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Indian Contract Act, 1872

Case Studies on Minor’s Agreement

Question No.1
State with reasons whether the following statements are True or False:

(a) A minor can become a partner in a partnership firm.

(b) A minor cannot act as an agent.
(c) A minor cannot become a member of a Company.
(d) A minor can be declared insolvent.
(e) A minor cannot be apprentice.
(f) A minor can be employee.
(g) A minor can be guarantor.
(h) A mortgage can be executed in favour of a minor who has advanced money.
(i) A minor can be a promisor on a promissory note.
(j) A minor can be a drawee on a bill of exchange.
(k) A minor who sold goods is entitled to recover the price from the buyer.
(l) X, a guardian, on behalf of Y, a minor can enter into a contract for the purchase of a movable
property for the benefit of the minor.

Answer

As per the provisions of the Indian Contract Act, 1872, an agreement made with minor is void-ab-
initio.

a) False. A minor cannot become a partner in a partnership firm. However, according to

Section 30 of The Indian Partnership Act 1932, with the consent of all the partners for the
time being be admitted to the benefits of partnership. In other words, he can share the
profits of the firm without incurring any personal liability.
b) False. A minor can act as an agent and bind his principal by his acts without incurring any
personal liability.
c) False. A minor can become a shareholder or member of a Company if:
1) The shares are fully paid up.
2) The Articles of Association do not prohibit so.
d) False. A minor cannot be declared insolvent because he is not competent to contract.
e) False. A minor can be apprentice if he is of at least 14 years of age.
f) False. A minor cannot be an employee because minor’s promise to serve is not a
consideration for employer. In the eyes of law, a minor is not capable of giving a promise
which imposes a legal obligation.
g) False. A minor cannot be a guarantor. As per the provisions of the Indian Contract Act,
1872, a minor is not capable of giving a promise which imposes a legal obligation.
h) True. A mortgage can be executed in favour of a minor who has advanced money since a
minor can be a promisee. A mortgage executed in favour of minor is valid because he can be
a beneficiary whereas a mortgage executed by the minor is altogether void.

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i) False: A minor can be a promisee but not a promisor on a promissory note. A minor is not
capable of giving a promise which imposes a legal obligation.
j) False: A minor can be a drawer but not a drawee on a bill of exchange. A bill drawn by
minor is not enforceable in the court of law.
k) True: A minor who sold goods is entitled to recover the price from the buyer since a minor
can be a promisee. A minor who has delivered goods under the contract of sale, can
maintain a suit for the recovery of price.
l) True: Because this contract is for the benefit of minor. Though minor’s agreement is void,
his guardian can enter into a valid contract on minor’s behalf.

Question No.2

D, a minor, borrowed a sum from M by executing a mortgage of his property in favour of M. Can M
recover the sum advanced to D in the following cases?

a) If lending of money was not for the necessities.

b) If lending of money was for meeting the cost of education.
c) If lending of money was for buying eleven fancy coats for minor’s own use.
d) If D, a minor, borrowed by misrepresenting himself to be of 19 years.

Answer

a) As per the provisions of the Indian Contract Act, 1872, a minor cannot validate any
agreement by ratification on attaining majority. An agreement by a minor is void-ab-initio.
So, M cannot recover the sum advanced to D.
b) As per the provisions of the Indian Contract Act, 1872, the contract with minor for
necessities is valid and minor’s property is liable. Minor shall not be personally liable for
such contract. Any person would be entitled to reimbursement out of minor’s estate for
necessities supplied to him and to whom he is bound to support. Thus, M will be entitled
to recover the amount of loan given to D for meeting the cost of education from the
property of D.
c) As per the provisions of the Indian Contract Act, 1872, the contract with minor for
necessities is valid and minor’s property is liable. Minor shall not be personally liable for
such contract. Lending of money for buying eleven fancy coats for minor’s own use cannot
be said to be for necessities since eleven coats at a time cannot be a necessity. So, M
cannot recover any money from D.
d) As per the provisions of Indian Contract Act, 1872, a minor entered into agreement by
misrepresenting his age, the court may grant relief to the other party by passing an order,
to restore the amount to the other party. Restoring is possible to the extent of the estate of
minor. Minor shall not be personally liable. The power of court to grant relief by order is
discretionary in nature. So, M can recover amount from D’s estate if court grants relief to
M at its discretion, otherwise M cannot recover the amount from D.

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Question No.3

D, on attaining majority, gave a promissory note in the satisfaction of one executed by him for money
borrowed when he was a minor. Is this promissory note valid?

Answer

As per the provisions of the Indian Contract Act, 1872, a minor cannot validate any agreement by
ratification on attaining majority. An agreement by a minor is void-ab-initio. The first promissory
note given by D, when he was a minor, is void-ab-initio and the second promissory note, executed by
D when he attains majority is void as it is without consideration.

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