competing parties

Prof Shweta Verma, faculty, IMM

Competence of Competence of contracting partiescontracting partiesSection 11 of the Indian contract act Section 11 of the Indian contract act

states that every person is competent states that every person is competent to contract, who is the to contract, who is the age of age of

majoritymajority ,who is of ,who is of sound mindsound mind and who and who is is not disqualified from contracting by not disqualified from contracting by

lawlaw


Following persons are incapable of Following persons are incapable of contractingcontracting

A person disqualifiedBy law

A person of Unsound mind

A minor

A minor ,person of unsound mind and personDisqualified by law cannot enter into contractAny contract with any such party will be voidAb intio


MINORMINOR

A PERSON WHO HAS NOT COMPLETED HIS A PERSON WHO HAS NOT COMPLETED HIS 1818THTH YEAR OF AGE IS CONSIDERED TO BE A YEAR OF AGE IS CONSIDERED TO BE A MINOR.MINOR.

IN CASE A GUARDIAN TO THE PERSON OR IN CASE A GUARDIAN TO THE PERSON OR PROPERTY OF THE MINOR IS APPOINTED PROPERTY OF THE MINOR IS APPOINTED BY THE COURT OR THE PROPERTY OF THE BY THE COURT OR THE PROPERTY OF THE MINOR IS PUT UNDER THE CHARGE OF A MINOR IS PUT UNDER THE CHARGE OF A COURT OF WARDS ,DURING THE PERIOD COURT OF WARDS ,DURING THE PERIOD OF HIS MINORITY .OF HIS MINORITY .


LAW RELATING TOLAW RELATING TO MINOR’S AGREEMENT MINOR’S AGREEMENT

A minor can take advantage of his acts A minor can take advantage of his acts but does not incur any kind of obligations.but does not incur any kind of obligations.

He/she can not be personally liable for any He/she can not be personally liable for any of his wrongs.of his wrongs.

No legal action can be taken against him No legal action can be taken against him for his misbehaviour or false promises.for his misbehaviour or false promises.

The parents of the minor are not legally The parents of the minor are not legally liable unless he acts as his/her agent.liable unless he acts as his/her agent.


Special provisions governing Special provisions governing agreementagreement

made with a minormade with a minor 1.Absolutely void1.Absolutely void: An agreement with minor is : An agreement with minor is

void ab initio.it is considered to be a nullity void ab initio.it is considered to be a nullity and non existent from the very beginning and and non existent from the very beginning and therefore devoid of any consequencestherefore devoid of any consequences

EXAMPLE:Bittoo a minor sold scooter to EXAMPLE:Bittoo a minor sold scooter to bhuvan for Rs1000 and receive 500 as bhuvan for Rs1000 and receive 500 as advance .later on bhuvan refuses to buy the advance .later on bhuvan refuses to buy the scooter and sued the advance money .held scooter and sued the advance money .held that he cannot sued it as the contract was that he cannot sued it as the contract was void and no question of refunding money void and no question of refunding money could arise in these circumstances.could arise in these circumstances.


Agreement with minor is VOIDAgreement with minor is VOIDdecided casedecided case

In Mohiri Bibi’s case ,the minor had executed In Mohiri Bibi’s case ,the minor had executed a mortgage for the sum of Rs20000 out of a mortgage for the sum of Rs20000 out of which the lender had paid the minor only which the lender had paid the minor only about Rs8000.The mortgagee filed a suit for about Rs8000.The mortgagee filed a suit for the recovery of his mortgage money and for the recovery of his mortgage money and for sale of the property in case of default .The sale of the property in case of default .The privy council held that an agreement by a privy council held that an agreement by a minor was absolutely void as against him and minor was absolutely void as against him and therefore the mortgagee could not recover therefore the mortgagee could not recover the mortgage money nor could he have the the mortgage money nor could he have the minor’s property sold under his mortgage.minor’s property sold under his mortgage.


2.No Ratification2.No Ratification

Contract with minor is void and ,he cannot ratify Contract with minor is void and ,he cannot ratify contracts entered into by him during his contracts entered into by him during his minority even after attaining the age of minority even after attaining the age of majority.majority.

Example:A,minor borrows Rs.5000 from B and Example:A,minor borrows Rs.5000 from B and executes a promissory note in B’s favour.after executes a promissory note in B’s favour.after attaining the age of majority A executes a fresh attaining the age of majority A executes a fresh promissory note in favor of B for this amount . B promissory note in favor of B for this amount . B cannot sue on this promissory note as the cannot sue on this promissory note as the agreement is void for lack of agreement is void for lack of consideration .because consideration in minority consideration .because consideration in minority age is no consideration.age is no consideration.


