ABSTRACT

This paper explores the legal framework, challenges, and policy implications surrounding minor contracts in India. Under the Indian Contract Act, 1872, minors are deemed incompetent to contract, rendering such agreements void ab initio. The Indian Majority Act, 1875, further clarifies that individuals under the age of 18, or 21 with a guardian, are considered minors. While these provisions aim to protect minors from exploitation and undue influence, they present significant challenges in the context of enforceability, age verification, and potential misuse. Digital platforms, in particular, face difficulties in ensuring compliance, leading to legal uncertainties and potential exploitation by minors. To address these issues, policy recommendations include the implementation of enhanced age verification mechanisms, mandatory parental or guardian consent for significant transactions, educational initiatives to raise awareness of legal implications, and judicial discretion in assessing the fairness of contracts involving minors. By adopting these measures, India can create a more balanced legal framework that protects minors while ensuring fairness and reliability in contractual dealings.

KEYWORDS

Minor contracts, focusing on guardians, e-contracts, legal implications, and safeguarding minors’ rights, legal framework

INTRODUCTION

Contracts are fundamental to commercial and personal transactions, forming the bedrock of economic and social interactions. In India, the legal framework governing contracts is primarily outlined in the Indian Contract Act, 1872[1], and the Indian Majority Act, 1875[2]. A critical aspect of this framework is the regulation of contracts involving minors. The Indian Contract Act stipulates that minor, defined as individuals under the age of 18 (or 21 if a guardian is appointed), lack the legal capacity to enter binding agreements, rendering such contracts void ab initio.

This protective measure aims to shield minors from exploitation and ensure they are not bound by obligations they may not fully comprehend. However, in an increasingly digital age, where minors frequently engage in online transactions and E-contracts[3], this doctrine presents several challenges. The issues of enforceability, accurate age verification, and potential misuse of the legal protections afforded to minors have become more pronounced. This paper look into the complexities of minor contracts in India, examining the existing legal framework, identifying the challenges faced by various stakeholders, and exploring potential policy implications. The goal is to provide a comprehensive understanding of the current landscape and suggest reforms that balance the protection of minors with the need for a reliable and fair contractual system. Through this analysis, we aim to contribute to the ongoing discourse on how to adapt traditional legal principles to modern realities, ensuring both the protection of vulnerable individuals and the integrity of contractual relationships.

RESEARCH METHODOLOGY

This study uses a wide-ranging and varied approach to explore the legal consequences and difficulties associated with minor contracts in the digital age. It combines primary sources like case rulings and laws with secondary sources such as articles and books by respected authors.

LEGAL FRAMEWORK OF MINORS CONTRACT

Section 11 of the Indian Contract Act states that all parties in a contract must have the legal capacity to do so. Minors, who have not reached the age of majority, are considered legally incapable of entering contracts. This leads to a significant legal question: what happens when a minor is involved in a contract? There has been a longstanding legal debate in Indian courts regarding whether such contracts are void because of the minor’s incapacity, leading to no legal relationship and making the contract irrevocable even after the minor becomes an adult, or if the minor cannot be held accountable but has the right to void the contract, making it voidable at their discretion. The conflicting interpretations in Indian courts regarding contracts involving minors have resulted in varying opinions. Some courts followed the belief that such contracts were voidable at the minor’s discretion, aligning with English common law principles. However, a significant legal milestone occurred in a 1903 Privy Council case, definitively ruling that contracts made by minors are void from the beginning. This ruling, addressing a mortgage executed by a minor, prevented the mortgagee from recovering the funds secured under Sections 64 and 65 of the Contract Act. As a result, no legal actions could be taken against the mortgagor or the mortgaged property. This decision has set a consistent precedent upheld by both the Privy Council and Indian High Courts, stating that contracts based on a minor’s promise are void due to their inherent incapacity, protecting them from legal liabilities.

