Contract with a minor – Mr. Sharma v. Mr. Nitin

 

Editor’s note:

This paper lays down the facts and circumstances of a fictitious case – dealing with primarily the law of contracts, whether a contract entered into with a minor is void, and the remedies one may avail upon entering into such contract conditionally with the guardian assenting to pay the price. It also examines the definition and scope of “necessary” under S. 68 of the Indian Contract Act, 1872. Arguments are presented for both sides, and a conclusion is drawn by the author.

Facts

Mr Sharma owns a furniture shop. Kamal, a class X student wanted a study table for his room. His father Nitin was adamant at not splurging money in buying unnecessary items. Kamal visited Mr Sharma’s shop and offered to buy a study table for 5000/- rupees. Mr Sharma looked at Kamal and realized that Kamal was not yet eighteen year old. Mr Sharma told Kamal that only if his father agreed to pay the price, will Mr Sharma sell the table to Kamal. Kamal promised to Mr Sharma that he would ensure that his father Nitin makes the payment.  Nitin refused to make the payment.

Issues

Is the contract valid, voidable or void ab initio?

Is the study table a “necessary” under the definition of Section 68, Indian Contract Act, 1872?

If at all, what remedies does Mr Sharma have?

Arguments for Plaintiff (Mr Sharma)

Though the contract with a minor is void ab initio,[i] the person who supplies another with a “necessary” is entitled to be reimbursed out of the minor’s estate. [ii] Section 68, [iii] provides for liability when a “necessary” is supplied to a person incapable of entering a contract under Section 11.[iv] A minor is a person incapable of contracting within the meaning of Section 11,[v] and hence, Section 68[vi] applies to his case. “Necessaries” under Section 68,[vii] includes not only ‘necessities’, but anything which might be necessary to maintain the incapable person in his state orastationainalife.[viii]aFurthermore,a“necessary”a is a relative fact,and should be determined with reference to theafortuneaandacircumstancesaof aaparticularaminor. [ix]

To render the minor’s estate liable for “necessaries”, two conditions must be satisfied, Viz.:(a) the contract must be for a commodity which was reasonably necessary to maintain his station or stage in life, and (b) he must not have a sufficient  supply of these “necessaries”.[x] Coming to the first criterion, the factual matrix here shows that Kamal was a class X student. Being a class X student, he would obviously require a study table to maintain himself in his station of student life. It is a known fact that in every civilised country of the world, a study table is a very fundamental requirement for a school goer. Now addressing the second criterion, nowhere does the factual matrix show that Kamal had already got another study table or he could manage in his stage of life without it. In the light of the aforementioned law and the subsequent application of the same to the facts of this case, his estate is liable for the “necessary” which he got out of this contract. Thus, to ensure that Defendant is not “unjustly enriched” [xi] on cost of Plaintiff, the latter should be reimbursed.[xii] Therefore, this contract is a quasi-contract or restitution[xiii] and on the lines of the judgement of Manmatha Kumar Saha v. Exchange Loan Co. Ltd., [xiv] Plaintiff here should be entitled to reimbursement out of minor’s estate.

In the alternative, under Section 65, [xv] Defendant is entitled to compensation since the contract was void and Defendant was “unjustly enriched”. This view was taken by the Bombay High Court in the case Motilal Mansukhram v. Maneklal Dayabhai. [xvi] Furthermore, under Specific Relief Act, [xvii] if a minor is brought before the court as a Defendant, he can be compelled to account for anything which is going to benefit him personally, such as education or training. [xviii] Thus, it would be perfectly just and equitable if the Honourable Court uses its discretion in the matter and, for the sake of justice orders restitution of the table, which benefited his education.

Arguments for Defendant (Mr Nitin)

Under the Family Law Reform Act, [xix] the age of majority was lowered from 21 to 18. [xx] Thus, Kamal is a minor and therefore is incompetent to contract under Section 11,[xxi] and thus the contract will be void ab initio. This counsel contends that the study table in question was not a “necessary”. The court is supposed to consider the character of the supplied goods, and the circumstances of the minor. As was held in the case Jagon Ram Marwari v. Mahadeo Prasad Sahu,[xxii] things mayabe a “necessary” to a minor, but the quality or quantity supplied may render them unnecessary. Objects though of real use, but excessively costly cannot be “necessaries”.[xxiii] A study table isanot a good which is quintessential to a high school student’s education. The seller (owns the burden of proof) has to prove that the goods supplied were suitable for the estate or station of a minor’s life, and that they were suitable to his actual requirements at the time, i.e., the minor had no supply from other sources.[xxiv] As has been already mentioned, and was is clearly evident in the factual matrix, in words of Defendant, buying the study table was “splurging money in buying unnecessary items.” Further, the table was in  no way quintessential to the minor’s academics. Furniture was held not be a “necessary” in the case Stocks v. Wilson.[xxv]In arguendo, “a study table for 5000/- rupees” is excessively costly. In the case Ryder v. Wombwell, [xxvi] it wasaheld that though buttons are used in usual kind of clothing, and would constitute a “necessary” underanormal circumstances, the fact that the buttons in question were diamond buttons rendered them otherwise. Similarly, a furnished or lavish study table (which costs as much as 5000 rupees) cannot be a necessary, when several foldable and proper study tables are available for less than 1100 rupees.[xxvii] Even if one of these arguments is taken it would be sufficiently evident that the study table in question was not a “necessary”. Also, the counsel for Plaintiff failed to back its assertion that the minor had no supply from the other sources with evidence.

