Minors Capacity To Enter Into A Contract

According to Section 10 of the Indian Contract Act, 1972 all agreements are not contracts. Only those agreements are contracts that are made by parties who are competent to enter into a contract. Further, the word ‘competent’ has been described in Section 11 of Indian Contract Act; it is inclusive of 3 essentials-

  • The person should be of the age of majority; that is to say, 18 years
  • He should be of sound mind at the time of making of contract.
  • He should not be disqualified from contracting by any law to which he is subject.

It can be said that majority is an essential before entering into a contract

Minor’s contract

A minor is one who has not attained the age of 18, and for every contract, the majority is a condition precedent. By looking at the Indian law, minor’s agreement is a void one, meaning thereby that it has no value in the eye of the law, and it is null and void as it cannot be enforced by either party to the contract. And even after he attains majority, the same agreement could not be ratified by him. Here, the difference is that minor’s contract is void/null, but is not illegal as there is no statutory provision upon this.

Mohiri Bibi v. Dharmodas Ghosh

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

Facts of the case – the plaintiff Dharmodas Ghosh, when he was a minor, mortgaged his property to the defendant, a moneylender. At that time, defendant’s attorney had the knowledge about plaintiff’s age. The plaintiff later paid only Rs 8000 but refused to pay rest of the money. The plaintiff’s mother was his next friend (legal guardian) at that time, so he commenced an action against the defendant saying that at the time of making of a contract, he was a minor, so the contract being a void one, he is not bound by the same.

The court held that unless the parties have competence under Section 11 of the Act, no agreement is a contract.

Effects of minor’s agreement

Through this landmark judgment, the effects can be explained-

  • No liability arising out of either tort/contract: A minor is incapable of giving consent, and the nature of minor’s agreement is a nullity and cannot be enforced
  • The rule of estoppel: Estoppel is a legal rule of evidence which prevents a party from alleging something that contradicts what he previously stated. The court held that the doctrine of estoppel does not apply to the case in which the person knows the real facts, before hand and here the attorney of the defendant knew that the plaintiff was a minor. Hence this rule does not apply.