Exceptions to contracts involving minors include beneficial contracts. In the case of A.T. Raghava Chariar v. O.A. Srinivasa Raghava Chariar[4], the Madras High Court’s Full Bench ruled that a mortgage by a minor, especially if the minor has provided the full mortgage amount, can be legally valid. This interpretation was also supported by the Patna High Court, showing agreement on contracts where minors have fulfilled their obligations. Necessaries play a crucial role in establishing guidelines for contracts involving minors or individuals who are dependent on them. As per Section 68, if a person provides essential goods or services suitable for the living conditions of an incapable individual or someone legally responsible for them, they are entitled to compensation from the individual’s property. The definition of “necessaries” can vary and is influenced by one’s social status. In a legal context, necessaries may include housing for a minor, medical care, education, and legal assistance. In India, this term also encompasses a woman’s marriage and educational needs. A significant case, Nash v. Inman[5], exemplified this concept where a minor’s purchase of eleven luxury coats was not deemed necessary, preventing the supplier from claiming payment from the minor’s assets.

Beyond clothing, necessities essential for sustaining life, such as food and shelter, are universally recognized as crucial. In India, this definition includes education and a woman’s marriage. When providing necessaries to a minor, the minor cannot be held personally accountable for payment; reimbursement must be sought from the minor’s assets. This principle also applies to services offered to a minor, like legal defence or property protection, where the minor cannot be compelled to work in exchange, and any income they earn cannot be seized for payment. It’s important to understand that if necessaries are provided to a minor as agents of the parent or guardian, the responsibility for these goods and services falls on the parent or guardian. In such instances, the minor represents the parent or guardian, and any obligations incurred become the responsibility of the parent or guardian under the law.

We completely understand the complexity of differentiating between executed and executory contracts. It can be quite tricky to draw a clear line between these two categories, especially when looking at real-life situations. The issue of determining whether a minor is released from any further obligations or liabilities adds another layer of difficulty to the mix. When dealing with these contractual arrangements in practice, the practical implications often muddy the waters, making it challenging to come to a definitive conclusion. It’s essential to carefully analyse the specifics of each case to unravel the extent of a minor’s responsibilities within the context of executed and executory contracts.

ROLE OF GUARDIANS IN MINORS CONTRACT

The guardians’ role in contracts involving minors is quite significant. In India, the legal framework around minors and contracts was greatly influenced by the Mohori Bibee case[6]. Traditionally, under Hindu and Muslim personal laws, guardians were allowed to represent minors, especially if it was for the minor’s welfare or in cases of necessity. However, a pivotal judgment in the Mir Sarwarjan v. Fakhruddin Mohd[7] case by the Privy Council established that a guardian couldn’t bind a minor in a property transaction, even if it was for the minor’s benefit. This ruling, along with the earlier Mohori Bibee case, led to minors’ contracts being unenforceable, even if a guardian entered into the contract for the minor’s advantage.

The Indian courts really had a tough time dealing with all these conflicting decisions that went against the traditional practices and personal laws of Hindus and Muslims. They realized that sticking to such strict rules wasn’t practical, so they began to make some exceptions. These exceptions allowed for enforcement of contracts when the guardian had the proper authority, and the contract was truly in the minor’s best interest. This shift was supported by the Privy Council in the Sri Kakulam v. Subba Ra[8] case, which was in line with the seventh edition of Pollock and Mulla’s treatise. Even though this new direction clashed with the Mir Swarajan ruling, it wasn’t officially recognized, creating quite a complex legal situation.

The Supreme Court of India really solidified this stance in the Mathai Mathai case[9], emphasizing that contracts entered into by a guardian on behalf of a minor are valid as long as they benefit the minor. This legal progression showcases the intricate nature of minors’ contracts in India, finding a delicate balance between longstanding principles and real-world practicalities to guarantee fairness and safeguard minors involved in contractual dealings.

CONTRACTS WITH MINOR: KEY PRINCIPLES

• Void Ab Initio

When it comes to contracts with minors, one key principle is that they are considered void ab initio, which means void from the beginning. This principle implies that a contract with a minor is not legally binding, and therefore, neither party can enforce it. For example, in the case of Mohori Bibee vs. Dharmodas Ghose[10], the Privy Council held that contracts with minors are void ab initio, emphasizing that minors lack the legal capacity to enter into binding agreements. This case established a significant precedent regarding the status of contracts involving minors. The implication of this principle is that it serves to protect minors from being bound by agreements that they may not fully comprehend or that could potentially exploit them. It also highlights the importance of guardians or legal representatives in overseeing and approving contracts involving minors to ensure their best interests are preserved. Understanding the concept of contracts with minors being void ab initio is essential in legal contexts to uphold the protection and rights of minors in contractual dealings. It underscores the need for caution and diligence when engaging in agreements with individuals who lack the full legal capacity to consent to contracts.

