Minors' Contracts Revisited**

Minor's Agreement is Void Ab Initio

The legal capacity of parties is a fundamental requirement for a valid contract under the Indian Contract Act, 1872 (Section 10). Among those considered incompetent to contract is a minor, i.e., a person who has not attained the age of majority (generally 18 years in India, as per the Indian Majority Act, 1875, or 21 years in certain cases).

Incapacity to Contract

Section 11 of the Indian Contract Act states that a person is competent to contract if, among other things, they are "of the age of majority according to the law to which he is subject". A minor, by definition, does not meet this criterion.

The Rule from Mohori Bibee's Case

The legal effect of an agreement entered into by a minor was definitively settled by the Privy Council in the landmark case of Mohori Bibee v. Dharmodas Ghose (1903) 30 IA 114. As discussed previously, the court held that a contract by a minor is not merely voidable, but is absolutely void ab initio. It is a nullity in the eyes of the law from the very moment it is made.

Consequences of Voidness Ab Initio:

No Legal Existence: The agreement has no legal standing and cannot create any rights or obligations for the minor or against the minor.
Cannot be Enforced: Neither the minor nor the other party can sue to enforce the agreement. The other party particularly cannot sue the minor for performance or damages.
Estoppel Inapplicable: A minor is not prevented (estopped) from pleading their minority to escape liability under an agreement, even if they misrepresented their age to the other party. The statutory incapacity under Section 11 cannot be overridden by the rule of estoppel (Section 115, Indian Evidence Act).
No Ratification: A void agreement cannot be ratified by the minor after they attain majority. A fresh agreement would be required for any binding obligation post-majority.

The rationale behind this strict rule is to protect minors from entering into agreements that could be detrimental to their interests, recognizing their lack of maturity and judgment.

Example 1. Ms. Pooja, aged 17, takes a loan of Rs. 20,000/- from Mr. Rajesh, promising to repay it next month. She uses the money to buy clothes. When the repayment is due, she refuses to pay. Can Mr. Rajesh sue her to recover the loan amount?

Answer:

No, Mr. Rajesh cannot sue Ms. Pooja to recover the loan amount. Ms. Pooja is a minor, and the agreement to repay the loan is a contract entered into by a minor. According to the principle in Mohori Bibee's case, an agreement by a minor is void ab initio. Since the agreement is void, it is not legally enforceable against the minor. Mr. Rajesh has no contractual right to recover the money from her based on this agreement. (Whether the clothes bought are 'necessaries' is a separate question, but recovery for a loan is generally not permitted even if used for necessaries; recovery for necessaries is limited to the minor's property, not personal liability).

Minor's Liability for Necessaries

While a minor's agreement is void, the law makes a specific provision for the recovery of payment for 'necessaries' supplied to a minor. This is not based on contractual liability but on a quasi-contractual obligation imposed by law (discussed further under Quasi-Contracts).

Section 68 of the Indian Contract Act

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

"If a person, incapable of entering into a contract, or any one whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person."

Explanation:

Applies to Incompetent Persons: This section applies to minors and persons of unsound mind.
Supply of Necessaries: Goods or services considered 'necessaries' must be supplied. As established by judicial decisions, 'necessaries' are determined based on the minor's status and standard of living. They must be required by the minor at the time of supply and must be things without which the minor cannot reasonably exist or which are essential for their education, health, and reasonable comfort.
For Minor or Dependents: Necessaries can be supplied to the minor personally or to persons whom the minor is legally bound to support (like his wife or children).
Source of Recovery: The supplier is entitled to be reimbursed *only from the property* of the minor. The minor is not personally liable. If the minor has no property or estate, the supplier cannot recover anything under this section.

Example: Mr. Suresh supplies Ms. Taruna, a minor, with essential medical treatment costing Rs. 15,000/-. Ms. Taruna owns a small plot of land inherited from her parents. Mr. Suresh can recover the Rs. 15,000/- from the value of Ms. Taruna's plot of land. He cannot sue Ms. Taruna personally to make her pay from her future earnings or non-existent property.

This provision is an exception to the strict non-liability of minors and is based on the principle of preventing unjust enrichment from essentials.

Example 1. Mr. Umesh sells a luxury car to Mr. Varun, a minor, for Rs. 10 Lakhs. Mr. Varun has substantial inherited wealth. Mr. Varun refuses to pay. Can Mr. Umesh recover the price of the car from Mr. Varun's property under Section 68?