Furthermore, in the case Amolakchand (Seth) v. Pralhadsingh ,[xxviii] the Indore bench of Madhya Pradesh High Court held that for Plaintiff to be entitled to compensation under a void contract Plaintiff should have not have had the knowledge that the contract was void ab initio, in case it is void ab initio and only then Section 65[xxix] would apply. The factual matrix clearly shows that it was not the case and Plaintiff had knowledge of the same before entering into the void contract. In arguendo, even if a study table is held to be “necessary” and minor’s estate is held liable for the same,[xxx] Section 70[xxxi] cannot be read so as to create any personal liability.[xxxii] It was held in Bankey Behari Prasad v. Mohendra Prasad[xxxiii] case that Section 70[xxxiv] is applied in contractual cases and a minor cannot be held liable under the same as a contract with a minor is void ab initio. Most importantly, as was held in the case Sadhu Laxmi Sunderamma v. Sadhu Suryanarayana, [xxxv] a claim lies only and only against the estate of a minor, and the father of the minor cannot be held liable. Only if the minor has hisaown estate, theaminoracan be held to be liable.

Judgment

The court holds that the contract is void ab initio.[xxxvi] Furthermore, the law clearly shows, that merely vague assertionsaby Plaintiff, who also owns the burden of proof, would not suffice.[xxxvii] With all due respect, the counsel for Plaintiff has just made vague assertions throughout. Firstly, as has been stated by the counsel for Defendant, the counsel for Plaintiff has failed to show that a study table is in any reasonable way quintessential to a high school student’s educationunder Section 68.[xxxviii] Secondly, we should look at the very basis of Section 11,[xxxix] which is that a party incompetent of understanding the consequences should not be the party which suffers losses, monetary or otherwise, because of its inability to understand the consequences of the contract, in perspective with the law,[xl] which says a good may be a “necessary” to a minor, but the quality or quantity supplied may render them unnecessary. The counsel for Plaintiff has failed to show through valid arguments or evidence that the study table in question was indeed a “necessary” and has also failed in negating the fact that 5000/- rupees is not a huge amount to pay for a study table. This leads us to the conclusion that the study table in question is out of the definition of “necessaries”. The court therefore holds that the study table in question is not a “necessary” under the definition of Section 68.[xli]

Also, even if the claim lies, it lies solely against the estate of a minor, and the father of the minor cannot be held liable.[xlii] Same was held in the case Sadhu Laxmi Sunderamma v. Sadhu Suryanarayana.[xliii] Furthermore, Defendant is not liable either under Section 65[xliv] or Section 70[xlv]. Moreover, even if Section 70[xlvi] might in principle, be applicable in ca-se of a contract with a minor, in practice, perhaps stricter standards of proof  might be required to show that the the payment or act was really for the minor’s benefit than in the case of a major.[xlvii]  The counsel for Plaintiff also failed on this account. Thus, Mr Nitin is not liable to pay anything. Lastly, the table need not be reimbursed under Specific Relief Act.[xlviii] As was held in the landmark Mohoria Bibi (wife of Brahmo Dutt) v. Dharmodas Ghose case,[xlix]There is no need to pay special relief as the appellant knew that they were contracting with a minor.” The court also held that one who seeks equity must do equity (cannot take advantage of your own faults). Similarly, in the instant matter, the Plaintiff knew that Kamal was a minor and hence they are not entitled toareimbursementaunderaSpecificaRelief Act.[l] Thus, the judgement is passed for Defendant with both parties bearing individual costs.[li]

Edited by Neerja Gurnani

[i]Indian Contract Act, 1872, § 11.

[ii]Indian Contract Act, 1872, § 68.

[iii]Ibid, as held in Benaras Bank Ltd. V. Dip Chand, AIR 1936 All 172.

