Minor’s Contract Part 2

 Minor’s Contract Part 2

The promise of infants should never have been held to be promises in law or to constitute a consideration for another promise.

There is nothing in the Contract Act which prevents an infant from being the promisee. The Indian Law recognized the capacity of the minor to accept a promise.

Sec.7 of the Transfer of Property Act makes capacity to contract, the limit of the capacity to transfer. The Section applies to property in general.

This Section does not in terms declare that a transfer by a person incapable of contracting is wholly void; nor does it prohibit it. The persons who are incapable of contracting are capable of transferring.

A transfer by an incompetent person is wholly void,

The Transfer of Property Act 1882 when enacted came into force only in limited areas though now it has been extended to nearly the whole India.

Even a gift of money by an infant was held good in Taylor vs Johnson (1898) 171. In the case of money in which not merely possession but title passes by delivery, a payment or delivery of money, even by an infant should be held sufficient to pass property.

As regards transfers of immovable property in all cases where the transfer can only be made by an instrument in writing registered, a minor may not be able to make a transfer at all; for an instrument executed by a minor cannot be admitted to registration. Sec. 35 of the Registration Act.

Sec.26 of the Negotiable Instruments Act. In a vast majority of cases promissory notes are made in consideration of a loan of money and if a minor were incompetent to pass property in money and cannot therefore be a payee, it would have been so enacted in the Act. A minor can evidently draw a bill or issue a cheque on his banker (a cheque is only a species of bill). No doubt he cannot be made liable on the bill, but his banker evidently can honour his cheque.

Sec.22 of the English Bills of Exchange Act which is quite similar to Sec.26 of the Indian Negotiable Instruments Act.

If a minor can pay by a cheque, it would be absurd to hold that he cannot pay cash so as to pass title to it. 

A minor partner can apparently transact the business of a partnership and if the partnership was a money lending business, he can make loans. (Sec.253 Clause (3) of the Contract Act).

Sec.7 of the Transfer of Property Act is in consonance with the principles laid down in England and America in respect of transfers by persons of deficient or limited contractual capacity. 

In Sections 35 and 38 of the Specific Relief Act ‘contract’ is used in the sense of both executed contract and executory contract, i.e. transfers and promises.

A promise by a minor may be void as it is not a contract, but a conveyance by a minor was not void.

Whether a minor can be a transferee of property?

The provisions of the Transfer of Property Act and the Trusts Act make it clear that an infant can be a grantee though he cannot ordinarily be a grantor.

Infants cannot make grants, they may accept them. (Palmer vs Low).

According to the Indian Contract Act, a minor is incompetent to make a contract. According to the Contract Act, a contract by a minor must be regarded as void and not merely voidable.

The contract should be for the benefit of the minor.

Even the Judges in England came to the conclusion that marriage was for the benefit of the minor. There is no question that in India it would be considered to be for the benefit of the minor.

Specific performance is merely a relief and not the cause of action; the cause of action is the breach of contract.

A contract of apprenticeship is held to be good because it is considered to be for the benefit if the minor. In the same way a contract of marriage is for the benefit of the minor.

Neither a contract of personal service nor a contract of marriage can be ordered to be specifically performed so that in either case the apprentice or the girl cannot be compelled to carry out his or her part of the contract against his or her wishes. However, if it is an enforceable contract, the other result, namely, the liability in damages of the party making the breach of the contract, would follow.

Doctrine of mutuality

The doctrine of mutuality in the matter of contracts entered into on behalf of the minor by the guardian can arise where the subject-matter is minor’s separate estate and all the cases which have refused performance of executory contracts relate to properties belonging separately to the minor.

A minor is not personally bound by any contract made on his behalf by his guardian.

A contract for sale of immovable property does not of itself create an interest in or charge on such property. (Sec.54 of the Transfer of Property Act).

If it is a contract of purely personal nature and no personal liability can be imposed on the minor, it must logically follow that the minor cannot be compelled to perform the contract; for the same reason he cannot take advantage of the contract and ask for specific performance. The purchaser therefore can only claim compensation against the guardian and not against the minor or his property, except in the case where the guardian uses the money obtained from the purchaser for the improvement of the minor’s estate, a case which stands on a separate footing.

Sec.24A of the Specific Relief Act debars the purchaser from claiming the relief of specific performance against the minor.

Under the Mohomedan law, a guardian has no authority to deal with the estate of a minor. As such, a contract to sell or purchase entered into by such guardian was held to be void and not binding on the minor. 

The position of a guardian of a Hindu minor is slightly different. The guardiain under the Hindu Law has the authority to charge the property of a minor or to sell it on grounds of necessity or benefit to the minor. Even so, it was not within the competence of the guardian of a minor to bind the minor’s estate by contract for purchase of immovable property. 

A distinction was also made between ‘executed contracts’ and ‘executory contracts’. In the case of executed contract, it was held even though it was for the benefit of the minor, it could not be specifically enforced.

Thus, upto 1948 it was firmly settled that a Hindu guardian could alienate infant’s property only in case of necessity and for the benefit of the estate and that he had no authority to enter into a contract to purchase property for the minor and that such contract could not be specifically enforced.

In the case of ‘executed contracts’, it was, however, held that the transaction could be set aside only on proof that the guardian had no authority to enter into a contract or that it was not for the benefit of the minor.

Whatever might be the case with regard to the position of minors belonging to other regions even with regard to contracts for sale of property which are governed by the provisions of the Guardians and Wards Act, so far as Hindu minors are concerned, there is no difficulty in holding that the guardian of a Hindu minor is competent to enter into a contract of sale of the minor’s property if it is for the necessity of the minor or the minor’s estate.

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