Agreement with a minor with reference to Mohori Bibee V/S Dharmodas Ghose

Statement of Facts

The facts of this case were as follows:-

1. Dharmodas Ghose, was the respondent in this case. He was a minor (i.e. has not completed the 18 years of age) and he was the sole owner of his immovable property. The mother of Dharmodas Ghose was authorized as his legal custodian by Calcutta High Court.

2. When he went for the mortgage of his own immovable property which was done in the favor of appellant i.e. Brahmo Dutta, he was a minor and he secured this mortgage deed for Rs. 20,000 at 12% interest rate per year.

3. Bhramo Dutta who was a money lender at that time and he secured a loan or amount of Rs. 20,000, and the management of his business was in the control of Kedar Nath, and Kedar Nath acted as the attorney of Brahmo Dutta.

4. Dharmodas Ghose’s mother sent a notification to Brahmo Dutta informing him about the minority of Dharmodas Ghose on the date on which such mortgage deed was commenced.

5. But the proportion or sum of loan that was actually provided was less than Rs. 20,000.

6. The negotiator or representative of the defendant, who actually acted instead of on behalf of money lender has given money or sum to the plaintiff, who was a minor and he fully had knowledge about the incompetency of the plaintiff to perform or enter into contract and also that he was incompetent legally to mortgage his property which belonged to him.

7. After that, on 10thSept. 1895 Dharmodas Ghose along with his mother brought an legal suit or action against Brahmo Dutta by saying that the mortgage that was executed by Dharmodas was commenced when he was a minor or infant and so such mortgage was void and disproportionate or improper and as a result of which such contract should be revoked or rescinded.

8. When this petition or claim was in process, Brahmo Dutta had died and then further the appeal or petition was litigated or indicted by his executor’s.

9. The plaintiff argued or confronted that in such case no relaxation or any sought of aid should be provided to them because according to him, defendant had deceitfully or dishonestly misinterpreted the fact about his age and because if mortgage is cancelled at the request by defendant i.e. Dharmodas Ghose.

Issues raised

Issues Raised in this case were:-

Whether the deed was void under section 2, 10[5], 11[6], of Indian Contract Act, 1872 or not?

Whether the defendant was liable to return the amount of loan which he had received by him under such deed or mortgage or not?

Whether the mortgage commenced by the defendant was voidable or not?

Judgement

1. According to he verdict of Trial Court, such mortgage deed or contract that was commenced between the plaintiff and the defendant was void as it was accomplished by the person who was an infant at the time of execution of mortgage.

2. When Brahmo Dutta was not satisfied with the verdict of Trial Court he filled an appeal in the Calcutta High Court.

3. According to the decision of Calcutta High Court, they agreed with the verdict that was given by Trial Court and it dismissed the appeal of Brahmo Dutta.

4. Then he later went to Privy Council for the appeal and later the Privy Council also dismissed the appeal of Brahmo Dutta and held that there cannot be any sought of contract between a minor and a major person.

5. The final decision that was passed by the Council were :-

1. Any sought of contract with a minor or infant is void/ void ab-initio (void from beginning).

2. Since minor was incompetent to make such mortgage hence the contact such made or commenced shall also be void and id not valid in the eyes of law.

3. The minor i.e. Dahrmodas Gosh cannot be forced to give back the amount of money that was advanced to him, because he was not bound by the promise that was executed in a contract.

Agreement with a Minor

Competence

Section 11 of the Indian Contract Act defines the competence to contract. This section says that “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.”

This section also declares the people who are incompetent to contract—

1. Minors,

2. Persons of unsound mind, and 

3. Persons disqualified by law to which they are subject.

The age of majority is generally eighteen, except when a guardian of a minor’s person or property has been appointed by the court, in which case it is 21. The age of majority of a person is to be determined “according to the law to which he is subject”.

In England the age of majority formerly was 21 years. But now under the Family Law Reform Act, 1969, “a minor is a person under the age of eighteen years”. Formerly a minor was referred to as an “infant”, but this Act has changed the term tp “minor”.