Answer:

No, Mr. Umesh cannot recover the price of the car under Section 68. While Mr. Varun is a minor with property, a luxury car is generally not considered a 'necessary' suited to a minor's condition in life, regardless of their wealth. Section 68 only applies to the supply of necessaries. The agreement to sell the car is a void contract (as with any minor's agreement), and since the subject matter is not a necessary, Section 68 provides no basis for recovery. Mr. Umesh cannot recover the price from Mr. Varun's property or personally.

Ratification of Minor's Contract after attaining Majority

Ratification is the act of confirming or adopting a previously done act. In contract law, ratification often applies to acts done by an agent without authority or to voidable contracts. However, a minor's agreement, being void ab initio, has no legal basis for subsequent ratification.

Rule: Void Agreements Cannot Be Ratified

Since a minor's agreement is void from the very beginning (a nullity), it cannot be made valid by any subsequent act of ratification by the minor after they attain the age of majority. A void agreement is dead from birth and cannot be brought to life by ratification.

If a person wishes to be bound by a promise made during their minority after attaining majority, they must enter into a fresh contract upon becoming an adult. This new contract would require fresh consideration to be valid, unless it falls under one of the exceptions in Section 25 of the Indian Contract Act (e.g., a promise to pay a debt barred by limitation can be valid without fresh consideration, but this is a specific exception, and a void minor's debt is generally not considered a debt capable of being revived by a mere promise after majority unless it is a completely new agreement).

Example: Mr. Wasim, while a minor, borrowed Rs. 50,000/- from Mr. Yusuf and signed a promissory note. After attaining majority, Mr. Wasim writes to Mr. Yusuf promising to pay the Rs. 50,000/-. This promise is not a ratification of the old void agreement. It is a new promise. For this new promise to be binding, it must be supported by fresh consideration, unless it amounts to a valid promise to pay a debt barred by limitation (which the void minor's debt wasn't necessarily). Generally, a mere promise to pay a void minor's debt after majority, without fresh consideration, is unenforceable.

The only instance where a minor's position after attaining majority relates to the prior partnership is when a minor is admitted to the benefits of a partnership under Section 30 of the Indian Partnership Act. Upon attaining majority, the minor has the option to become a full partner or cease connection, but this is a specific statutory procedure and not a general ratification of any agreement made during minority.

Example 1. Ms. Zoya, aged 17, enters into a contract to sell her bicycle to Mr. Anand. After she turns 18, she agrees in writing to honour the contract she made when she was a minor. Is she bound by this agreement?

Answer:

No, Ms. Zoya is generally not bound by this agreement. The original contract made when she was a minor was void ab initio. A void agreement cannot be ratified after attaining majority. Her agreement after turning 18 is a new promise. For this new promise to be binding, it requires fresh consideration from Mr. Anand (e.g., Mr. Anand paying the price again or providing some other value). If the new promise is merely a confirmation of the old void agreement without fresh consideration, it is unenforceable. The only exception might be if it falls under Section 25 (e.g., a fresh promise to pay a debt, but the original debt from the minor's agreement was void itself).

Minor's Liability in Tort and Quasi-Contract

While a minor is largely immune from contractual liability, they are not immune from all legal obligations. Minors can be held liable for civil wrongs (torts) and for certain obligations resembling contracts (quasi-contracts).

Minor's Liability in Tort

A minor can be held liable for torts (civil wrongs) committed by them. This liability is independent of contract. If a minor commits a tort like negligence, defamation, trespass, or conversion, they can be sued for damages just like an adult.

Example: A minor drives a vehicle negligently and causes an accident resulting in injury to another person. The injured person can sue the minor for the tort of negligence and claim damages.

Important Limitation: However, a party cannot sue a minor in tort if the tort is directly connected with or arises out of a contract with the minor, and allowing the tort action would effectively be an indirect way of enforcing the void contract. The courts prevent using tort law to undermine the protection afforded to minors under contract law.

Example: A minor hires a horse for riding (contract void). He rides it negligently causing injury to the horse. The owner cannot sue him for the tort of negligence if the negligence was merely in the mode of riding as per the void contract. However, if the minor deliberately injured the horse, or used it for a purpose outside the contract (which would be conversion), he might be liable in tort.

Minor's Liability in Quasi-Contract

As discussed earlier (under Quasi-Contracts), a minor, being a person incapable of contracting, can be subject to certain obligations imposed by law that resemble contractual obligations. These are covered in Chapter V of the Indian Contract Act, 1872.