[iv]Supra footnote 1.

[v]Supra footnote 1, as held in Watkins v. DhunnooBaboo, (1881), 7 Cal 140,143.

[vi]Supra footnote 2.

[vii]Supra footnote 2.

[viii]Peter v. Fleming (1840), 6 M. & W. 42.

[ix]Jagon Ram Marwari v. Mahadeo Prasad Sahu, (1909) ILR36Cal768in Mulla, Page 1046.

[x]Buckley ljin Nash v. Inman, (1908) 2 KB 1,12in Avtar Singh, Law of Contract and Specific Relief Act, 10th Edition Reprint, 2008, (Hereinafter Avtar Singh), Page 172.

[xi]The doctrine was founded by Lord Mansfield in Moses v. Macferlan, (1558-1774) All ER Rep 581.

[xii]Emphasis added.

[xiii]Chesworth v. Farrar, [1966] 2 All ER 107.

[xiv]AIR 1936 Cal 567 in Mulla, Page 1049.

[xv]Indian Contract Act, 1872, § 65.

[xvi]AIR 1921 Bom 147.

[xvii]Specific Relief Act, 1963, § 33, §§ (2).

[xviii]Avtar Singh, Page 162 – 163.

[xix]Family Law Reform Act, 1969, § 1 in Anson, Page 215.

[xx]Anson, Page 215.

[xxi]Supra footnote 5.

[xxii]Supra footnote 9.

[xxiii]Supra footnote 9.

[xxiv]SadasheoBalaji v. Firm HiralalRamgopal, AIR 1938 Nag 65 in Mulla, Page 1049.

[xxv][1913] 2 KB 235.

[xxvi](1869) LR 4 Ex 32.

[xxvii] http://www.ebay.in/itm/NEW-LAPTOP-BED-TABLE-MULTIPURPOSE-TOP-LAMINATED-HEAVY-BODY-FRAME-WOOD-BASE-/281162388560?pt=IN_Laptop_Desktop_Accessories&hash=item4176959450&_uhb=1 ; http://www.ebay.in/itm/Kawachi-Multipurpose-Folding-Study-Table-/111156732746?pt=IN_Furniture&hash=item19e175234a&_uhb=1#ht_3382wt_1037 ; http://www.ebay.in/itm/Multi-Purpose-Foldable-Table-Childrens-Study-Table-/141051911538?pt=IN_Furniture&hash=item20d7595d72&_uhb=1#ht_2877wt_1037.

[xxviii]1972 MP LJ 473. The Court held, “The two phrases “discovered to be void” and “becomes void” should be understood to denote different situations. In the one cases at least the person who has given the advantage to the incompetent party has believed the agreement to be valid, and has at a later stage discovered that it was really void from the very beginning or at all events from an earlier date. When a contract becomes void the position is materially different; it is not void from before, but something has happened after the execution of the contract which has made it void. Thus, while it is clear that in the case of a contract becoming void it should have been valid ab initio; it is not necessary for an agreement to be discovered to be void, that it should necessarily have been valid from the beginning. The voidness should have been all the time unknown to one or the other of the parties. The party who would naturally be the one seeking restoration of the advantage given by him to the other, must have believed or led to believe that it is not void. Where both parties know that the agreement is void ab initio, and one of them later on claims restoration under Section 65 the latter cannot be held to have discovered the voidness of the agreement and as much will not be entitled to it.

[xxix]Indian Contract Act, 1872, § 68.

[xxx]Supra footnote 2.

[xxxi]Indian Contract Act, 1872, § 70 in Mulla, Page 1048.

[xxxii]Mulla, Page 1048.

[xxxiii]AIR 1940 Pat 324.

[xxxiv] Supra footnote 31.

[xxxv]AIR 1950 Mad 274.

[xxxvi]Supra footnote 1.

[xxxvii]Supra footnote 23.

[xxxviii]Supra footnote 2.

[xxxix]Supra footnote 1.

[xl]Supra footnote 9.

[xli]Supra footnote 2.

[xlii]Emphasis added.

[xliii]Supra footnote 31. It was held, “Be this as it may, the claim for reimbursement in this case is not against the estate of the minor but personally against her father and Section 68, Contract Act, would not therefore apply.

[xliv]Supra footnote 27.

[xlv]Supra footnote 33.

[xlvi] Supra footnote 31.

[xlvii]K.R.S.V. MuthayyaChetti and Ors.v. Narayanan Chetti and Ors. ,AIR 1928 Mad 317.

[xlviii]Supra footnote 17.

[xlix](1903) 30 Cal. 539.

[l]Supra footnote 17.

[li]Extra emphasis.

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