Lectures by Dr. Tabrez Ahmad

1. Capacity to contract
By
Dr. Tabrez Ahmad,
Professor of Law
Contracts with the Minor
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.in 1

2. Who are competent to contract
Sec 11 of the Indian contract Act 1872.
Who are competent to contract –
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.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.in 2

3. Cont…
Thus, the section declares the following persons
are not competent to contract
minors,
persons of unsound mind
persons disqualified by law to which they are
subject.
Age of majority: The age of majority is generally
eighteen years.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.in 3

4. Cont..
Sec. 3 of the Indian Majority Act, 1875 provides
as follows:
“Every person domiciled in India shall be deemed
to have attained his majority when he shall have
completed his age of eighteen years, and not
before.
Dr. Tabrez Ahmad,
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5. Cont…
Sec 10 requires that the parties to a contract must be
competent and sec 11 declares that a minor is not competent
but neither section makes it clear whether, whether if a minor
enters into an agreement, it would be voidable at the option or
altogether void.
What agreements are contracts –
Sec 10- All agreements are contracts if they are made by the free
consent of parties competent to contract, for a lawful consideration
and with a lawful object, and are not hereby expressly declared to
be void.
Nothing herein contained shall affect any law in force in [India] and
not hereby expressly repealed by which any contract is required to
be made in writing or in the presence of witnesses, or any law
relating to the registration of documents.
Dr. Tabrez Ahmad,
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6. Cont…
Sec 10 and Sec 11 had, therefore, quite
naturally given rise to a controversy about
the nature of minor’s agreement.
The controversy was only resolved in
1903 by the judicial committee of the Privy
Council in their well-known
pronouncement in Mohoribibi v
Dharmodas Ghose.
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7. Mohoribibi v Dharmodas Ghose
(1903) Privy Council
The plaintiff, a minor mortgaged his houses in favour of
the defendant a money lender, to secure a loan of Rs.
20,000/-. A part of this amount was actually advanced to
him. While considering the proposed advance, the
attorney, who was acting for the money-lender, received
information that the plaintiff was still a minor.
Subsequently the infant commenced this action stating
that he was under age when he executed the mortgage
and the same should, therefore, be cancelled.
The relief of cancellation had to be granted as the
plaintiff was entitled to it. .( Under sec 39 of the original
Specific relief Act 1877 courts were authorised to order
cancellation of void contracts. Now Sec. 31 of the Act of
1963).
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8. The money lenders only request was that the
relief should be made subject to the condition of
the minor’s repaying him the sum of Rs. 10,500/-
advanced as a part of the consideration for the
mortgage.
Sec. 64 and sec 65 of the Indian contract act
1872 and Sec 41 of the Specific Relief Act 1877
[ S. 33 of 1963] were in question.
Arguments:
Judgment:
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9. Developments after Mohribibi case
In its subsequent pronouncement in
Subramanyam v Subba Rao AIR 1948 PC 25.
the Privy council overruled earlier decisions and
entertained no doubt that it was within the
powers of the mother of a minor as a guardian to
enter into a contract of sale for the purpose of
discharging his fathers debts. Following this
decision the Orissa HC in the case of Durga
Thakurani v Chintamani, AIR 1982,158, held that
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10. Cont…
endowment of property for religious purposes by
guardians on behalf of minors, being within their
competence of was specifically enforceable.
The other High Courts have also expressed the
view that the doctrine of mutuality should not
have been imported into the matter where the
contract was within the competence of the
guardian and that there is no scope for this
doctrine under sec. 20 of the Specific Relief Act
1963.
Dr. Tabrez Ahmad,
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11. In today's society it does not seem to be
possible, much less desirable for law to
adhere to the categorical declaration that
a minors agreement is always “ absolutely
void”.
Minors are appearing in public life today
more frequently than even before.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.in 11

