Contract by minorQ. What is the legal status of a contract entered into by minor? Is it enforceable by law? If so, under what circumstances. (2000)
The age of majority is different in various parts of the world. In Pakistan the person of 18 years is consideration major. Contract act requires that the contracting parties must be competent to contract.
2. Definition of minor:
According to majority act.
ďA minor is a person who has not completed 18 years of age. Where a guardian of minorís person or property has been appointed under the guardian and wards act or court of wards has taken charge of minorís property a minor will attain the age of majority after 21 years of age.
3. Nature of minor agreement:
(I) Agreement with a minor is void:
Agreement with a minor is void because minor has no capacity to enter into a contract. A minor is not liable to perform any act which he has promised to perform.
(II) Doctrine of estoppels is not applicable:
Meaning of estoppels:
Estoppels, means when a person makes a false representation, and the other person believe it to be true and acts accordingly. Later on the person who has made false representation is stopped from the denying the truth of that representation. The doctrine of estoppels is not applicable to a minor.
A, a minor fraudulently shows that he is major and enters into a contract with B. to sell his land. A refuses to perform the contract on attaining the age of majority that at the time of entering into contract he was minor B has no legal right against A.
(III) Minor and restitution:
It means restoring back to the owner that which has been taken away.
(b) General rule:
It is a general rule that A minor can not be compelled to any back money received by him under an agreement which is void.
(c ) Exception:
According to sec. 41 specific relief act 1887. If any thing is traceable in hands of minor, out of the proceeds of the contract made by fraudulently representing that he was of full age, the court may compel the minor to restore the amount to the other party when minor himself brings a suit against the other party.
(IV) Necessaries of minor:
A person who provides the necessaries to the minor is entitled to recover from the property of minor.
A provides necessaries to B, A minor for his life. A can recover from the property of B.
(V) Agreement of guardian on behalf of minor:
A contract which is made on behalf of minor by his guardian is binding on the minor.
(VI) Minor can be a promise or beneficiary:
Any contract which is for the benefit of a minor and under which the minor and under which the minor is not required to bear any obligation is valid.
Property can be mortgaged in favour of a minor.
(VII) Rules about agent:
A minor can be an agent but he can not be held personally liable for negligence.
(VIII) Rules about partnership:
(a) General rule:
A minor can not become partner of a firm.
A minor can be partner of a firm through his guardian with the consent of all other partners.
(c ) Liability of a minor:
The liability of a minor is limited to his investment in the business.
(IX) Surety for a minor:
In case of contract of guarantee an adult stands surety for minor. Minor is not responsible but adult is liable under the contract.
(X) Minor as a member of a company:
In case of fully paid-up shares the minor can become share holder of a company but not otherwise.
(XI) Minor can not be declared insolvent:
Under law a minor cannot be declared insolvent because he cannot enter into contract.
(XII) Contract by minor and adult jointly:
If an minor and an adult jointly enter into an agreement with another person, the minor is not liable but only the adult is liable.
(XIII) Position of minorís parents:
The parents of a minor are not liable for agreement made by a minor.
1990 CLC 1200
It was held that a minor has no legal capacity to authorize any person to make contract on his behalf, even when that person in his ĎFatherí.
(XIV) Minor and negotiable instruments:
A minor can draw and deliver the negotiable instrument. He is not liable but all other parties to the instrument would be liable.
A minor draws a bill of exchange on B. A accepts the bill A endorses it to C. The B/E is valid.
To conclusion it can be said that, a minor is not capable to enter into contract. His agreement is absolutely void and an agreement entered into by a minor is not enforceable at law. Minor can always plead minority. Law protects a minor from contractual liability. A minor has no legal competency to authorize any person to enter into contract on his behalf.
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