3.No Restitution3.No Restitution

A minor is not liable to repay any money or A minor is not liable to repay any money or compensate for any benefit that he might compensate for any benefit that he might have received under a void contract .have received under a void contract .

Example:Bittoo ,a minor ,sold a shop to Ram Example:Bittoo ,a minor ,sold a shop to Ram a major. The consideration was paid to a major. The consideration was paid to Bittoo but the sale deed could not be Bittoo but the sale deed could not be registered as Bittoo was minor. On a suit by registered as Bittoo was minor. On a suit by Ram for recovery of the consideration ,it was Ram for recovery of the consideration ,it was held that the agreement being void ,the held that the agreement being void ,the amount of consideration was not amount of consideration was not recoverable.recoverable.


4.No Estoppel4.No Estoppel A minor is not bound by his misrepresentations. If a A minor is not bound by his misrepresentations. If a

minor enters into a contract by fraudulently minor enters into a contract by fraudulently representing himself to be a major. He will not be representing himself to be a major. He will not be liable under the contract.liable under the contract. the contract will be void. the contract will be void. If the injured party were allowed to sue for fraud, it If the injured party were allowed to sue for fraud, it would be giving him an indirect means of enforcing would be giving him an indirect means of enforcing the void agreement.the void agreement.

It does not mean that a minor can protect himself It does not mean that a minor can protect himself from any such act. court will order ,on equitable from any such act. court will order ,on equitable consideration for restitution if the minor is still in consideration for restitution if the minor is still in possession of the money or the things purchased possession of the money or the things purchased out of it.and he will not be liable if the money is out of it.and he will not be liable if the money is spent and any thing bought out of that money is spent and any thing bought out of that money is cannot be traced out. cannot be traced out.


Example Example No Estoppel No Estoppel

Bittoo a minor borrowed Rs.1000 on a Bittoo a minor borrowed Rs.1000 on a faudulent representation that he was a major faudulent representation that he was a major to Ram a major.Now Ram cannot sue Bittoo to Ram a major.Now Ram cannot sue Bittoo Rs1000.because any contract with minor is Rs1000.because any contract with minor is void and Bittoo can escape from the liability .void and Bittoo can escape from the liability .

But an order of restitution can be issued if the But an order of restitution can be issued if the amount can be found with Bittoo or if he has amount can be found with Bittoo or if he has purchased anything from that money then purchased anything from that money then that thing can also taken but if he has spent that thing can also taken but if he has spent whole money ,nothing can be recovered from whole money ,nothing can be recovered from him.him.


Decided case on pleading minorityDecided case on pleading minority

LESLIE vs SHIELL, (1914) 3 K.B .6071LESLIE vs SHIELL, (1914) 3 K.B .6071

S a minor by fraudulent representing S a minor by fraudulent representing himself to be of full age induced L to himself to be of full age induced L to lend him 400 pounds. He refused to lend him 400 pounds. He refused to repay it and L sued him for the repay it and L sued him for the money. Held the contract was void money. Held the contract was void and S was not liable to repay the and S was not liable to repay the amount.amount.


5.Minor Beneficiary5.Minor Beneficiary

All such contracts under which the minor is to All such contracts under which the minor is to receive some benefit or which are beneficial receive some benefit or which are beneficial to him are valid .but in no case ,he is to him are valid .but in no case ,he is personally liable. personally liable.

M aged 17 agreed to purchase a second hand M aged 17 agreed to purchase a second hand scooter for Rs.5000 from S. He paid Rs200 as scooter for Rs.5000 from S. He paid Rs200 as advance and agreed to pay the balance the advance and agreed to pay the balance the next day and collect the scooter, when he next day and collect the scooter, when he came with the money the next day, S told came with the money the next day, S told him that he had changed his mind and him that he had changed his mind and offered to return the advance. S cannot avoid offered to return the advance. S cannot avoid the contract, though M may if he likes.the contract, though M may if he likes.


6.Minor’s liability for necessities6.Minor’s liability for necessities

All contracts relating to the necessities All contracts relating to the necessities of the life supplied to a minor are valid. of the life supplied to a minor are valid. A person can claim reimbursement out A person can claim reimbursement out of the property of the minor ,the of the property of the minor ,the amount of necessities suitable for the amount of necessities suitable for the position in life supplied to him or to the position in life supplied to him or to the members of his family whom he was members of his family whom he was bound to support .A minor shall have bound to support .A minor shall have personal liability for such debts.personal liability for such debts.


