LLB 3 years Contracts 1 important question and answers PDF

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Question No. 1: Who is competent to contract Discuss the law relating to   minor’s agreement in India, with help of decided cases. Also brief about English Law  ...

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Question No. 1: Who is competent to contract Discuss the law relating to minor’s agreement in India, with help of decided cases. Also brief about English Law Indian law in this context. OR Minor’s agreements are void at-initio. In which case the above rule was established. Discuss in brief that case and also bring out the exceptions to the above rule. OR What do you understand by “ capacity to contract” What is effect of Minor’s agreement and when can it enforced. OR “A minor’s bind others but is never bound by others.” Explain by giving illustrations. OR Discuss the nature and effects of Minor’s Agreement. Answer – INTRODUCTION:- All agreements are not contracts. Only those agreements are contract which fulfil he conditions of section 10 and according to section 10 for a contract parties must be competent, the consent must be free. Therefore the competency of the parties to a contract is most essentials element of a contract. According to section 11 of Indian contract Act 1872 which provided, “That every person is competent to contract who is of the age of majority according to law to which is subject and who is sound mind and not disqualified from contracting by any law to which he is subject.” The following persons are competent to contract i) Who is major. ii) Who is of sound mind. It is evident that minor’s and unsound mind person cannot make a contract. A Major person means who has attained the age of 18

years. The age of majority has been decided by Indian majority act 1875. In case of guardian appointed by the court, the age shall be 21 years. “ An agreement made by a minor is void.”, from the above statement we find that the minor is not competent to contract. Indian contract act is silent about whether it will be void or voidable up to 1903. But it is decided by the Court that these are void. Agreement by a minor is void-ab-initio, such contract cannot be enforced by law. Further the minor cannot authorise any other person to do a contract. Case Mohiri Bibi vs Dharamdass Ghosh (1903) A minor Mr. Dharamdass Ghosh executed a mortgage documents for Rs.20,000.00 in favour of a money lender Sh. Brahmo Dutt. The money lender actually paid Rs.8,000.00 to the minor. It is important that before this transaction the guardian of the minor informed the Attorney of Money lender that he (Dharamdass Ghosh) is minor. Later on a suit was instituted by the minor Dharmadass Ghosh against the money lender Sh. Brahamo dutt with the intention that the mortgage be set aside. This suit was opposed by Money lender by saying that the above contract being voidable, he has the right to receive the amount of the loan under section 64 and 65 of Contract Act i.e. minor is bound to return back the amount. Privy council held that,“ the contract is void ab-initio which cannot be enforced.” It was also held that the minor could not be asked to repay the loan taken by him. It was further held that law of estoppels cannot be applied against the minor Shri Dharmodas Ghosh being mis-stated falsely his age because he was minor at the time of the agreement and the agreement was void. The law of estoppels as stand in section 115 of Indian Evidence Act was not applicable to the present case as the plaintiff was minor at the time of making agreement, this fact was also known to the agent of Brahmo Dutt defendant. Under Specific Relief Act 1877 Section 38

and 41 applies where party had the knowledge of minority age gets restitute degree. A new concept of beneficial has come into existence now. It has been held in various cases. A minor is bound for the beneficial contract. The beneficial contract are those contracts which are for the benefit of minor. The first case was S.Subramanyam v/s Subha Roy-1948 - In this case transfer of inherited property of a minor affected by his guardian to pay off an in-herited debt was binding on him for his benefit. Here is a list of beneficial contract i) Contract of Insurance Such contracts are in the benefit of minors. ii) Contract to purchase the immoveable property Such contract are valid. iii) Contract of service - These are for the benefit for the monors iv) Contract of apprentice ship Training period of any minor who is taking training from any person, because of the training minor will case his livelihood. It is for his benefit and mono is liable to compensate hat person. v) Contract of Marriage When guardian made an agreement for the marriage of the minor then another party cannot enforce it, but minor can enforce it. If agreement is made jointly by guardian and minor, it can be enforced again on majority age. vi) Contract of Necessities- Under section 68 of the Contract Act1872, minor is also liable for necessaries. Necessaries means the basic things of the life. These are mainly, ROTI – KAPRA-AUR MAKAAN. If any person supplied necessaries to minor then the minor is liable o compensate the supplier. A case Chapple vs Cooper The court held that necessaries are not only food, shelter, clothes but also education or religious and any such things which are necessary for life, comes under the definition of necessaries. The following two conditions are necessary for liable 1. The supply must not be more than sufficient.