Section 10 of the Indian contract Act requires that the parties to a contract must be competent and Section 11 declares that a minor is not competent. But neither section makes it clear whether, if a minor enters into an agreement, it would be voidable at his option or altogether void. These provisions had, therefore, quite naturally given rise to controversy about the nature of a minor’s agreement.The controversy was only resolved in 1903 by Judicial Committee of the Privy Council in their well-known pronouncement in Mohiri Bibee v. Dharmodas Ghose. Sir Lord North observed: “Looking at Section 11 their Lordships are satisfied that the Act makes it essential that all contracting parties should be competent to contract and expressly provides that a person who by reason of infancy is incompetent to contract cannot make a contract within the meaning of the Act. The question whether a contract is void or voidable presupposes the existence of a contract within the 

Ever since this decision it has not been doubted that a minor’s agreement is absolutely void. In England also the Infant’s Relief Act of 1874 declares the following categories of a minor’s agreement to be “absolutely void”.

1. Contract for repayment of money lent or to be lent, or

2. Contract for goods supplied or to be supplied(other than necessary), and

3. Contract for accounts stated.

Any other rule would have made the law asymmetrical leaving it to the whim of a child to pick and choose between agreements made by him which he will and which he will not enforce. A child may show poor judgment in making a particular contract, and it is a protection against his own ignorance and immaturity- not merely fraudulent manipulation by others- that the law affords. The general presumption that every man is the best judge of his own interests is suspended in the case of children.[x]

The ruling of the Privy Council in the Mohiri Bibee case has been generally followed by the courts in India and applied both to the advantage and disadvantage of minors. Another decision of the Privy Council in line is Mir Sarwarjan v. Fakhruddin Mahomed Chowdhuery[xi]. “A contract to purchase certain immovable property had been made by a guardian on behalf of a minor, and the minor sued the other party for a decree of specific performance to recover possession. His action was rejected.”

The court said that it was not within the competence either of the manager of the minor’s estate or of the guardian of the minor, to bind the minor or the minor’s estate by a contract for the purchase of immovable property; that as the minor was not bound by the contract, there is no mutuality; and that consequently the minor could not obtain specific performance of the contract.

In its subsequent pronouncement in Sirkakulam Subramanyam v. Kurra Subba Rao[xii]the Privy Council overruled earlier decisions and entertained no doubt that it was within the powers of the mother of a minor as guardian to enter into a contract of sale for purpose of discharging his father’s debts. Following this decision, the Orissa High Court held that endowment of property for religious purposes by guardians on behalf of minors, being within their competence, 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 Section 20 of the Specific Relief Act,1963. If the contract is within the competence of the guardian and it is for the benefit of the minor it is especially enforceable.

In today’s society, it does not seem to be possible, much less desirable, for the law to adhere to the categorical declaration that a minor’s agreement is “absolutely void”. Minors are appearing in public life today more frequently than ever before. A minor has to travel, to get his dress tailored, or cleaned, to visit cinema halls and deposit his cycle at a stand. He has to deal with educational institutions and purchase so many things for the facility of life and education. If, in any one of these cases, the other party to the contract could brush against contractual liability would be too dear to minors.

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. In order to pay off the debts of his father, which were promissory notes owing to the appellants and a mortgage to another, a minor son and his mother sold a piece of land to the appellants in satisfaction of the notes, requiring that the appellants pay off the mortgage debt. The appellants, accordingly, paid off the mortgagee and took possession.

Afterwards, the minor brought an action to recover back the land. It was found as a fact that the transaction was for the benefit of the minor and the guardian had the capacity to contract on his behalf. LORD MORTON said that section 11 and the Mohiri Bibee case leave no doubt that a minor cannot contract that if the guardian and the mother had for the benefit of the minor and within the power of the guardian was held to be binding upon him.

EFFECTS OF MINOR’S AGREEMENT

A minor’s agreement being void, ordinarily, it should be wholly devoid of all effects. If there is no contract, there should, indeed, be no contractual obligation on either side. Consequently, all the effects of a minor’s agreement must be worked out independently of any contract.

1. No Estoppel against minor Suppose that the minor by misrepresenting his age induces another to contract with him, will there be any estoppel against him, or, in other words, will he be precluded from disclosing his true age in litigation resulting from the contract? Even this question had at one time created a controversy. But it is now settled by the preponderance of authority that there is no such estoppel against a statute. The policy of the law of contract is to protect persons below age from contractual liability and naturally, the doctrine of estoppel cannot be used to defeat that policy. Thus, in a case before Bombay High Court,
 BEAUMONT CJ reviewed the earlier authorities and concluded by saying: “ the court is of opinion that where an infant represents fraudulently or otherwise that he is of age and thereby induces another to enter into a contract with him then in an action founded on the contract the infant is not estopped from setting up infancy”.

