THE NATIONAL LAW INSTITUTEUNIVERSITY, BHOPAL

LAW OF CONTRACT I

SECOND TRIMESTER

MINOR’S CONTRACT: EFFECT OFBENEFICIAL CONTRACT

SUBMITTED TOSUBMITTED BY

PROF. QURESHINIMISHA JHA (2009BALLB01)

1

TABLE OF CASES

Chekha Adinarayana v Oriental Fire & General Insurance Co Ltd,

AIR 2006 AP 479(NOC)……………………………………………………………………………………05

Clements v London and North Western Railway Co(1894) 2 QB 482,

491......................11

Cowern v Nield(1911-13) All ER Rep

425…………………………………………….......14

Doyle v White City Stadium Ltd (1935) 1 KB

10……………………………………........12

Edwards v Carter,1893 AC 360…………………………………………………………….15

Great American Insurance Co Ltd vMandanlal,(1935) 59 Bom

656………………………05

Khimji Kuveriji Shah v Lalji Karamsi Raghavji AIR 1939 Rang

86................................08

Kumari Shahnoor Md Tahssen v State of U.P AIR 2007 All

437(NOC)..........................09

2

Raghava Chariar v Srinivasa(1916) 40 Mad

308...........................................................

.04

Raj Rani v Prem Adib AIR (1943) Bom

215...........................................................

......06

Rajendra Bahadursingh v Roashan Singh AIR 1950 All

592...........................................08

Steinburg v Sacla (Leeds) Ltd. (1923) 92 LJKB

944......................................................06

Thakur Das v Mt Putli AIR 1924 Lah

611...........................................................

..........05

Tulsiram v Roop Chand (2006) 4 SCC

391...........................................................

........08

Ulfat Rai v Gauri Shanker (1911) 33 All

657...........................................................

.....05

Valentini v Canali (1889) 24 QBD

166...........................................................

..............07

Walidad Khan v Janak Singh AIR 1935 All

370...........................................................

.063

.

TABLE OF CONTENT

INTRODUCTION......................................................................................04

CONTRACT OFMARRIAGE....................................................................08

MARRIAGE OF MUSLIM MINORGIRL...................................................09

CONTRACT OFAAPREHENTICESHIP....................................................10

CONTRACT OFEMPLOYMENT..............................................................13

TRADECONTRACT.................................................................................14

OPTION TO RETIRE FROM BENEFICIAL CONTRACT ON MAJORITY....15

BIBLIOGRAPHY.......................................................................................16

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INTRODUCTION

Section 10 of the Indian Contract Act, 1872 requires that the

parties must be competent to contract. Competence to contract

is defined in Section 11:

11. Who are competent to contract- Every person is competent

to contract who is of the age of majority according to law to

which he is subject, and who is of sound mind, and is not

disqualified from contracting by any law to which he is

subject.

5

the law declared by the Privy Council in the Mohori Bibi1 case that

a minor’s agreement is “absolutely void” has been generally

followed, but it has been growingly “confined to cases where a

minor is charged with obligations and the other contracting

party seeks to enforce those obligations against the minor”2.

It was observed by ABUR RAHIM J of the Madras High Court that

“what is meant by the proposition that an infant is

incompetent to contract or that his contract his void is that

the law will not enforce any contractual obligation of an

infant”.

Accordingly a minor is allowed to enforce a contract that is

of some benefit and under which he is required to bear no

obligation. In Raghava Chariar v Srinivasa3 the following question

was referred for decision of a Full Bench of the Madras High

Court:

“Whether a mortgage executed in favour of a minor

who has advanced the whole of the mortgage money is

enforceable by him or by any other person on his behalf.”

The unanimous opinion of the Full Bench was that the

transaction was enforceable by or on behalf of the minor.

1 (1903) 30 IA 1142 Raghava Chariar v Srinivas (1916) 40 Mad 3083 (1916) 40 Mad 308

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WALLIS CJ said:

“The provision of law which renders minors incompetent to

bind themselves by a contract was enacted in their favour and

for their protection , and it would be a strange consequence

of this if they are to take nothing under transfers in

consideration of which they have parted with their money.”