The primary quasi-contractual liability of a minor is under Section 68, for necessaries supplied to him or his dependents. As detailed above, the liability is limited to the minor's property, not personal liability.

Other sections in Chapter V might also, in principle, apply depending on the situation, though their application to minors needs careful consideration given their general incapacity:

Section 70 (Obligation of person enjoying benefit of non-gratuitous act): If a minor benefits from a lawful non-gratuitous act, Section 70 could potentially impose an obligation to compensate, limited to the extent of the benefit received and the minor's property. However, enforcing this against a minor is debated and often restricted by the principle of protecting minors, unless it relates to necessaries. Simply receiving money or goods under a void contract where the other party expects payment might not trigger Section 70 because the transaction originates from a void agreement.
Section 71 (Finder of goods): If a minor finds goods belonging to another, they are subject to the same responsibility as a bailee. Their liability for care would be based on this section, limited by their capacity for negligence.
Section 72 (Liability of person to whom money is paid... by mistake or coercion): If a minor receives money or a thing by mistake or under coercion, they are bound to repay or return it. This obligation arises irrespective of contract. However, forcing restitution from a minor, especially of money that has been spent, is often restricted by courts to protect the minor's interests, particularly under the Specific Relief Act, 1963.

In essence, while a minor cannot be made liable *on* a contract, they can be held liable for their independent tortious acts or for obligations imposed by law under quasi-contractual principles, primarily for necessaries, subject to the limitations (liability to property only) and the overarching policy of protecting minors.

Example 1. Mr. Prakash, a minor, borrows a motorcycle from Mr. Qasim under a void loan agreement. Mr. Prakash uses the motorcycle responsibly but it is stolen from him due to no fault of his own. Is Mr. Prakash liable to Mr. Qasim for the loss of the motorcycle?

Answer:

No, Mr. Prakash is generally not liable to Mr. Qasim for the loss of the motorcycle. The agreement to borrow was a void contract. A minor is not liable for breach of a void contract. While a minor can be liable in tort, the loss here (theft) did not occur due to a tortious act committed by the minor independent of the contract (like damaging it negligently or using it for an unauthorized purpose). The loss occurred while the motorcycle was in his possession under the void agreement, and it was stolen without his fault. Therefore, he is not liable for the loss under the void contract or in tort based on these facts.

Contracts by Persons of Unsound Mind

Definition of Unsound Mind (Section 12)

Along with being of the age of majority and not disqualified by law, being of sound mind is a prerequisite for competence to contract according to Section 11 of the Indian Contract Act, 1872. The Act defines what it means to be of sound mind for the purpose of contracting.

Rule under Section 12

Section 12: What is a sound mind for the purposes of contracting

"A person is said to be of sound mind for the purpose of making a contract if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests."

Explanation:

Point of Time: The critical factor is the state of mind *at the time* of making the contract. A person's general mental condition is relevant evidence, but the focus is on their capacity at the specific moment of contracting.
Two-fold Capacity: To be of sound mind, a person must possess two capabilities simultaneously at the time of contract:
- Capacity to Understand: They must be able to comprehend the nature and terms of the agreement, including the promises being made and the rights and obligations being created.
- Capacity to Form Rational Judgment: They must be able to evaluate the consequences of the contract on their own interests and make a sensible decision about whether to enter into it. This requires weighing the pros and cons based on rational thought.

Persons who are habitually or occasionally of unsound mind:

Section 12 (illustrations):

"A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind."

"A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind."

Explanation:

This addresses individuals whose mental state fluctuates.
If a person who is usually of unsound mind has periods of lucidity (sound mind), they can enter into a valid contract during those lucid intervals, provided they meet the criteria in Section 12 at that time.
If a person who is normally of sound mind experiences temporary phases of unsoundness (e.g., due to severe illness, intoxication, or temporary mental derangement), they cannot make a valid contract during those periods.

Examples of persons who may be considered of unsound mind for contracting purposes depending on the circumstances: Idiots (permanently mentally incapable), Lunatics (with intermittent periods of sanity and insanity), persons in delirium (due to fever or illness), persons under extreme intoxication from alcohol or drugs that impairs mental capacity.

The burden of proof for proving unsoundness of mind at the time of contracting usually lies on the party who alleges it.

Example 1. Mr. Abhay, who is usually mentally challenged and incapable of managing his affairs, has moments when he seems to understand simple matters. During one such moment, a neighbour convinces him to sign a contract selling his land for a very low price. Is this a valid contract?

