Effect of Minor's Agreement

Sections 10, 11, 68 and 183 to 184 of the Indian Contract Act, 1872; section 33 of the Specific Relief Act, 1963

In one minute

A minor's agreement is void from the very beginning. It is not merely voidable. The minor cannot be made to perform it, and cannot be made to repay under it, as a rule. The Privy Council settled this in Mohori Bibee v. Dharmodas Ghose.

The law still protects a person who supplies necessaries, and it lets a minor take benefits. In exams this is a favourite problem question. In real life it decides what a seller can do after dealing with a teenager.

Exam focus

Frequency: Occasionally asked
Usually asked as: Both (long answer and short answer)

Legal provision

Sections 10 and 11: a contract needs parties competent to contract, and a person below the age of majority is not competent.
Section 2(g): an agreement not enforceable by law is void.
Section 68: if a person incapable of contracting, or anyone he must support, is supplied with necessaries suited to his condition in life, the supplier is reimbursed from that person's property.
Sections 183 and 184: a person below the age of majority cannot employ an agent, and cannot become an agent responsible to the principal. As between the principal and third persons, any person may become an agent.
Specific Relief Act, 1963, section 33(2)(b): a defendant may win because the agreement is void for want of competence under section 11. The court may then require him to restore the benefit he received. The restoration is limited to the extent he or his estate has benefited.

Meaning and definition

A minor is a person below the age of majority. The Act does not say that a minor's agreement is "void" in so many words. The Privy Council reached that result by reading sections 2, 10 and 11 together.

The agreement is void ab initio (void from the start). It is not a contract at all, so there is nothing for anyone to cancel. This is the sharp contrast with a voidable contract, where the contract stands until the wronged party avoids it.

A minor borrows and an adult guarantees the loanHow to read this: the three boxes are the people. The lines say what the law allows between them. A red line marks what the law does not allow.

X (minor)Borrower. Lacks capacity under section 11.

Y (lender)Advanced Rs 10,000 to X.

Z (adult)Promised Y to pay if X fails to repay.

Y cannot enforce the loan agreement against X. It is void (Mohori Bibee v. Dharmodas Ghose).
If X still holds a benefit, the court may require X to restore it, to the extent X has benefited (Specific Relief Act, section 33(2)(b)).
Whether Y can sue Z is not settled. Kashiba v. Sripat Narshiv held the adult liable. Edavan Kavingal Kelappan Nambiar v. Moolakal Kunhi Raman held a surety not liable.

Detailed explanation

Step 1: the agreement is void and cannot be enforced

Neither side can enforce it against the minor. The minor cannot be compelled to perform and cannot be sued for damages on it. Whether he must give anything back is covered under restitution below.

Example. Arjun, aged 16, agrees to sell his late father's plot to a builder for Rs 8 lakh and takes the money. The builder cannot get the plot by suing Arjun on the agreement. The agreement is void.

Step 2: no ratification, and no estoppel on a false age statement to someone who knew

A void agreement cannot be ratified (approved afterwards) when the minor becomes a major. A fresh promise with fresh consideration is needed. In Suraj Narain Dube v. Sukhu Aheer, a Full Bench of the Allahabad High Court dealt with a loan taken in minority and a new bond signed after majority for the old debt. The Court held that the loan received in minority was not good consideration for the new promise.

In Mohori Bibee the lender's attorney knew the borrower was under age. The Privy Council held that a false statement of age made to a person who knows the truth does not stop (estop) the infant from pleading infancy. It did not decide whether an estoppel could arise against a minor who deceives an innocent lender.

Example. Divya, aged 17, signs a lease for a shop. At 19 she writes "I confirm the lease". The lease was void, so the confirmation is not enough. She and the landlord must make a fresh agreement.

Step 3: restitution

The Privy Council refused to order the minor to repay, because the lender knew of the minority and sections 64 and 65 presuppose a contract with a competent party. Today section 33(2)(b) of the Specific Relief Act gives the court a discretion to require restitution (giving back a benefit) of the benefit the minor still has. It is limited to that benefit.

Example. A minor buys a scooter for Rs 50,000 and resists the seller's suit. The court may require him to return the scooter, but not to pay more than he has gained.