The same opinion was expressed by BEAUMONT CJ of the Bombay

High Court4:

“The provisions of the law which make a contract by a

minor not binding not binding were no doubt intended to be for

the benefit of the minors, and the courts in this country when

faced with a contract which has been carried out by or on

behalf of the minor, the performance of which by the other

party is then resisted on the ground of minority, have

struggled hard to avoid holding the contract wholly void to

the detriment of the minor”

Accordingly, the learned Chief Justice rejected the defence of

an insurance company that the person on whose behalf certain

goods were insured was a minor and allowed the minor to

recover the insurance money.5

On the same principle it has been held that “a minor is

capable for purchasing immovable property and may sue to

4 Great American Insurance Co Ltd vMandanlal,(1935) 59 Bom 656.5 Chekha Adinarayana v Oriental Fire & General Insurance Co Ltd, AIR 2006 AP 479(NOC)

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recover the possession of the property purchased upon tender

of the purchase money.”6

In Ulfat Rai v Gauri Shanker7,where the court held that “ there is

nothing in the Transfer of Property Act which makes a minor

incapable of being a transferee of immovable property. He

cannot transfer immovable property, it is true, but that is a

different thing from recovering as a transferee”

All cases proceed on the principle that a minor has already

given full consideration to be supplied by him and there is

nothing that remains to be done by him under the contract. He

is now a mere promise and prays the court for recovering the

benefit stipulated. But where the contract is still executor

or the consideration is still supplied, the principle of the

Mohori Bibi case8 will thwart any action on the contract.

In Raj Rani v Prem Adib9:

The plaintiff, a minor, was allotted by the defendant, a film

producer, the role of an actress in a particular film. The

agreement was made with her father. The defendant subsequently

allotted that role to another artist and terminated the

contract with the plaintiff’s father.

The Bombay High Court held that neither she nor her father

could have sued on the promise. If it was a contract with the

plaintiff, she being a minor, it was nullity. If it was a6 Thakar Das v Mt Putli, AIR 1924 Lah 611

7 (1911) 33 All 6578 (1903) 30 IA 1149 AIR 1949 Bom 215

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contract with her father it was void for being without

consideration. The promise of a minor girl to serve, being not

enforceable against her, cannot furnish any consideration for

the defendant’s promise to pay her a salary.”

In Walidad Khan v Janak Singh10 a minor has given consideration

under a contract, but the consideration given to him has

failed, he may have restitution. Thus, where a minor bought a

zamindari property on payment of money, but he was ousted on a

suit by a third party, it was held that “ the minor was at any

rate entitled to recover from the vendor the sum which he had

paid as purchase money.”

For this principle to apply there should be total failure of

consideration. Where, for example, in Steinburg v Scala(Leeds)Ltd,11

a minor purchased shares in a company and then repudiated them

and also asked for refund of the partly paid purchase price,

the court held that the price which he has already paid is not

refundable, because there was evidence that the shares were of

some value. If the shares were totally worthless there would

have been total failure of consideration entitling the minor

to refund. But he was not liable to pay further demand or

calls for payment.

“When an infant has paid for something and has consumed or

used it, it is contrary to natural justice that he should

10 AIR 1935 All 37011 (1923)92 LJKB944

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recover back the money which he has paid.”12 This is the

principle of the well-known case of Valentini v Canali13.

The plaintiff, a minor, agreed with the defendant to

become a tenant of his house and pay 100 pounds for the

furniture therein. He paid 68 pounds in cash and gave a

promissory note for the balance. The plaintiff occupied the

premises and used the furniture for some months and then

brought an action for the refund of the consideration paid by

him.

The court ordered the cancellation of the promissory note, but

refused to order refund the sum paid. “The infant plaintiff

had the quantity use of furniture for some months. He could

not give back this benefit or replace the defendant in the

position in which he was before the contract..... The

legislature never intended, in making provisions for this

purpose (for the protection of the infants), to sanction a

cruel justice” 14

12 LORD COLERIDGE CJ in Valentini v Canali,(1889)24 QBD 16613 (1889)24 QBD 16614 BEAUMONT CJ, commenting on this case.

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CONTRACTS OF MARRIAGE

A contract for the marriage of a minor is also prima facie

for his or her benefit. It is customary among most of the

communities in India for parents to arrange marriages between

their minor children and the law has to adapt itself to the

habits and customs of the people. It has, therefore, become

established, almost without any controversy, “that while the

contract of marriage could be enforced against the other

contracting party at the instance of the minor, it cannot be

enforced against the minor.

11

Where the agreement for marriage of a minor involves statutory

violation, e.g. the Hindu Marriage Act, 1955, the age of the

girl has to be 18years, the agreement is likely to be avoided.

In Tulsiram v Roop Chand15, on the date of engagement the girl was

not of 18 years but on the date fixed for marriage she would

have completed 18 years. The agreement was held to be valid.