Case studyCase studyPETERS v FLEMINGPETERS v FLEMING

Mr Fleming during his career at the university of Mr Fleming during his career at the university of cambridge, and while under age, became indebted cambridge, and while under age, became indebted to a jeweller in the town for several articles of to a jeweller in the town for several articles of ornament which were supplied to him. ornament which were supplied to him. Fleming ,who was a wealthy member of parliament Fleming ,who was a wealthy member of parliament and could easily have paid it if he had liked, and could easily have paid it if he had liked, would’nt look at the hill when it was sent in; if he would’nt look at the hill when it was sent in; if he had, this is what he would have seen:-had, this is what he would have seen:-

A fine gold ringA fine gold ring A ring A ring A short gold watchA short gold watchSo the dealer bought an action against the young So the dealer bought an action against the young

man himself when he became of age, and (the man himself when he became of age, and (the judge having left it to the jury to say whether the judge having left it to the jury to say whether the articles were necessaries or not and they having articles were necessaries or not and they having found that they were)found that they were)

DECIDEDECIDE


exampleexample

Ram cannot sue Bittoo as the contract Ram cannot sue Bittoo as the contract with minor is void .if the goods would with minor is void .if the goods would necessities then the property of Bittoo can necessities then the property of Bittoo can be taken to recover it but here the goods be taken to recover it but here the goods are not of necessities nature thus Bittoo is are not of necessities nature thus Bittoo is not liable.not liable.

At best court can allow Ram to recover the At best court can allow Ram to recover the pen and registers supplied to Bittoo. if it pen and registers supplied to Bittoo. if it can be traced in the hands of the minor.can be traced in the hands of the minor.


7.minor as7.minor asagentagent

A minor can be agent. he can represent his A minor can be agent. he can represent his principle in dealing with other parties. the principle in dealing with other parties. the principal will be responsible to third parties principal will be responsible to third parties for the acts of his minor agent but he for the acts of his minor agent but he cannot hold the minor agent personally cannot hold the minor agent personally responsible for any wrongful acts. in the responsible for any wrongful acts. in the absence of any personal liability of the absence of any personal liability of the minor agent, the principal runs a great risk. minor agent, the principal runs a great risk. he cannot recover any compensation from he cannot recover any compensation from his minor agent for the loss caused to him his minor agent for the loss caused to him by any fault of the minor agent.by any fault of the minor agent.


8.Minor 8.Minor as partneras partner

A minor cannot be a partner .he can, A minor cannot be a partner .he can, however be admitted to the benefit however be admitted to the benefit of the partnership. his liability is of the partnership. his liability is limited to the extent of his interest in limited to the extent of his interest in the partnership .the partnership .he has no right to he has no right to take part in the mgmt of the firm or take part in the mgmt of the firm or copy or inspect any of the books of copy or inspect any of the books of accounts of firm.accounts of firm.


9.Minor liability for tort9.Minor liability for tort

Minor will be liable for tort (civil wrong). Minor will be liable for tort (civil wrong). But But where a tort arises out of a contract a where a tort arises out of a contract a minor is not liable in tort as an indirect minor is not liable in tort as an indirect way of enforcing an invalid contract.way of enforcing an invalid contract.

If the minor in the course of doing, what If the minor in the course of doing, what he is entitled to do under the contract, is he is entitled to do under the contract, is found guilty of negligence, he cannot be found guilty of negligence, he cannot be made liable for a tort if he is not liable on made liable for a tort if he is not liable on the contract.the contract.

(Burnard vs. Haggis (1863) 14 C.B 45)(Burnard vs. Haggis (1863) 14 C.B 45) (Jennings vs. Rundell (1799) 8 T.R 335)(Jennings vs. Rundell (1799) 8 T.R 335)


Minor liability for tortMinor liability for tort(Bernard vs. Haggis (1863) 14 C.B 45)(Bernard vs. Haggis (1863) 14 C.B 45)

A minor hired a horse for riding under A minor hired a horse for riding under express instructions not to jump it. He express instructions not to jump it. He lent the horse to one of his friends who lent the horse to one of his friends who jumped it over a long distance whereby jumped it over a long distance whereby it becomes sick become sick and it becomes sick become sick and ultimately died. The court held the minor ultimately died. The court held the minor liable for tort since… it was bare liable for tort since… it was bare trespass, not within the object and trespass, not within the object and purpose of hiring for which the defendant purpose of hiring for which the defendant was liablewas liable