Step 4: necessaries

Section 68 gives a supplier of necessaries a claim against the minor's property. The claim is not against the minor personally. The goods must be suited to the minor's condition in life.

Example. A grocer supplies rice and school books to Sneha, a minor orphan, on credit. The grocer is reimbursed from her property. In the English case Nash v. Inman (1908), a Cambridge undergraduate already had enough clothes, so a tailor's extra waistcoats were not necessaries.

Step 5: a guarantee for a minor's debt

A surety gives a contract of guarantee (section 126). Section 128 makes the surety's liability co-extensive with the principal debtor's. The question is whether a surety is bound when the principal debtor is a minor and owes nothing in law. High Courts have divided.

Surety liable. In Kashiba v. Sripat Narshiv (1894), the Bombay High Court held a father liable on a bond given for his minor daughter's debt. It treated his promise as that of a principal, not a mere surety. The Lahore High Court followed this in Chajju Singh v. The Crown (1921).
Surety not liable. In Edavan Kavingal Kelappan Nambiar v. Moolakal Kunhi Raman (1956), the Madras High Court held that a surety's liability rests on a valid principal debt. The surety is not liable for a minor's void debt, unless the contract is truly one of indemnity or the surety was misled by fraud.

Example. Rohan, a major, signs as surety for Karthik, aged 16, who borrows Rs 20,000 from a lender. Karthik defaults. Under the Bombay line the lender may recover from Rohan. Under the Madras line he may not, because Karthik owes nothing in law.

Step 6: other roles of a minor

Promisee or beneficiary: the rule makes a minor's own promise void. A minor may still take a benefit where he gives no promise, for example as payee of a promissory note or as donee of a gift.
Partner: a minor cannot be a partner, because a partnership arises from a contract. Section 30 of the Indian Partnership Act, 1932 allows a minor to be admitted to the benefits of a partnership with all partners' consent. His share is liable for the firm's acts, but he is not personally liable. Within six months of attaining majority, or of learning he was admitted, he may give public notice that he elects to become or not to become a partner. If he gives no notice, he becomes a partner at the end of the six months.
Shareholder: a minor cannot sign a company's memorandum, because subscribing is a contract. A minor may be registered as a member through a guardian, but only for fully paid shares, so that no liability for unpaid calls can fall on him. On attaining majority he may repudiate within a reasonable time or continue as a member.
Agent: as between principal and third persons, a minor may be an agent. He cannot be made responsible to the principal (section 184).

Don't confuse: void and voidable

A minor's agreement is void. A contract induced by coercion or fraud is voidable. The words are close, but the results differ.

Point	Minor's agreement	Voidable contract
Status	Void from the start. No contract	A contract that stands until the wronged party avoids it
Who can cancel	No one needs to. It never bound the minor	The wronged party, by choice
Ratification	Not possible. A fresh agreement is needed	The wronged party may affirm it
Restoring benefits	Not under sections 64 or 65. Only under section 33 of the Specific Relief Act	The party who avoids it restores the benefit (section 64)

Inside the idea. A 17-year-old signs a loan agreement. It is void. No one can enforce it against him.

Just outside it. A 40-year-old signs a loan agreement because the lender threatens him with a false police case. The agreement is a contract, voidable at his option.

Common mistakes

Writing that a minor's agreement is voidable. It is void.
Saying the minor can ratify at 18. A fresh agreement is needed.
Making the minor personally liable for necessaries. Only his property is liable.
Thinking a minor can never be benefited. A minor may take a benefit without promising anything.

Apply it

Problem

X, a minor, borrows Rs 10,000 from Y. Z, a major, guarantees the loan. X refuses to repay and pleads minority. Can Y recover from X or from Z?

Issue. What is the effect of the minor's loan agreement and of the guarantee?

Rule. A minor's agreement is void (Mohori Bibee v. Dharmodas Ghose). A surety's liability is co-extensive with the principal debtor's (section 128). High Courts differ on a surety for a minor's debt.

Application. The loan agreement with X is void, so Y cannot enforce it against X. The court may at most require X to restore any benefit he still holds. Z is a competent party, and his promise to Y is a separate contract.