2. The supply must be according to the standard of minor. Case PETRESS VS FLEMING The supply of a watch to a minor whose study was considered as the necessity because to have a watch for graduate person is his necessity. RATIFICATION OF THE MINOR’S AGREEMENT A minor’s agreement being void ab-initio, it is incapable of being validated a subsequent ratification after the minor has attained the age of majority. Here is minor accepts the contract in some terms is entered during minority then also he is not liable. If a minor takes 2000.00 in minority and Rs.3000- after getting majority age and said major give back Rs.5000- then this is valid and with consideration. After getting majority age if minor uses his option to be a partner, he will be bound for all the responsibilities of minority period, which are against the firm. CONTRACT BY MINOR GUARDIANS 1. If the agreement is on behalf of minor done by guardian. 2. With in his Power. 3. Guardian is capable to enter into contract. 4. The agreement will be in the interest of minor. A case of Raj Rani vs Prem - Father agreed with the Director of Film, and according to this agreement Director of Film will give a role to Indrani. It was held void because no consideration was therein. It this agreement is with the daughter then it is void abs-intro. If it is with his father then it has no value even to think over it. DOCTRINE OF RESTITUTION Restitution means if an agreement is declared void, benefit should be returned. Under section 64 & 65 of contract Act, that section 68 is applies only on voidable agreements, Section 56 is applies on the agreement which were valid at the time of formation but due to some circumstances(as under sec.56) it becomes void. Under the equitable

doctrine of restitution minor has to restore back the benefit so received by him the exact things but it is applicable in case of goods and property not in the case of money. Restitution stop where repayments begins. A case of Leslie vs Sheill- (1914) - It was held by the court of Appeal that the money could not be recovered. If there were allowed that would amounts to enforcing the agreement to repay loan, which is void under Inflants Relief Act-1874. Section 39(3) specific Relief Act 1877 If the court thinks he may pass an order of restitution in any case, now a question arises whether he person did not know about the age of minor. If minor is also not know his age. In this stage plaintiff does not get compensation. If respondent misrepresent his age on this point there are different view of court. Case KHARGIL VS LAKHAN SINGH -1928 LAHORE HIGH COURT. The court ordered a minor to refund Rs.17500- which he had taken in advance for the sale of land. When he refused to complete the contract. The court was of the opinion that still the Specific Relief Act should apply whether the minor was the plaintiff or the defendant. The doctrine of restitution should apply whether the minor had taken the goods or money. Case Ajudhiya Parsad vs Chandan Lal – 1937 Allahabad High Court refused to following, extended view of restitution and held that a minor who had taken money by mortgaging his home was not bound to restore the money. Now section 33(2)(b) added according to this section, when a plaintiff wants to dissolve the agreement and says that at the time of agreement he is minor than he can get back all his profits. DOCTRINE OF ESTOPPELS According to rules contained in Sec.115 of Indian Evidence Act 1872, if you make a statement today, which misleads another person,

you are not allowed to deny the statement to-marrow when the question of your liability arises. A question whether a minor who has made a false representation about his age is stopped from pleading his minority, was raised, but it was not decided in this case of Mohiri Bibi. Privy Council held that where the party knows about the age of minor this principle could not apply. The question arises that whether minor can be stopped by false representation as to his age is now settled by this case. A Case Nawab Sadiq Ali Khan vs Bibi Jai Kishori1928 It was held by Privy Council that if a minor makes a contract by fraudulently expressing his age more than actual then he cannot be stopped as per the rules of estoppels that he was minor at the time of contract. INDIAN AND ANGLO LAW It is difficult to differentiate between both the law in respect of contract by minor’s but generally the difference in both the law is 1. Contract by minor under Indian law is void ab-initio. 2. It is voidable under English Law, such contract can be declared void on the will of minor. If the contract is for the benefit or fulfilment of necessity of minor. Then it shall be binding.

