Q1: A minor enters into a contract with an adult that he will sell his house to the adult. Whether the contract is valid.
Facts of the case:
- A minor ‘offers’ an adult to sell away his house
- He represents himself as ‘major’
- The adult provides his ‘acceptance’ to the minor’s offer.
- Thereupon the minor enters into a contract with the adult.
Issues/Questions Involved in the case:
- Is the contract entered into by both the minor and the adult is maintainable in the eyes of law?
Decision/Judgement arrived at in the case:
- No, the contract entered into by both the minor and the adult is not valid and hence not maintainable in the eyes of law
Reasons/Principles Applied to arrive at the Decision:
Meaning and Definition: According to Section 3(1) of Indian Majority (Amendment) Act, 1999, a minor is a person who is under the age of 18 years. Similarly, according to Section 10 of Indian Contract Act, Capacity of parties is one of the essential elements of a valid contract.
Section 11 of Indian Contract Act defines contractual capacity as follow: “Every person is said to have contractual capacity when he is of age of majority, of sound mind and not expressly not disqualified by law”.
Effect of entering into a contract with minor:
- Contract is absolutely void ad initio:
It means invalid at the very beginning itself. Earlier to 1903, a contract entered into with a minor was voidable at minor’s option. In 1903, the Privy Council made it essential that all contracting parties should be competent to contract and held that a contract entered into with a minor is void ad initio. Thereby ended the controversy around the maintainability of contracts with minor with respect to the liability on minor.
- No ratification is possible:
Ratification means ‘subsequent acceptance/approval/sanction’. A minor’s agreement is void ab ignition and therefore being a nullity, it has no existence in the eye of law. Hence it cannot be ratified by the minor, after attainment of minor’s majority.
- No restitution for fraud by minor
Restitution mean give back. A minor need not return or restitute the benefits received under void or voidable agreements. Even though, a minor committed fraud by misrepresenting his age, court cannot pass an order for return of goods. If the goods are unchanged, the court may give a direction to restore the goods or property. This is called equitable doctrine of restitution.
- No estoppel against a minor
Estoppel is a rule which says when a person has made a statement either expressly or impliedly, he must stand upon it. Thereafter, he should not deny the statement. In case of a minor, it is a settled law now that a minor is not estopped from pleading minority even though he may be guilty of misrepresentation as to his age.
- No Specific Performance
Specific performance is one of the remedies available to the aggrieved party to a contract. According to Specific Relief Act, when a person made a promise, the other party i.e., promise may compel promisor to perform his promise but not any other remedy. Since a contract with minor is void ab initio, it cannot be specifically enforced in the court of law.
- No Vicarious Liability
Vicarious liability means liability incurred for another i.e., liability of one person for the acts of another person. Since a contract with minor is void ab initio, it cannot bring about any vicarious liability to his parents or guardians in the court of law. Exception is when the minor acts as an agent to the parents or guardians.
- Minor’s liability for necessities
In case there is any property in the name of minor. Minor is held liable for necessities under the principle of equity.
In the above given problem, even though minor falsely represented himself as major and entered into contract to sell away his house, this act of minor can be called as a Fraud.
Supporting Case laws/precedents/references:
- Mohiribibee v. Dharmodas Ghose (1903) 30 IA 114, (1903) 30 Cal. 539 P.C (Privy Council)
In this case, a minor mortgaged his house for Rs.20,000/- to money lender and received as advance of Rs.8,000/-. Later, he avoided the contract and didn’t return the advance. In an action by the minor to set aside the mortgage deed, it was held that the contract is not enforceable on the ground that, ‘an agreement with minor is void ad initio’. This view laid down by the Privy Council in the above case, is popularly known as ‘The Rule in Mohiribibi V. Dharmadas Ghose’
- Suraj Narain Dube v. Sukhu Aheer And Anr. [AIR 1928 All 440] (Allahabad High Court)
In this case, a minor borrowed some money by executing a bond/promissory note. When he became major, he executed a second bond for the earlier borrowed money as well as interest on it. The Hon’ble Court held that the second bond is invalid because it was without consideration.