2. No liability in Contract or in Tort arising out of Contract A minor’s agreement is, of course, in principle devoid of all legal effects. “A minor is in law incapable of giving consent, and, there being consent, there would be no change in the character” or status of the parties. In England it was laid down as early as 1665 in Johnson v. Pye that “ an infant who obtains a loan of money by falsely representing his age cannot be made to repay the amount of loan in the form of damages for deceit”.
 The court pointed out that the infant of England would be ruined. Hence a minor cannot be held responsible for anything which would be an indirect way of enforcing his agreement. “You cannot convert a contract into tort to enable you to sue an infant. This example, refused to hold a minor liable in tort for money lent on a bond. The court said: “ if the tort is directly connected with the contract and is the means of effecting it and is parcel of the same transaction, the minor is not liable in tort.
 But where the tort is independent of the contract, the mere fact that a contract is also involved, will not absolve the infant from liability. Thus, where an infant borrowed a mare for riding only, he was held liable when he lent her to one of his friends who jumped and killed her. Similarly, in another case, an infant was held liable for the tort of detenue for his failure to return certain instruments which he had hired and then passed on to a friend.
 ATKIN J’s judgment in Fwcetta v. Smethurst explains the independent of the contract. “The principle of law applicable to this case is that which is referred to in Leslie (R) Ltd v. Sheill where Kennedy LJ in his judgment cites with approval the following passage from POLLOCK ON CONTRACTS: ‘He (i.e. the infant) cannot be sued for a wrong when the cause of action in substance is ex contractu, or is so directly connected with the contract … But if an infant’s wrongful act, though concerned with the subject-matter of a contract, and such that but for the contract there would have been no opportunity of committing it, is nevertheless independent of the contract in the sense of not being an act of the kind contemplated by it, then the infant is infant’.
 In the present case, the car was hired for the purpose of going to Cairn Ryan and back but was in fact driven further. In my opinion, nothing that was done upon that further journey made the defendant an independent tortfesor; and, if any damage was done to the car on that journey, the defendant would only be liable if he were liable under the contract made…
 In Burnard v. Haggis the defendant who was a Cambridge undergraduate and an infant, hired a horse for the purpose of going for a ride, expressly stating that he did not want a horse for jumping. The defendant let the horse to a friend, who was jumping, with a result that it fell and was injured. The defendant was liable on the ground that the act resulting in injury to the horse was one which was quite outside the contract, and could not be said to be an abuse of the contract.
 In Jennings v. Rundall, on the other hand, where the defendant, an infant, had hired a horse to be ridden for a short journey and took it on a much longer journey, with the result that it was injured, the court held the defendant not liable upon the ground that the action was founded in court and that the plaintiff could not turn what was in substance a claim in contract to one in tort.”

3. 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 the equitable doctrine of restitution is not applied where the infant has obtained cash instead of goods. The well-known authority is Leslie Ltd v Sheill.
 An infant succeeded in deceiving some money-lenders by telling them a lie about his age, and so got them to lend him £ 400 on the faith of his being an adult.
 Their attempt to recover the amount of principal and interest as damages for fraud failed for the reasons explained above. They then claimed the return of principal moneys under a quasi-contract as “money has and received to plaintiff’s use.”
 To this Lord SUMNER replied: “Further, under the statute[xxx] the principal, which at common law relieved an infant from liability for a tort directly connected with a voidable contract, namely, that it was impossible to directly connected with a voidable contract, namely, that it was impossible to enforce in a roundabout way an unenforceable contract, equally forbids the courts to allow, under the name of an implied contract or in the form of an action quasi ex contractu, a proceeding to enforce part of a contract, which the statute declared to be fully void.
 Finally, the money-lenders relied upon the doctrine of restitution, contending that the infant should be compelled in equity to restore the money. Rejecting this contention, Lord Sumner said:
 “I think that the whole current of decisions down to 1913… went to show that, when an infant obtained an advantage by falsely stating himself to be of full age, equity required him to restore his ill-gotten gains, or to release the party deceived from obligations or acts in law induced by fraud, but scrupulously stopped short of enforcing against him a contractual obligation, entered into while he was an infant, even by means of a fraud… Restitution stopped where repayment began.
 … the money was paid over in order to be used as the defendant’s own and he has so used it and, I suppose, spent it. There is no question of tracing it, no possibility of restoring the very thing got by the fraud, nothing but compulsion through a personal judgment to repay an equivalent sum out of his present and future resources…. I think this would be nothing but enforcing a void contract.”
 Minor Seeking Relief, Compellable to Restore
 However, where an infant invokes the aid of the court for the cancellation of his contract, the court may grant the relief subject to the condition that he shall restore all benefits obtained by him under the contract, or make suitable compensation to the other party.
 This aspect of the doctrine of restitution found expression in Section 41 of the original Specific Relief Act of 1877. The section authorized the courts to order any compensation that justice required to be paid by the party at whose instance a contract was canceled. The first well-known case decided under the section is that of Mohiri Bibee v. Dharmodas Ghose.
 The relief of canceled has to be granted in the above case as the plaintiff was entitled to it under Section 39 of the Specific Relief Act, 1877.