Q. No 2:- State the difference between void agreement and illegal agreement OR All illegal agreements are void but all void agreement are not illegal. Comments Ans- INTRODUCTION Under section 2(g) of Indian Contract Act 1872, definition of void agreement has been given and according to

it , “ Agreement in not only enforceable by law said to be void.” For instance, an agreement by a minor has been held to be void. Section 24 to 30 of the Indian Contract Act 1872, make a specific mention of agreement which are void. Generally the following agreements are not enforceable by law. i) Whose parties are not competent to do a contract i.e. they are not adult and are unsound mind. ii) Whose parties do not have free consent i.e. they are under coercion, undue influence fraud & misappropriation etc. iii) Whose consideration and object has not been lawful iv) Which are immoral or against public policies. v) Which do not create valid (illegal) liabilities between the parties. vi) Which have been declared as void by the court etc. All above agreements are void because they cannot be enforced by law. ILLEGAL- AGREEMENTS Illegal agreements are such agreements whose consideration and object are not lawful i.e. they are illegal. Such agreements are mentioned in section 23 of the Indian Contract Act 1872. The following agreements are considered as illegal1. Which are prohibited by Law. 2. Which is of such a nature if followed would defeat the provisions of law. 3. Which is fraudulent. 4. Which is causing injury to body or property of any other person. 5. Which have been declared by the court as immoral or against public policies. After the definition of void and illegal agreements we have considered the following statements “ That all illegal agreements are void agreements but all void agreements need not necessarily be illegal.” It can be adjudged from the following -

i) Illegal agreements are void – ab-initio which cannot be enforced by law at any time whereas void agreement need not be void-abinitio, such agreements could become un-enforceable by law later. ILLUSTRATION An agreement takes place between the citizen of India and Pakistan which was enforceable by law at the time agreement, but later on in the event of war between India & Pakistan the agreement becomes un-enforceable whereas agreement to pay money by A to B for illegal intercourse is void ab-initio which cannot be enforced any time.” This shows the illegal agreements are always void whereas void agreements are not always illegal. ii) Parties of illegal agreements can be punished whereas the parties of void agreements cannot be punished. ILLUSTRATION - An agreement to encourage any woman for prostitution by paying her money is punishable but an agreement by minor or without consideration is not punishable. This also proves the fact that every illegal agreement is void but every void agreement is not illegal because illegal agreement is of punishable nature whereas void agreement is not. Void agreement does not contain the element of illegal agreement whereas illegal agreement contains the elements of void agreement. iii) Void agreement cannot be enforced at any time and illegal agreement is also never enforceable by law. Hence illegal agreement contains impliedly the element of illegal agreement. iv) Illegal agreement are those which are mentioned in Sec. 23 of contract act whereas void agreements included various other types of agreement, like agreement by minor or unsound mind persons, agreement without consideration etc. v) Void agreements include illegal agreements which are not enforceable by law, but illegal agreements need not contain all types of void agreement. This shows that all illegal agreements are void but all void agreements are not illegal. DIFFERENCE BETWEEN VOID AGREEMENT &

ILLEGAL AGREEMENTS. VOID AGREEMENT ILLEGAL AGREEMENT 1. All agreements are not void-ab-initio but become void later due to circumstances 2 The reason of void agreement could be incompetency of parties, lack of consideration etc. 3 Parties of void agreements are not be punished. 4 Collateral agreement to void agreements can be enforced. 5 The area of void agreement is extremely void. It includes all illegal agreement. 1 Illegal agreements are void –ab-initio. 2 The reasons of illegal agreement shall be those which are mentioned in sec.23 of the Contract Act., like prohibited by law. Immoral against public policies, fraudulent etc. 3 Parties of illegal agreement can be punished. 4 Collateral agreement to the illegal agreement can also not be enforced. 5 The area of illegal agreement is comparatively narrow. It does not include all types of void agreement. Question No 3 : All contracts are agreements but all agreements are not contracts? OR Discuss the rule for the formation of a valid contract when a contract becomes complete? Introduction : i) MULLA :- Every agreement or promise enforceable by law is a contract. ii) SALMOND :-Contract is an agreement creating defining obligations between parties. A contract is an agreement enforceable by law. An agreement is the prime stage of the contract. If agreement is enforceable by law or if agreement is recognised by law then it will become a contract