Answer:

The validity depends on whether Mr. Abhay was truly of sound mind as per Section 12 *at the moment* he signed the contract. If his 'moments' of seeming understanding do not meet the two-fold test (capacity to understand the specific contract and form a rational judgment as to its effect on his interests), then he was not of sound mind for contracting. If he was permanently incapable or temporarily of unsound mind at that moment, the contract would likely be void or voidable. Given he is usually mentally challenged and the transaction is highly unfavourable ("very low price"), it strongly suggests he lacked the capacity for rational judgment. The contract would likely be voidable at his option (or his guardian's) or potentially void if he is found to be permanently incapable of understanding the transaction's nature or consequences.

Validity of Contracts by Persons of Unsound Mind

The legal effect of a contract entered into by a person of unsound mind depends on the nature of their incapacity and the circumstances surrounding the agreement. The contract is not always void ab initio like a minor's contract.

Contracts by Persons Permanently of Unsound Mind

A contract entered into by a person who is permanently and entirely incapable of understanding or forming a rational judgment (e.g., an idiot) is generally considered void ab initio, similar to a minor's contract, as the person completely lacks the capacity to contract under Section 11 and 12.

Contracts by Persons Occasionally of Unsound Mind

If a person is usually of sound mind but occasionally of unsound mind, or vice-versa, the validity of the contract depends on their state of mind *at the time* of contracting (Section 12).

Contracts made during lucid intervals: If a person who is usually of unsound mind but occasionally experiences periods of soundness enters into a contract during such a lucid interval, the contract is valid and binding. During that interval, they meet the criteria of Section 12.
Contracts made during unsoundness: If a person enters into a contract while they are in a state of unsoundness of mind, such a contract is generally voidable at the option of the person of unsound mind. It is not void ab initio like a minor's contract. The contract is valid until the party who was of unsound mind chooses to repudiate it upon regaining soundness of mind, or through their legal guardian/representative.

However, if the other party was aware of the person's unsoundness of mind and took unfair advantage of them, the contract might also be liable to be set aside on grounds of undue influence (Section 16(2)(b)) or fraud, in addition to being voidable due to lack of free consent.

Contracts for necessaries

Similar to minors, the law provides for the recovery of payment for necessaries supplied to a person incapable of contracting, or to those they are legally bound to support. This is a quasi-contractual obligation under Section 68, not based on the contract itself.

Section 68: "If a person, incapable of entering into a contract [includes person of unsound mind], or any one whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person."

Explanation:

If necessaries are supplied to a person of unsound mind, the supplier can recover the cost from the property of the person of unsound mind.
The person of unsound mind is not personally liable.
Necessaries are determined based on the person's condition in life.

Example: Essential medical treatment provided to a person suffering from mental illness is a necessary. The cost can be recovered from their property.

Restitution (Section 65):

If a contract with a person of unsound mind is treated as voidable and is rescinded, or if it is treated as void, Section 65 regarding restitution of advantages received under an agreement discovered to be void or a contract that becomes void may apply.

Example 1. Mr. Bharat, who is usually of sound mind, enters into a contract to sell his car while he is temporarily delirious due to high fever, making him incapable of understanding the transaction. After recovering, he wants to set aside the contract. Is the contract void or voidable?

Answer:

The contract is voidable at Mr. Bharat's option. He is usually of sound mind but was occasionally of unsound mind when he made the contract due to fever (Section 12 illustrations). A contract made by a person temporarily of unsound mind is voidable at their option (implied from Sections 11, 12, and 19/19A). Mr. Bharat can choose to repudiate the contract upon regaining his sound mind. He would likely have to return any benefit received under the contract while rescinding it.

Example 2. Mr. Chirag supplies basic food and shelter to Mr. Deepak, a person of unsound mind who has some savings in a bank account. Can Mr. Chirag recover the cost of the food and shelter?

Answer:

Yes, Mr. Chirag can recover the cost. Basic food and shelter are considered necessaries suited to anyone's condition in life. Mr. Deepak is a person incapable of contracting due to unsoundness of mind. Mr. Chirag has supplied necessaries to him. According to Section 68 (a quasi-contractual obligation), Mr. Chirag is entitled to be reimbursed for the cost of the necessaries from Mr. Deepak's property (his savings in the bank account). Mr. Chirag cannot sue Mr. Deepak personally.