The other party ran away from the agreement. The court allowed

her compensation of Rs 27,000 for mental pain and suffering,

lowering of esteem in society and amount spent on engagement

ceremony.

In Rajendra Bahadursingh v Roshan Singh16, the court held that

betrothal itself was in nature of contract.

In Ma Puia Kywc v Maung Hmat Gyl17, a Buddhist girl sought to

enforce a promise to marry made to her, when she was less than

18 years. The court held that she could not enforce such a

promise. Here, the question was not of specific performance of

promise to marry. The question was damages for breach of

promise.

In Khimji Kuveriji Shah v Lalji Karamsi Raghavji, the court categorically

ruled that a guardian can enter into a contract of betrothal

on behalf of minor children and also can sue for breach.

15 (2006) 4 SCC 391(Bom)16 AIR 1950 All 59217 AIR 1939 Rang 86

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MARRIAGE OF MUSLIM MINOR GIRL

In Kumari Shahnoor Md Tahssen v State of U.P18 parties were governed by

Shariat law. The medical report showed that the girl had not

attained the age of majority. She had, therefore, no right to

enter into the contract of marriage on her own free will. She

could have been given in marriage only by her father or

guardian. The kazi who performed the ceremony of marriage was

in know of things. The marriage was not valid. She could have

been forced to live with her husband against the mandate of

Quran Sharif. The father was entitled to her custody.

18 AIR 2007 All 437(NOC)13

CONTRACTS OF APPRENTICESHIP

Contracts of apprenticeship is another species of contracts

which are for the benefit of the minors. The India Apprentices

Act, 1850 provudes for contracts in the nature of contracts of

service are binding on minors. The Act was passed, as the

preamble of the Act shows:

“For better enabling children, and especially

orphans and poor children brought up by public charity, to

learn trades, crafts and employments, by which, when they come

to full age, they may gain a livelihood”

The Act requires the contract to be made by a guardian on

behalf of the minor19.

“In English law contracts of service and apprenticeship are

put on the same footing and in the same category as contracts

for necessaries”. The well-known English case on the subject

19 Section 9, Indian Contract Act, 187214

The defendant, an infant, agreed with the

plaintiff, a noted billiards player, to join him in a

billiards playing tour of the world. The plaintiff spent time

and money in making arrangements for billiard matches, but the

defendant repudiated the contract. The plaintiff succeeded in

recovering damages for the breach of the contract.

The contract was held to be one for the necessaries as it was

for the minor’s “good teaching or instruction whereby he may

profit afterwards.” The most important part of the contract

was the instruction that would be received by the defendant

from playing constantly with the plaintiff under the

conditions of a world-wide tour, a thing which a distinguished

billiards player apparently contemplates as part of his

career.

It has been suggested by DESAI J of the Bombay High Court in

Raj Rani v Prem Adib20 that “though according to English Law the

minor would be liable in the case of a contract of service

where the contract was for his benefit, it is clear that

Section 11, the minor’s contract being void, the minor would

not be held liable”.

A minor may bind himself apprentice to an employer, and after

the employer’s death, to his executors provided that they

carry on the same trade in the same place. The validity of

such a contract depends on whether the contract is as a whole,

beneficial to the minor at the time when it is entered into.

20 AIR 1949 Bom 21515

If the contract of apprenticeship imposes onerous terms such

as a penalty clause, or a provision that his wages are to

depend on the will of his employer, or if it places the minor

virtually in a position of entire subservience to his

employer, it will be unenforceable.

The question of fairness will depend upon whether the clause

was common to labour contracts at the time, or accorded with

the current conditions of trade, so that the employer was

reasonably justified in imposing it in protection to himself.

A contract of apprenticeship must be made in writing and it is

usually made by deed under which the minor promises faithfully

to serve his employer and the employer to provide proper

instruction for the minor and to pay him wages.

Although a minor may by contract bind himself apprentice,

during the period of apprenticeship no action is maintainable

against him or his covenant to serve in such a contract, nor

can an injunction be obtained to enforce a negative covenant

in the contract. Accordingly, it is customary for the minor’s

father or mother to execute the contract so as to covenant for

his due performance of the agreement.

After his apprenticeship has ceased, however, a restrictive

covenant in such a contract may be enforced provided that the

contract as a whole is for the minor’s benefit.

Minors are also bound by contracts of service, providing these

are on the whole beneficial to them. In practice this

generally means contracts of employment under which a minor16

gains some training, experience or instruction for an

occupation- an apprenticeship would be a common example.

