insolvents are barred from entering into contract until he is discharged by the court. The person does not have any power over his assets and he cannot enter into the contract concerning his assets. For example: A is declared bankrupt by the court before he execute a sale deed , therefore if he enters into a contract it will be considered void.
FOREIGN SOVEREIGNS AND DIPLOMATS
They have equipped some special privileges. Generally , they can sue the persons to implement the contract with them but cannot be sued ,unless they themselves surrender under the jurisdiction of Indian court of law.
CONCLUSION
To make a contract enforceable by law or valid or to avoid any future complications, competency of parties are more important to be checked. A contract made by minors are void ab initio , those who are lunatics are also unable to understand the nature and consequences of contract. A person regain its capacity to enter into contract after the removal after the removal of any disqualifications.
The author of this article is Nandini Singh, a law student at Lloyd School of Law.
This article contains the view of the author and the publisher in no way associates with the views or ideologies of the author. All the moral rights vests with the Author(s).
Comments