Conclusion. Y cannot recover from X on the agreement. Against Z the courts differ. On the Bombay view in Kashiba v. Sripat Narshiv, Z is liable. On the Madras view in Edavan Kavingal Kelappan Nambiar v. Moolakal Kunhi Raman, Z is not liable unless the contract is one of indemnity or fraud is shown. An exam answer should state both views.

Leading case laws

Mohori Bibee v. Dharmodas Ghose (1903)
Facts. A minor mortgaged houses for Rs 20,000 to a money lender whose attorney knew he was under age. The minor sued to have the mortgage declared void. The lender asked that he at least repay the money.

Principle. An infant is not competent to contract, so his agreement is void. Sections 64 and 65 do not apply, and no repayment was ordered.

Why it matters. It settled that a minor's agreement is void, not voidable.
Suraj Narain Dube v. Sukhu Aheer (1928), Allahabad High Court, Full Bench
Facts. Suraj Narain lent Rs 40 to Sukhu Aheer, a minor. After Sukhu came of age, he and his mother signed a new bond of Rs 76 for the old loan and interest.

Principle. The loan received in minority was not good consideration for a promise made after majority. The new bond could not be enforced on that ground.

Why it matters. It shows why a minor's void agreement cannot be ratified by a promise for the old debt.
Kashiba v. Sripat Narshiv (1894), Bombay High Court, ILR 19 Bom 697
Facts. A minor girl executed a bond for Rs 1,000. Her father joined and promised to pay personally if she failed.

Principle. The father was held liable. His promise was that of a principal, not a mere surety.

Why it matters. It is the leading authority for holding an adult liable on a minor's debt.
Edavan Kavingal Kelappan Nambiar v. Moolakal Kunhi Raman (1956), Madras High Court, AIR 1957 Mad 164
Facts. A surety gave a bond guaranteeing a minor's debt. The minor was not liable.

Principle. A surety's liability is ancillary and rests on a valid obligation of the principal debtor. The surety was not liable, unless the contract was one of indemnity or fraud was shown. The decree against the surety was set aside.

Why it matters. It is the leading authority on the other side of the divide.
Nash v. Inman (1908), Court of Appeal, England
Facts. A tailor sold clothes on credit, including eleven fancy waistcoats, to a minor at Cambridge University.

Principle. The supplier must prove the goods were suited to the minor's condition in life and that the minor was not already sufficiently supplied.

Why it matters. It shows how courts test whether goods are necessaries. It is an English case, used as a guide for section 68.

How to write this answer in the exam

5-mark answer

Sections 10 and 11: a minor is not competent.
State that the agreement is void ab initio.
Cite Mohori Bibee v. Dharmodas Ghose.
Add no ratification and no personal liability.
Add necessaries under section 68.

10-mark answer

Capacity under section 11 and the age of majority.
Facts and holding of Mohori Bibee v. Dharmodas Ghose.
Ratification, estoppel and restitution.
Necessaries (section 68) and Nash v. Inman.
Guarantee for a minor's debt: Kashiba against Edavan Kavingal Kelappan Nambiar.
Minor as promisee, partner, shareholder and agent.
Comparison with a voidable contract.

Key points to remember

A minor's agreement is void from the start (Mohori Bibee v. Dharmodas Ghose).
No ratification on attaining majority. A fresh agreement is needed.
Necessaries: reimbursement from the minor's property, never personal liability (section 68).
A surety for a minor's debt: Bombay and Lahore hold him liable, Madras does not. State both.
Restitution is limited to the benefit the minor still has (Specific Relief Act, section 33(2)(b)).
A minor may take a benefit but cannot be bound by a promise.

Quick self-test

1. Is a minor's agreement void or voidable?

It is void from the start. This was held in Mohori Bibee v. Dharmodas Ghose.

2. Who is liable for necessaries supplied to a minor?

The minor's property is liable. The minor is not personally liable (section 68).

3. Can the lender recover from an adult who guaranteed a minor's loan?

High Courts differ. Kashiba v. Sripat Narshiv held the adult liable. Edavan Kavingal Kelappan Nambiar v. Moolakal Kunhi Raman held a surety not liable, unless the contract is one of indemnity or fraud is shown.