• Exceptions and Special Cases

In the domain of contracts with minors, there exist exceptions and special cases to the general rule of contracts being void ab initio. Two significant exceptions include contracts for necessaries supplied to minors and beneficial contracts that are advantageous to the minor.

Necessaries supplied to minors. – When it comes to necessaries supplied to minors, these are essential goods and services that are necessary for the minor’s well-being. In such cases, even though the contract is with a minor, it is enforceable to the extent of the value of the necessaries provided. This exception ensures that minors receive essential items they require for their basic needs, such as food, clothing, shelter, and medical care.

Beneficial contracts– Beneficial contracts, on the other hand, are agreements that are deemed to be in the minor’s best interest. If a contract is clearly advantageous to the minor, such as for education, training, or employment, it may be upheld by the courts. The focus in these cases is on promoting the minor’s welfare and development.

• Restitution and Ratification

Restitution in contracts with minors refers to the returning of any benefits or payments received under a voidable contract. While the minor cannot be held liable for breaching the contract, they are obligated to return any goods or money they have received. However, there are limitations to restitution, especially when the minor has consumed or used the goods, making it impossible to return them in the same condition. In such cases, the courts may require the minor to make a monetary payment in lieu of returning the goods. Ratification is the act of confirming or accepting a contract that was initially voidable due to the minor’s involvement. When a minor reaches the age of majority (usually 18 years old), they have the option to ratify the contract, thereby making it legally binding. This ratification can be explicit, where the individual confirms the contract in writing or verbally, or implicit, where the individual’s actions demonstrate their intention to uphold the agreement. Once ratified, the contract becomes fully enforceable as if it were entered into when the individual was of legal age.

CHALLENGES IN ENFORCING MINOR CONTRACTS

• Legal Ambiguities

Navigating the realm of enforcing contracts with minors indeed presents challenges due to legal ambiguities, interpretation issues, and judicial inconsistencies. When it comes to minors and contracts, the law can be unclear and subject to varying interpretations, leading to complexities in enforcement. One significant challenge arises from the ambiguity surrounding the capacity of minors to enter into contracts. Different jurisdictions may have varying laws and standards regarding what constitutes a valid contract with a minor, resulting in interpretation issues. This lack of uniformity can create confusion for parties involved in such contracts.

Moreover, judicial inconsistencies further compound the challenges in enforcing minor contracts. Courts may interpret laws differently or apply precedents in divergent ways, leading to inconsistent outcomes in similar cases. This inconsistency can make it challenging for individuals to predict the enforceability of contracts with minors and can result in disparities in legal decisions. For instance, in the case of Mohori Bibee v. Dharmodas Ghose in Indian contract law, the Privy Council ruled that a minor’s contract was voidable, emphasizing the protection of minors from exploitation. This case highlights the importance of legal clarity and consistency in dealing with minor contracts to ensure fairness and adherence to legal principles.

• Practical Difficulties

Enforcing minor contracts can indeed pose practical difficulties, especially when it comes to enforcing restitution and ensuring protection against exploitation. When minors are involved in contracts, practical challenges may arise in the process of seeking restitution or returning benefits received under voidable agreements. Enforcing restitution in minor contracts can be complex, particularly when it involves returning goods or money that the minor has already received. Practical difficulties may arise if the minor has consumed, used, or no longer possesses the benefits received, making it challenging to fulfil the restitution requirement. In such cases, determining a fair and feasible solution becomes crucial to address these practical hurdles effectively.

Additionally, ensuring protection against exploitation of minors in contractual agreements is a significant concern. Minors are considered vulnerable individuals who may be taken advantage of in contractual dealings. Practical difficulties may emerge in safeguarding minors from unfair or exploitative contracts, highlighting the importance of legal mechanisms and oversight to prevent such situations and uphold the rights of minors.

• Economic and Social Factors

When minors enter into contracts, their socio-economic circumstances can greatly influence their experiences and outcomes. The economic and social factors surrounding minors engaging in contracts can have a profound impact on their lives. For instance, minors from disadvantaged backgrounds may be more vulnerable to exploitation or may enter into contracts out of necessity rather than choice, highlighting the intersection of economic pressures and social vulnerabilities. In cases where socio-economic factors play a significant role, minors may face challenges in understanding the terms of a contract, negotiating fair agreements, or asserting their rights in case of disputes. This imbalance of power and resources can further exacerbate the challenges in enforcing contracts with minors, especially when economic disparities come into play.