12. Cont..
The Privy council had therefore to modify its
earlier decisions.
This trend is evidenced by the decision of their
Lordships in Srikakulam Subramanyam v Kurra
Subba Rao (1949) 75. Lord Morton held that
Sec. 11 of the Indian Contarct Act 1872 and the
Mohribibi case leave no doubt that a minor can
not contract and that if the guardian and the
mother had taken no part in this transaction it
would have been void. The contract being for the
benefit of the minor and within the power of the
guardian was held to be binding upon him.
Dr. Tabrez Ahmad,
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13. Effects of minor’s agreement
No Estoppel against minor
No liability in Contract or in Tort arising out of
Contract: If the tort is directly connected with the
contract and is the means of effecting it and is a
parcel of the same transaction, the minor is not
liable in tort.
Doctrine of Restitution: If an infant obtains
property or goods by misrepresenting his age,
he can be compelled to restore it, but only so
long as the same is traceable in his possession.
This is known as equitable doctrine of
possession.
Dr. Tabrez Ahmad,
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14. Cont…
Again the doctrine of restitution is not applied where the
infant has obtained cash instead of goods. The well
known authority is
Leslie (R) Ltd. V Sheill (1914) 3 K.B
An infant succeeded in deceiving some money-lenders by
telling them a lie about his age, and so got them to lend
him 400 pound on the faith of his being an adult.
Their attempt to recover the amount of principal and
interest as damages for fraud failed.
The attempt also failed under quasi-contract and doctrine
of restitution.
Rejecting the contention, lord Sumner said: I think this
would be nothing but enforcing a void contract.
Dr. Tabrez Ahmad,
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15. Beneficial Contracts
A minor is allowed to enforce a contract which is of some
benefit to him and under which he is required to bear no
obligation
The person on whose behalf certain goods were insured
was a minor court allowed the minor to recover the
money.
Contract of marriage: contract of marriage could be
enforced against the other contracting party at the
instance of the minor it can not be enforced against the
minor
Contract of apprenticeship: The Indian Apprentices Act
1850 provides for contracts in the nature of contracts of
service which are binding on minors.
Dr. Tabrez Ahmad,
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16. Trade Contracts not included in
Beneficial Contracts
In a general sense contracts which can be
brought within certain categories and are also for
the benefit of the infant can be supported.
A trading contract does not come within any of
these categories. The only contracts of an infant
which can be enforced are which relate to the
infant’s person, as contracts by which he
provides himself with clothes, food, or lodging or
contracts of marriage, apprenticeship and
service.
Dr. Tabrez Ahmad,
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17. Option to retire from beneficial
contracts on majority
A minor will have the option of retiring from a
contract of beneficial nature on attaining majority
provided that he exercises the option within a
reasonable time.
Where a minor in pursuance of a marriage
settled his after acquired property and after
attaining majority he received large sum of
money under the will of his father which came
under the settlement, and , therefore, he
attempted to repudiate the settlement, The
House of Lords held that the repudiation coming
after 5 years after attaining majority was too late
Dr. Tabrez Ahmad,
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18. Ratification
A person can not on attaining majority ratify an
agreement made by him during his minority
Ratification relates back to the date of the
making of the contract and, therefore, a contract
which was then void can not be made valid by
subsequent ratification
It would be contradictory in terms to say that a
void contract can be ratified.
It is necessary, a fresh contract should be made
on attaining majority
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.in 18

19. English Law
It is a presumption at law that every
person is entitled to enter into a contract
unless an exception applies. One of those
excpetions is for minors. The age of
contractual capacity for individuals is the
age of 21 at common law, however this
was reduced to the age of 18 in 1969 by
Act of Parliament. Reaching the age of 18
is known as attaining 'majority'. Minors are
those who have not attained the age of 18.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.in 19

20. Cont….
Minors are permitted to enter into
contracts for limited purposes, and the test
is one that focuses on the nature of the
transaction, and whether the minor is of an
age such that they capable of
understanding it.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.in 20

21. Cont…
The general law states that contracts
entered into by children that are for
'necessaries' are binding on children, as
are those for apprenticeship, employment,
education and service where they are
rightly said to be for the benefit of the
child.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.in 21

22. Cont…
Contracts for necessaries are for the supply of
food, medicines, accommodation, clothing,
amongst other things but generally excludes
conveniences, and products and services for
comfort or pleasure. Commercial or 'trading'
contracts are excluded. These latter contracts
are voidable at the option of the minor, and
whether the minor may avoid the contract
depends on the nature of the contract.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.in 22

23. Contracts where the minor may avoid the affect of the
contract are for the acquisition of a legal or equitable
interest in property of a permanent nature, such as
shares, land, marriage and partnerships. Other contracts
require positive ratification in order to be enforceable,
which includes contracts for debts and the sale of goods
that are not for necessaries. The ratification must take
the form of an acknowledgement that the debt is binding
after attaining the age of 18. Fresh consideration is not
required for the ratification to be complete.
Restraints of trade may be unenforceable against a
minor, even if they would be enforceable against an
adult.
Dr. Tabrez Ahmad,
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24. Thanks
Dr. Tabrez Ahmad,
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