- Leslie Ltd. v Sheill (1914) 3 KB 607
In this case, the limits of restitution were explained. The defendant minor by fraudulently misrepresenting himself to be a major, induced the plaintiff to lend his two sums of 200 pound each. The plaintiff sued minor to recover the money, 475 pounds being, amount of advances with interest.
- Nawab Sadiq Ali Khan vs Bibi Jai Kishori (1928) 30 BOMLR 1346, (1928) P.C. 159
In this case, the fact of minority being established at the date of the execution by the mortgagors of the deed founded on is sufficient for the decision of the case; such a deed executed by minors being admittedly a nullity according to Indian law, and incapable of founding a plea of estoppel.
- Kedhar nath v. Ajundhia Prasad (1883) Punj Rec 165
In this case, it was held that the money given to minor for marriage expenses was recoverable.
Conclusion to the Problem:
In view of the above discussion, the contract entered into by the minor with the adult is with fraud, and as there is no restitution for the fraud done by minor, the contract is not valid and inoperative ab initio. The adult can’t claim any relief whatsoever from minor.
Q2: A contract was entered into by A & B that A agricultural land to B. This land belongs to A’s grandfather. Explain the validity of the transfer as A’s children claims that it is ancestral property.
Q3: X agrees to give Y his daughter in marriage with Z on the condition that Z should transfer his right on his property to Y. Is the contract valid
Q4: A, a contractor threatens B to sell his house which is in the middle of the town for cheap price. B rejects. A brings some goondar and attempts to kill B. B signs the agreement. Is it valid
Q5: A sells his house to B and the consideration was adoption of B’s son to A. Is it valid
Q6: A minor enters into a contract with B to sell his bike and takes the agreement amount. Later he refuses to sell. Explain
Q7: X gives an advertisement to but his products which makes them fair. Y buys the product and wa effected by a skin rash when he uses it. Y sues X. X claims that it is a General offer. Explain
Q8: A proposal was made by A to B to sell his car. B accepts the proposal. Before the proposal reaches A, A sells the car to C. B sues for damages. Explain
Q9: A threatens to file a suit against B if he did not sign Promissory Note in favour of B. Whether this amount to coersion.
Q10: M, a minor took a loan of Rs 10,000/- from N for purchasing necessaries suitable to his status after taking the loan, M spends away the money on non necessary things can N recover this amount. Discuss.
Q11: X agrees to see his Maruti car for Rs 100/- Is the contract valid.
Q12: A agrees to work as an assistant to B for two years and not to work else where. But before 2 years A wants to leave the job. What are B’s rights?
Q13: A minor enters into a contract with y. y does not know that he is a minor. Discuss
Q14: A father sells his property (ancestral) on the pretext that he is selling for minor’s necessities. But he sold his property for his bad habits. Discuss
Q15: A, a person enters into an agreement with B on the ground that when a contingency should happen, then the contract will be complete. Discuss
Q16: A, a coparcenor decides to sell his property to B an outside person. B pays the agreement amount. Is the sale valid
Q17: X agrees to give his daughter in marriage to Y if he waives his loan amount of 50 Lakhs which is due to Y. Is the marriage valid
Q18: A, a person is the owner of an ancestral house and B wanted to buy the property. A refuses to sell. B kidnaps A’s child and gets agreement signed. Explain.
Q19: A, a minor takes a hand loan of Rs. 50,000/- from B and unable to return the amount. Advise B
Q20: Ram offers to sell a house in Bombay to Shyam for 20 Lakhs. The offer was communicated to Shyam in Delhi by an express letter. The letter was delayed before Shyam telegram of acceptance Ram revokes. Advice Shyam
Q21: X enters into an agreement with Y to sell a pistol without license. Is it valid?
Q22: A and B are traders. A has private information of change in prices which will effect B’s acceptance for a contract. A keeps quiet and enters into a contract. Is the contract valid?
Q23: X, a minor represents to Y as a major and takes a loan of 1 lakh and deposits in a bank. X becomes major. Can Y sue for recovery? Advise.
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