An illustrative case that sheds light on the socio-economic impact on minors entering into contracts is the landmark Indian case of Mohori Bibee v. Dharmodas Ghose. In this case, the Privy Council emphasized the need to protect minors from exploitation and undue influence in contractual dealings. The judgment underscored the importance of considering the socio-economic vulnerabilities of minors and ensuring that they are not unfairly burdened by contractual obligations beyond their capacity. By recognizing and addressing the socio-economic factors that influence minors entering into contracts, legal systems can strive to create more equitable and protective frameworks for minors. Empowering minors with knowledge, support, and safeguards can help mitigate the negative impact of economic and social disparities on their contractual engagements, fostering a more just and inclusive environment for all individuals, regardless of their socio-economic backgrounds.

IMPLICATIONS

In the case of a minor ordering a product from Flipkart and then refusing to pay upon delivery, citing their status as a minor, it indeed raises complexities. While the minor is leveraging the infancy doctrine to avoid contractual obligations, they are also exploiting the protection granted to them. The delivery agent, lacking the authority to verify the minor’s age, ends up in a tricky situation where they must collect the payment and deliver the product, highlighting the challenges faced in enforcing contracts with minors, especially in e-commerce transactions. The second scenario involving a minor misrepresenting their age on social media platforms poses additional concerns. By falsely claiming to be older to create an account, the minor not only breaches the platform’s terms but also potentially exposes themselves to risks or offenses unsuitable for their age. The inadequacy of age verification systems on social media platforms further complicates the situation, as minors may circumvent restrictions meant to protect them, leading to potential long-term consequences.

The reference to the Mohiri Bibee case, which established that minor contracts are void from the beginning, contrasts with the evolving stance of Indian courts, as seen in the Trimax International Limited v. Vedanta Aluminium Limited case[11]. In this newer case, courts began recognizing contracts formed through social media, indicating a shift in how contracts, especially those involving minors, are viewed in the digital age. The emergence of contradictory precedents underscores the need for clear provisions addressing minor contracts, particularly in the context of e-contracts and social media engagements. As minors increasingly engage in contractual activities through digital platforms, it becomes crucial to identify and address the loopholes that may expose them to exploitation or legal uncertainties. Establishing guidelines that account for the unique challenges and risks faced by minors in online transactions is essential for ensuring their protection and well-being in the rapidly evolving digital landscape.

SUGGESTION

The clear suggestion here is that there should be a specific provision, rather than a full-fledged act, addressing minors and e-contracts. The Indian Contract Act dates back to 1872, a time when technology was far less advanced. Therefore, it is crucial to update the rules regarding minors’ capacity to enter contracts to align with modern circumstances. Nowadays, even children and young kids are well-informed about technology and the digital world. They are influenced by their peers and surroundings, and with the widespread use of electronic devices during situations like the COVID-19 pandemic, there is a need to adapt the laws accordingly. Applying the twin test concept from Section 84 of the Indian Penal Code[12], which determines the capacity of an insane person based on their understanding of actions and ability to form rational judgments, could be a valuable approach for assessing the capacity of minors in contract law. If a minor can demonstrate that they entered into a contract with full understanding, rational judgment, and awareness of the consequences, similar to the standards applied to insane persons, they could potentially be held accountable for any breaches of the contract. This alignment could provide a clearer framework for evaluating the capacity of minors in contractual agreements[13].

It’s interesting to draw parallels between the concepts in the Indian Penal Code regarding children committing offenses and the capacity of minors in contract law. Just like how there are age distinctions for immunity from prosecution based on maturity levels in criminal cases, establishing a specific age limit for minors entering into contracts could provide a structured approach. By considering the age at which a child is deemed mature enough to understand the consequences of their actions in criminal matters, a similar age threshold could be set for minors engaging in contractual agreements. This could help ensure that minors are held accountable based on their level of understanding and maturity.

It’s worth noting that the Juvenile Justice (Care and Protection of Children) Act, 2015[14] addresses the unique situation of minors involved in serious crimes. According to this act, minors aged between 16 to 18 who commit heinous offenses can be treated as adults, subject to the decision of the Juvenile Justice Board. The Board evaluates whether the minor has the mental and physical capacity to understand and commit the crime. This approach aims to balance the accountability of minors with the need to consider their capacity and circumstances.