4. Beneficial contracts The law declared by the Privy Council in the Mohiri Bibee case that a minor’s agreement is “absolutely void” has been generally followed, but it has been growlingly “confined to cases where a minor is charged with obligations and the other contracting party seeks to enforce those obligations against the minor.” It was observed by ABDUR RAHIM J of the Madras High Court that “what is meant by the proposition that an infant is incompetent to contract or that his contract is void is that the law will not enforce any contractual obligation of an infant.” Accordingly, 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.
 Contracts of Marriage
 A contract for the marriage of a minor is also prima facie for his or her benefit. “It is customary amongst most of the communities in India for parents to arrange marriages between their marriages between their minor children and the law has to adapt itself to the habits and customs of the people.” It has, therefore, become well established, almost without any controversy, “that while the contract of marriage could be enforced against the other contracting party at the instance of the minor it cannot be enforced against the minor”.
 Marriage of Muslim minor girl
 Parties were governed by Shariat law. The medical report showed that the girl had not attained the age of majority. She had, therefore, no right to enter into the contract of marriage on her own free will. She could have been given in marriage only by her father or guardian. The Kazi who performed the ceremony of marriage was in know of things. The marriage was not valid. She could not have been forced to live with her husband against the mandate of Quran Sharif. The father was entitled to her custody.
 Contracts of Apprenticeship
 Contracts of apprenticeship are another species of contracts which are for the benefit of minors. The Indian Apprentices Act, 1850 provides for contracts in the nature of contracts of service which are binding on minors. The Act was passed, as the preamble of the Act shows: “For better enabling children and specially orphans and poor children brought up by public, charity, to learn trades, crafts and employments, by which, when they come to full age, they may gain a livelihood.”
 The Act requires the contract to be made by a guardian on behalf of the minor [S. 9].

5. Ratification A person cannot 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 cannot be made valid by subsequent ratification. It would be a contradiction in terms to say that a void contract can be ratified. If it is necessary, a fresh contract should be made on attaining majority. And a new contract will also require a fresh consideration. “The consideration which passed under the earlier contract cannot be implied into the contract into which the minor enters on attaining majority.

Critical Analysis

In the case of Mohori Bibee V/S Dharmodas Ghose, the Privy Council strictly defined that any sought of contract or agreement with a minor or with any infant shall be null and void. All contacts with the minors will be void ab-initio. Majority Act, 1875 outlined the definition of a minor, according to such act, any person who is below the age of 18 years or has not completed the age of 18 years shall not be competent to create or enter into any sought of contact or agreement.

According to me any sought of contract in which a minor is party to contract or whether he/she is involved in it shall be void. This perception is correct because minor or infant comes in the category of such people who cannot give there free consent along with the reason that they are not in a situation where they can think in a manner in which a prudent or an ordinary person could do it. An agreement is a deal where free an equal consent of all parties are given but in case of a minor there consent can be dominated by major ones as a result of which , it leads to the violation of one of the condition to form a contract, i.e. free consent[9](a consent is said to be free when it is not caused by Coercion[10], Undue Influence[11], Fraud[12], Miss representation[13]and Mistake[14]).

The court also through its verdict has propounded that, a contact with an infant shall be declared null and void it means that it is neither valid nor voidable. According to me, minors contract shall be avoided and stopped because it sometimes lead to the harmful social, economic and legal effects on the lives and conditions of the minors. Any such person who commits such offence shall be strictly punished by court of law, either through imprisonment or with a fine or with both according to the ambit of the offence committed by the major person. 

