Minor’s contracts Part 1

 Minor’s contracts Part 1

The Judicial Committee held that a guardian had no power to bind the minor and the minor was not entitled to specific performance of the contract. (Mir Sarwarajan vs Fakirudding Mahamed, 39 Cal. 232: 39 IA 1 PC).

A guardian’s contract for sale, though supported by necessity or benefit, cannot be specifically enforced against the minor. (Ramakrishna Reddiar* vs Chidambra Swamigal, 54 MLJ 412: AIR (15) 1928 Mad 407 & Raghunathan vs Ravuth Kanni, ILR (1938) Mad 928: AIR (25) 1938 Mad 765).

A minor, who had attained majority, could specifically enforce a contract of sale entered into by his guardian when the purchaser had entered into possession of the property under the contract, but had not paid the consideration. (Adinarayana vs Venkasubbiah, AIR (27) 1940 Mad 625).

But Courts in India enforced a guardian’s contract for sale of the ward’s property if the transaction was supported by necessity or was beneficial to the minor. (Innatunnissa Bibi vs Janakinath, 22 CWN 477: AIR (5) 1918 Cal 877).

The Judicial Committee held that a contract for sale of the ward’s property concluded by a guardian competent to act and being for the ward’s benefit is enforceable against the minor. (Subramaniam vs Subba Rao, ILE (1949) Mad 141: AIR (35) 1948 PC 95).

Therefore the decision in Ramakrishna Reddiar* (AIR (15) 1928 Mad 407) cannot be accepted as correct statement of law.

Under the Hindu law (Old Hindu law) a guardian has the power to sell or mortgage the estate of his minor ward for the necessities or benefit of the minor, is too well established to require any citation of authority.

A guardian cannot do indirectly what the minor cannot do directly by entering into a contract.

That except in the case of necessaries supplied to a minor within the meaning of Sec.68 of the Contract Act, the creditor cannot obtain the estate of a minor on the basis of a contract entered into by the guardian and could only avail himself of the right of subrogation. 

If the guardian’s contract is unsupported by necessity or benefit to the minor, it would be in excess of his powers as guardian and the contract would be unenforceable against the estate of the minor on that ground.

Both in British India and in England, many contracts for marriage are made while one of the parties is a minor. In England, the question arose that whether the minor could claim damages for breach of such a contract. The question was decided in Holt vs Ward (1732) 2 Stra. 937, and held that in England the contracts of minors at that date were held under common law to be voidable or void, that is to say, the minor could enforce performance of the contract as against the other adult party, but the adult party could not enforce it against the minor.

Therefore the Infants Relief Act of 1874 was passed which made certain contracts by minors mentioned therein void. That Act, however, left contracts of marriage untouched.

In India, upto the decision of the Privy Council in Mohori Bibee vs Dharmadas Ghose (1903) 30 Cal. 539, that the contracts of minors were voidable.

An infant is capable of acquiring property by gift which the law requires must be accepted. Sec.127 of the Transfer of Property Act shows that a donee who is not competent to contract, an infant is within the category, can accept a gift even of property burdened with an obligation though he will not be bound by the acceptance and can repudiate it when he becomes competent to contract. (Subramania Iyer vs Sitha Lakshmi, ILR (1903) AC 6).

An infant may be admitted to the benefits of a partnership though he cannot be made personally liable for any obligation of the firm. (Sec.247 of the Contract Act).

Similarly a minor may accept a trust and can be a trustee though he cannot execute a trust involving the exercise of discretion. (Sec.10 of the Indian Trust Act).

All these indicate that what is meant by the proposition that an infant is incompetent to contract or that his contract is void if that the law will not enforce any contractual obligation of an infant.

As for the infant’s legal position with reference to transfers of property, he is undoubtedly capable of holding property and can acquire property not only by inheritance or bequest but also by gift. 

Sec.7 of the Transfer of Property Act lays down generally that a person competent to contract may make a transfer but that Act nowhere says that a person cannot be a transferee of property unless he is competent to contract.

There is a substantial distinction between a ‘contract for a sale’ and ‘a sale’. A sale effects a transfer the property, while a mere contract for a sale does not.

The English law on the point as summarized in Halsbury’s Laws of England (Vol. XVII, pages 75 and 76. The acquisition of property being generally beneficial, an infant can take property, both real and personal in manner whatever, either by descent, intestacy or will, or by purchase or gift or other assurance inter vivos except where it is necessarily prejudicial to do so.

A purchase of property, or the acceptance of a gift of property, by an infant is voidable by him. But in the meantime the property is vested in him.

Among writers of textbooks Dr Rash Behari Ghosh, the learned author in India, states the law correctly when he say (page 195) that an infant being a person capable of holding property can well be a mortgagee and that the disabilities which attend the creation of a mortgage do not attach to the acceptance of a security.

In America also the law seems to be that an infant can take a mortgage (see Jones on Mortgages, Article 131).

A mortgage transaction according to the definition of the Transfer of Property Act imports the existence of a loan or debt or an engagement which may give rise to a pecuniary liability and a transfer of an interest in specific immovable property to secure the repayment of the debt or the performance of the engagement.

Unless there is a binding promise to pay money either personally or out of the property of the person bound, there cannot be any mortgage at all.

A debt has been defined as a sum of money due by certain and express agreement. (Bouvier’s Law Dictonary, Vol-I, page 786; Blackstone, page 154).

Different modes of enforcing the security are prescribed by the Transfer of Property Act and the only mode by which a simple mortgagee can enforce the security is by bringing the property to sale through Court.

It is settled law that an infant cannot bind himself by a promise. But whether the converse follows is the question. 

A promise in law or an enforceable promise is a contract as defined by the Contract Act. A contract should be supported by lawful consideration. If the promise is an enforceable promise, it becomes a contract.

Even in unilateral contracts, there must be two parties, and there must be an assent or agreement of the minds of both the parties. In unilateral contracts, only one of the parties is under a legal obligation. The contract is therefore one sided, though the consent of both the parties is essential. (Street’s Foundation of Liability, Vol. II, p.53).

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