In Clements v London and North Western Railway Co21, a minor made an

agreement under which he gave up his statutory right to

personal injury benefit, but gained rights under an insurance

scheme to which his employers would contribute. It was held

that the rights gained were more beneficial than those given

up, and so the contract was, on balance, for the minor’s

benefit and therefore binding.

In De Francesco v Barnum, a 14 year old girl entered into a stage-

dancing apprenticeship with De Francesco, under an agreement

which was considerably more favourable to De Francesco than to

the girl. She was not to marry during the seven years of the

apprenticeship, could not take on professional engagements

without his written consent and was completely subject to De

Francesco commands. He, on the other hand, made no commitment

to employ her, and stated that if he did so it would be at a

very low rate of pay. The agreement also allowed him to send

her abroad, and to put an end to the agreement at any time. Fry

LJ concluded: “those are stipulations of an extraordinary and

unusual character, which throw, or appear to throw, an

inordinate power into the hands of the master without any

correlative obligation.” Consequently the court held that the

contract was not for the minor’s benefit, and could not

therefore be enforced against her.

21(1894) 2 QB 482, 49117

In some cases the courts have widened the concept of a

contract of service beyond the usual employment situations. In

Doyle v White City Stadium Ltd.22, the plaintiff was a minor who entered

into an agreement with the British Boxing Board to secure a

fighter’s license. One of the terms of such a license was that

if a boxer was disqualified for committing a foul, he would

not receive the ‘purse’ for the fight, only his travelling

expenses. Doyle was contracted to take part in a part in a

fight, for which the purse was 3000pounds, and the contract

was subject to British Boxing Board rules. He was disqualified

for hitting below the belt, but tried to claim the 3000pounds

from the promoters and the Board. The court looked at the

contract, and held that although boxing was not an occupation

in which an ordinary apprenticeship was possible, the type of

contract made with the Board could be compared with the

apprenticeship. Looked at as a whole, the contract was

beneficial to the minor, and even the clause which deprived

him of 3000pounds was one which was designed to encourage

clean fighting and thereby protect young, inexperienced boxers

against older hands. He was thus bound by the contract and

could not claim the 3000pounds.

22 (1935) 1 KB 1018

CONTRACTS OF EMPLOYMENT

A contract of employment entered into by a minor is dealt with

by the law in the same manner as a contract of apprenticeship.

A contract of employment may be binding even if the minor

gives up certain rights available under the general law, at

least if he gets something equally advantageous in return and

an agreement to submit disputes to arbitration may also be

binding if it forms part of a binding contract of employment.

But a contract containing a term by which his work and wages

depend on the will of his employer or by which, in

consideration of special terms, he contracts to waive all

claims for compensation for accident is not binding on him.

There are many statutory restrictions on the employment of

minors under which it is in general unlawful to employ a

person under the age of 13, and the employment of persons

between 13 and 16 is subject to many restrictions. An

agreement in breach of these provisions would presumably be

unenforceable against the minor.

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TRADE CONTRACTS

This category of beneficial contracts does not include

ordinary trade contracts. In Cowern v Nield23, for example, a

minor was carrying on business as a hay and straw merchant. He

received a cheque from the plaintiff for the supply of clover

and hay. He delivered the clover which was rejected as bad and

failed to deliver hay. The plaintiff’s action for recovering

back the amount of the cheque failed. PHILLIMORE J observed:

23 (1911-13) All ER Rep 42520

“In a general sense contracts which can be brought

within certain categories and are also for the benefit of the

infant can be supported. A trading contract does not come

within any of these categories. The only contracts of an

infant which can be enforced are which related to infant’s

person, as contacts by which he provides himself with clothes,

food, or lodging or contracts of marriage, apprenticeship and

service.”

21

OPTION TO RETIRE FROM BENEFICIAL

CONTRACTS ON MAJORITY

A minor will have the option of retiring from a contract of

beneficial nature on attaining majority provided that he

exercises the option within a reasonable time. Where a minor

in pursuance of a marriage settled his after-acquired property

and after attaining majority he received a large sum of money

under the will of his father which came under the settlement,

and, therefore, he attempted to repudiate the settlement, the

House of Lords held that the repudiation coming five years

after attaining majority was too late.24

24 Edwards v Carter,1893 AC 36022

BIBLIOGRAPHY

1. CONTRACT & SPECIFIC RELIEF

2. CHESHIRE & FIFOOT

3. FURMSTON

23