CONCLUSION

In the due course of the project the researcher has dealt with the case of Mohiri Bibee and the judgment given by the Privy Council. The following is the summary of the laws of contract with a minor:

1. Agreement with or by a minor is void:

An agreement with or by a minor is void and inoperative ab initio [Mohiri Bibee vs. Dharmodas Ghose]. These agreements are considered to be nullity and non-existent in the eyes of law. These cannot be enforced against a minor.

2. Minor can be a promisee or a beneficiary:

In competency of a minor to enter into contract means incompetency to bind himself by a contract. There is nothing which debars him from becoming a beneficiary, e.g., a payee [SharafatAli vs. Noor Mohd.], an endorsee or a promisee in a contract.

Such contracts can be enforced at his option, but not at the option of the other party. Thus, the law does not regard him as incompetent for accepting a benefit.

3. Minor’s agreement cannot be ratified by him:

An agreement by a minor cannot be ratified by him on attaining the age of majority. They term ‘ratification’ may be defined as the act of confirming or approving. The doctrine of no ratification’ implies that an agreement made by a minor (during the period of minority), cannot be confirmed by him on attaining majority.

This is so because minor’s agreement is voidable initio (i.e., void from the very beginning) and, therefore, cannot be made valid by ratification. However, if the minor wants to carry out the agreement, a fresh agreement should be made on attaining majority, it may be noted that a new agreement will also require fresh consideration.

The consideration which was given under the earlier agreement (during minority) cannot be taken as consideration for the new agreement (during majority) also as in the case of Nazir Ahmed v. Jiwandas.

4. No estoppel against minor:

The term ‘estoppel’ may be defined as prevention of a claim or assertion by law. In other words, when someone makes another person to believe that a particular thing or fact is true, then later on he cannot be allowed to deny the truth of that thing.

It will be interesting to know that there is no such estoppel against the minor. In other words, when a minor fraudulently enters into a contract, representing that he is a major, but in reality he is not, then later on he can plead his minority as a defence and cannot be stopped (i.e. prevented) from doing so.

5. No specific performance of the agreements:

There can be no specific performance of the agreements, entered into by minors as they are void ab initio. A contract entered into on his behalf by his parent /guardian or the manager of his estate, can be specifically enforced by or against minor provided that the contract is:-

(a) Within the scope of the authority of the parent /guardian or manager, and

(b) For the benefit of the minor.

6. No compensation by minors:

If a minor has received any benefit under a void agreement, he cannot be asked to compensate or pay for it. Sec 65, which provides for restitution in case of agreements found to be void, does not apply to a minor.

7. Minor’s property liable for necessaries:

Sometimes, a person supplies necessaries to a minor. In such cases, the supplier of necessaries can claim reimbursement from the property of minor.

8. Minor as a partner:

The partnership of partners results from their agreement. A minor, being incompetent to enter into a contract, cannot be a partner in the firm. However, he may be admitted only to the benefits of the firm with the consent of all other partners [Sec 30(1) of the Indian Partnership Act, 1932].

9. The Minor as an agent:

An agent is merely a connecting link, between his principal and third person. Therefore, a minor can be appointed as an agent. But he will not be personally liable for his acts as an agent [Sec. 184].

It may, however, be noted that the principal will be liable to the third persons for the acts of the minor agent which he does in the ordinary course of dealings.

10. Minor as an insolvent:

A minor cannot be declared as an insolvent. This is so because all agreements with a minor are absolutely void. Moreover, the minor is not personally liable for any debt incurred during the period of his minority.

11. The minor can execute a negotiable instrument:

According to Sec 13(1) of the Negotiable Instruments Act, 1881, the term ‘negotiable instrument’ means and includes a promissory note, a bill of exchange and a cheque. The minor is competent to draw, negotiate or endorse the negotiable instruments.

It may, however, be noted that the minor will not incur any personal liability under such instruments. But, the negotiable instruments executed in favour of the minor can be enforced by him.

12.  The liability of minor’s parents or guardians:

As a matter of fact, the minor’s contracts do not impose any liability on his parents or guardians even if the contracts are for ‘necessaries’. The parents or guardians of the minor may pay money borrowed by him just out of moral obligations.But there is no legal obligation to make such payments. It may, however, be noted that the parents or guardians can be held liable when the minor child is acting as an agent of his parents or guardians.

Aishwarya Says:

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