Minor’s liability for tortMinor’s liability for tort ((Jennings vs. Rundell (1799) 8 T.R 335)Jennings vs. Rundell (1799) 8 T.R 335)

A minor hired a horse for riding. The A minor hired a horse for riding. The horse was injured on account of over horse was injured on account of over riding. It was held that a minor was riding. It was held that a minor was not liable since the injury was due to not liable since the injury was due to his negligence in the course of what his negligence in the course of what he was entitled to do under the he was entitled to do under the contract. He was not liable on the contract. He was not liable on the contract himself and therefore he contract himself and therefore he was not liable for this tort too.was not liable for this tort too.


Example onExample onminor’s liability inminor’s liability in

case of tortcase of tort Bittoo hire horse .the horse was Bittoo hire horse .the horse was

injured on account of over ridding .it injured on account of over ridding .it was held that a minor was not liable was held that a minor was not liable since the injury was due to his since the injury was due to his negligence in the course of what he negligence in the course of what he was entitled to do under the was entitled to do under the contract.he was not liable on the contract.he was not liable on the contract himself and therefore ,he contract himself and therefore ,he was not liable for this tort too.was not liable for this tort too.


Decided case on pleading minorityDecided case on pleading minority

LESLIE vs. SHIELL, (1914) 3 K.B .6071LESLIE vs. SHIELL, (1914) 3 K.B .6071

S a minor by fraudulent representing S a minor by fraudulent representing himself to be of full age induced L to himself to be of full age induced L to lend him 400 pounds. He refused to lend him 400 pounds. He refused to repay it and L sued him for the repay it and L sued him for the money. Held the contract was void money. Held the contract was void and S was not liable to repay the and S was not liable to repay the amount.amount.


Introducing personIntroducing personof unsoundof unsound

mindmind


Person of unsoundPerson of unsound mind mind

A person is said to be of A person is said to be of sound sound mindmind for the purpose of making a for the purpose of making a contract if at the time when he contract if at the time when he makes it, he is capable of makes it, he is capable of understanding it and of forming a understanding it and of forming a rational judgment as to its effect rational judgment as to its effect upon his interests.upon his interests.

The idiot, lunatic and drunkards are The idiot, lunatic and drunkards are the person of unsound mind.the person of unsound mind.

Section-12Of Indian Contract act


Meaning of idiot, lunatic Meaning of idiot, lunatic and drunkardsand drunkards

Idiot: A person who is devoid of any faculties of Idiot: A person who is devoid of any faculties of thinking or rational judgment is called an idiot .all thinking or rational judgment is called an idiot .all agreements other than those for necessaries of agreements other than those for necessaries of life, with idiots are absolutely void.life, with idiots are absolutely void.

Lunatics: A person, whose mental powers are Lunatics: A person, whose mental powers are deranged is called a lunatic. Agreement made with deranged is called a lunatic. Agreement made with lunatic ,except those made during lucid intervals lunatic ,except those made during lucid intervals (period in which he is in his senses )are void(period in which he is in his senses )are void

For necessaries supplied to lunatic are valid. and the For necessaries supplied to lunatic are valid. and the property of lunatic can be takenproperty of lunatic can be taken

Drunkards: A person under the influence of drink or Drunkards: A person under the influence of drink or drug stands on the same footing as lunatic. An drug stands on the same footing as lunatic. An agreement with drunker is void.agreement with drunker is void.


Introducing Introducing person disqualified by law to enter person disqualified by law to enter

into into any contractany contract

I am declared disqualified By law to enter into any contract


Following are the people Following are the people disqualified by lawdisqualified by law

Alien enemy: A person who is not a Alien enemy: A person who is not a citizen of India is called an alien.citizen of India is called an alien.

Convicts: convict is incapable of Convicts: convict is incapable of entering into contract .and the entering into contract .and the incapability ends when sentence incapability ends when sentence expires or punishment finish.expires or punishment finish.

Corporation: A company is artificial Corporation: A company is artificial person created by law. it can only person created by law. it can only contract through its board of directors.contract through its board of directors.

competing parties

Business

void contract

mortgage money

ratification contract

void ab intio

person ofunsound

tominors agreement

lack of consideration

advance money