CAPACITY TO CONTRACTS: Beneficial Contracts
This article was written by Aishwarya Singh a student of Jindal Global Law School
The enforceability of an agreement is defined under Section 2(b) of the Indian Contract Act 1872. The interpretation clause carries a pre condition that the parties to the contract must be competent to contract as defined by Section 10 of the act and the competence to contract is defined in Section 11 which states that “every person is competent to contract who is of the age of majority according to 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 a subject.” This section thus declares that the following people are incompetent to contract: minors, persons of unsound mind and persons disqualified by law to which they are subject.[1] Minor can be defined as a person who is under the age of eighteen years of age and the law dealing with minors is based on two principles:
- The law must protect the minor against his own inexperience.
- The law should not cause unnecessary hardship to adults who deal fairly with the minors.[2]
The law declared by the Privy Council in the Mohori Bibi case[3] that a minor’s agreement is “absolutely void” has been generally followed, but it has been growingly “confined to cases where a minor is charged with obligations and the other contracting party seeks to enforce those obligations against the minor.”[4] A minor can be a beneficiary or a promisee. The Indian Contract Act, 1872 allows a minor to derive benefit under a contract even if he cannot enter into one. In the eyes of the law, a minor is not treated as incapable of accepting benefits. A promissory note in favour of a minor can also be enforced by the minor.[5] As long as the minor has paid the full consideration and nothing more is required to be done by him under the contract or he is required to bear no obligation, he can obtain the benefit stipulated.[6]
Accordingly, a minor is allowd to enforce a contract which is of some benefit to him and under which he is required to bear no obligation. In the case of Srikakulam Subrahmanyam v. Kurra Shubha Rao[7] it was observed that in order to pay off his promissory note and mortgage debt of his father, the minor son and his mother sold the piece of the land to the holders of the promissory note. Afterwards the minor filed to recover the property back. It was found that the sale was made for the benefit of the minor and his mother (guardian) had the capacity to contract on his behalf and hence the sale of the land was held to be valid. In the case of Thakar Das v. Mt Putli[8] it was held that a minor is capable for purchasing immovable property and he may sue to recover the possesion of the property purchased upon tender of the purchase money.
A lease however is not like other transfers of property and a lease to a minor has been held to be void.[9] All these cases proceed on the principal that the minor has already given the full consideration to be supplied by him and there is nothing that remains to be done by him under the contract.[10] Where a minor has given consideration under a contract, but the consideration given to him has failed, he may have restitution.[11] Thus, where a minor bought a zamindari property on payment of money, but he was ousted on a suit by a third party, it was held “that the minor was at any rate entitled to recover from the vendor the sum which he had paid at the time of the purchase of the property.”[12]
A minor can be admitted to the benefits of partnership with the consent of all the partners under Section 30 of the Indian Partnership Act, 1932 though he cannot be a partner in a partnership firm. Contracts made under the English law such as contracts of marriage, contracts of apprenticeship, etc are considered only to be voidable and not unlawful.[13]
- Contracts of Marriage
A contract for marriage of a minor is also prima facie for his or her benefit. However, only the minor can get such a contract enforced, the contract cannot be enforced against the minor.[14] When the agreement for marriage involves statutory violation e.g. The Hindu Marriage Act, 1955 when the girl has to be 18 years and the boy has to be 21 years, the agreement is likely to be avoided.
- Marriage to a Muslim Minor Girl
According to the Shariat Law, a minor girl can be given in marriage only by her father or her guardian and if it is medically ascertained that the girl has not yet reached the age of majority and lacks the capacity to consent then the marriage will not be considered valid.[15]
- Contracts of Apprenticeship
Contract of Apprenticeship is another species of contracts which are for the benefit of the minors at the later stage in life.[16] These contracts are in the nature of contracts of services.[17] It is essential that these types of contracts are made by a guardian on behalf of the minor to be valid as per the Act.[18] In English law contracts of services and apprenticeship are put on the same footing and in the same category as contracts for necessaries.[19] In the case of Raj Rani v. Prem Adib[20] it was observed that though according to English law the minor would be liable in the case if a contract of a service where the contract was for his benefit, it is clear that under Section 11, the minor’s contract being void, the minor would not be held liable.
