The law relating to contracts by minors has been discussed as under:
1. Agreement with or by a minor is void:
An agreement with or by a minor is void and inoperative ah initio [Moltri Bihi vs. Dharomdas Chose]. 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.