CONCLUSION

In the Indian legal system, the regulations surrounding minor contracts, rooted in the Indian Contract Act, 1872, and the Indian Majority Act, 1875, are designed to shield minors from engaging in agreements beyond their comprehension or consent. While these safeguards are crucial, they pose notable challenges in today’s digital age, particularly concerning electronic transactions and contracts. The complexities related to enforcement, age verification, and the potential for exploitation underscore the necessity for a more sophisticated and contemporary approach to handling minor contracts. To tackle these issues, we need a comprehensive approach. Improving age verification methods, requiring parental or guardian approval for major transactions, and educating minors and their guardians about contract laws are vital. Moreover, granting courts more flexibility, implementing specific regulations for digital deals, and setting up regulatory supervision can establish a fairer legal structure.

By putting these recommendations into action, we can safeguard minors and establish a more equitable and trustworthy contractual landscape for everyone engaged. Ongoing monitoring and assessment of these steps will be essential to adjust to changing conditions and maintain their efficacy. By harmonizing protection and fairness, India can update its legal structure to cater to the welfare of minors and uphold the credibility of contracts in an ever-evolving environment.

1. if a minor enters into a clickwrap contract without reviewing the terms and conditions, the validity of the contract may be questioned. In the case of traditional contracts, they are generally considered valid, as seen in past legal cases. However, if a minor claims ignorance of the terms and conditions in a clickwrap contract, the burden of proof would indeed fall on the minor to demonstrate this lack of awareness. This highlights the importance of understanding the terms of any contract, whether traditional or digital, especially for individuals who may have limited capacity to enter into legal agreements.
2. In some countries like the USA and South Africa, there are exceptions where e-contracts entered by minors may be deemed valid under certain circumstances. Similarly, in England, there have been discussions about this concept, although it has not been formally implemented yet. These exceptions reflect the varying approaches different legal systems take when considering the capacity of minors to enter into electronic contracts.
3. It seems like the consent of a minor without full awareness may not be considered valid, especially if the minor is incapable of fully understanding the terms and conditions of the contract. In such exceptional circumstances, where the minor lacks the capacity to comprehend the consequences of the agreement, the consent would likely not be deemed valid, rendering the contract itself invalid. This underscores the importance of ensuring that minors have the necessary understanding and capacity before entering into any contractual agreement.
4. In the Indian context, the infancy doctrine regarding E-contracts by minors can indeed present challenges. While minors may utilize this doctrine for protection, there is a risk that it could potentially disadvantage the other party involved in the contract. It is crucial for the judiciary to carefully consider the specific details of each case to ensure fair outcomes for all parties. Suggestions for potential amendments to the Indian Contract Act or the Information Technology Act could help mitigate these risks, aiming to prevent any party from exploiting the situation and ensuring a more balanced legal framework for E-contracts involving minors.

[1] Indian Contract Act, 1872

[2] Indian Majority Act,1875

[3] Thomson Reuter Practical law https://uk.practicallaw.thomsonreuters.com  (last visited Nov.14, 2023)

[4] A.T. Raghava Chariar vs O.A. Srinivasa Raghava Chariar AIR 1917 MADRAS 630

[5] Nash v Inman [1908] 2 KB 1

[6] Mohori Bibee V. Dharmodas Ghose (1903) 30 I.A. 114

[7] Mir Sarwarjan vs Fakhruddin Mahomed Chowdhuri (1912)14BOMLR5

[8] Sri Kakulam Subrahmanyam vs Kurra Subba Rao (1948)50BOMLR646

[9] Mathai Mathew vs. Joseph Mary Alias Marykutty Joseph (2015) 5 SCC 622,

[10] Mohori Bibee V. Dharmodas Ghose (1903) 30 I.A. 114

[11] Trimex International Fze … vs Vedanta Aluminium Limited, India https://indiankanoon.org/doc/658803 ,(last visited Nov.13, 2023)

[12] Indian Penal Code,1860

[13] Drishti Baranwal, A Study of Minors’ Capacity to Contract in Recent Context, Burnished law journal, Vol.3, (2022)

[14] Juvenile Justice (Care and Protection of Children) Act, 2015