However, it is imperative that the contract should be looked upon as a whole to determine whether it is beneficial to the minor or not.
- Trade Contracts not included in Beneficial Contracts
Ordinary trade contracts cannot be counted in the category of beneficial contracts. In the case of Cowern v. Nield, it was observed that “in a general sense ordinary trade contracts cannot be included under this category of beneficial contracts, 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.”[21]
- Option to Retire from Beneficial Contracts on Majority
Upon attaining the age of majority a minor has an option to retire from a beneficial contract provided that he acts within a reasonable time. The House of Lords held that the repudiation coming after five years after attaining majority was too late.[22]
Ratification in cases of beneficial contracts:
A person cannot on attaining majority ratify an agreement made by him during his minority.[23] Ratification relates back to to the date of the making of the contract and therefore a contract which was then void cannot be made valid by subsequent ratification.[24] A minor’s promise, though void under the Infant’s Relief Act, 1874, became binding on him when he attained majority and fixed a date for such promised marriage. It was held that this was a new promise and he was liable for the breach.[25]
Hence, there are exceptions to the rule of contract when the law seeks to secure contracts that are for a minor’s benefits and these exceptions comes in the form of Beneficial Contracts.
[1] Ashok Kumar J. Pandya v. Suyog Coop Housing Society Ltd, AIR 2003 Guj 118 (NOC): 2002 AIHC 3401, a housing society agreed to sell land before it became a legal person by registration, not enforceable.
[2] Singh, Avtar, Contract &Specific Relief, 10th Edition. Eastern Book Company Page 153.
[3] (1903) 30 IA 114: (1903) AC 6: 1903 ILR 30 Cal 539 (PC)
[4] Raghava Chariar v Srinivasa, (1916) 40 Mad 308, per SESHGIRI AYYAR J at page 311. Satyadeva Narayana v Tribeni Prasad, AIR 1936 Pat 153, minor a mortagagee.
[5] Sharfath Ali v. Noor Mahmomed AIR (1924) Rang 136
[6] Singh, Avtar, Contract &Specific Relief, 10th Edition. Eastern Book Company Page 155.
[7] ILR 1949 Mad 141 PC
[8] AIR 1924 Lah 611
[9] Jaykant v. Durgashankar, AIR 1970 Guj 106. Quoted from Ponnuswami and Puri, CASES AND MATERIALS ON CONTRACTS, p. 313 (1974).
[10] Singh, Avtar, Contract &Specific Relief, 10th Edition. Eastern Book Company Page 164-165.
[11] Singh, Avtar, Contract &Specific Relief, 10th Edition. Eastern Book Company Page 165.
[12] Walidad Khan v. Janak Singh, AIR 1935 All 370.
[13] Singh, Avtar, Contract &Specific Relief, 10th Edition. Eastern Book Company Page 166.
[14] Umed Kika v. Nagindas (1870) 7 Bom HC 122
[15] Kumari Shahnoor Md Tahssen v. State of UP AIR (2007) All 437 (NOC)
[16] Singh, Avtar, Contract &Specific Relief, 10th Edition. Eastern Book Company Page 167.
[17] The Indian Apprentices Act, 1850.
[18] Ibid
[19] Roberts v. Gray (1913) 1 KB 520
[20] AIR 1949 Bom 215
[21] (1911-13) All ER ER Rep 425
[22] Edward v. Carter, 1893 AC 360
[23] Nazir Ahmad v. Jiwandas AIR 1938 Lah 159
[24] Tukaram Ramji v. Madhorao Manaji, AIR 1948 Nag 293.
[25] Ditchman v. Worrall (1880) 49 LJ QB 688
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