otherwise not. It is basically based upon British Law because the Contract Act was passed by British Indian Govt., in 1872. To make contract an agreement it is essential that no contract is possible without an agreement, but we cannot say that all agreements are contracts. Section 2(y) of contract Act says that, “ Contract is an agreement enforceable by law.” All agreement e.g. to see cinema is not contract, if offer is accepted then it becomes promise. Promise is followed by consideration then it becomes agreement and if an agreement is enforceable by law then it becomes CONTRACT, see below :i) Proposal + acceptance = PROMISE ii) Promise + consideration = AGREEMENT iii) Agreement+ Enforceability = CONTRACT AGREEMENT :- Agreement 2(e) promise or set of promises forming the consideration with each other, is an agreement. PROMISE :- Promise is an important part of the agreement. A proposal when accepted becomes promise. PROPOSAL/OFFER :- According to section 2(a) when one person signifies to other his willingness to do or to abstain from doing anything with a view of obtaining the assent of that offer to such act or abstinence, he is said to make a proposal. ACCEPTANCE:- According to section 29(b) of contract act when the person to whom the proposal is made signifies his assent there to the proposal then it is said to be accepted. A proposal when accepted becomes promise. CONSIDERATION :- Section 2(d) of contract act defines consideration. Section 2 says that an agreement made without consideration is void unless :a) Natural love and affection. Sec.25 of contract act, the parties to the agreement must be standing in a near relationship to each other. The promise should be made by one party out of natural love and affection for the other. The promise should be in writing and

registered. b) Compensation for past voluntary services sec. 25(2) in case Sindha v.Abrahim-1895 Bombay : The promise to compensate though without consideration is binding because of this exception. The exception also covers a situation where the promise is for doing something voluntarily” c) Promise to pay time barred debt: Sec.25(3): The promise must be to pay wholly or in part a time barred debt i.e. a debt of which the creditor might have enforced payment but for the law for the limitation of suit. The promise must be in writing and signed by the person to be charged therewith. Case Gobind Das v. Sarju das-1908, Ganesh Prasad v.Mt. Rambati Bai-1942. ENFORCEABLE BY LAW :- in Indian Contract Act 2(h) it says that contract is agreement enforceable by law. If an agreement is enforceable by law then it is CONTRACT, otherwise merely an agreement. To make an agreement a contract in Indian Contract Act section 10, the following conditions must be fulfilled :1. Competent Parties :- Section 11 says, contract should be made with person who must be major and sound mind not disqualified by law. 2. Free Consent :- Section 14, says that consent must be free, when it is not caused by coercion, undue influence under section 16, fraud under section 17, misappropriation under section 18 and mistake under section 20. 3. Lawful consideration & object :- According to section 23, when agreements consideration or object are unlawful, they are void. 4. Not expressly declare as void:- The such agreements which are made without consideration or expressly declared to be void as per section (25) are no contract, these are as under:i) Agreement in restrain of marriage section-26. ii) Agreement in restrain of trade section-27.

iii) Agreement in restrain of legal proceedings section -28. iv) Agreement which is ambitious and uncertain sec.29. v) Agreement by way of wages section-30. vi) Agreement to do an impossible act section-56. 5.FORMALTIES PERFORMED IF NEEDED BY LAW:- The person by whom the contract must be performed time and place and performance opportunity of payment. Thus when these conditions are fulfilled then an agreement is made contract because these are enforceable by law. But some agreements are not made contract because they are not enforceable by law. These are :1. Social Agreement :- When agreements based only social relationship and parties, we cannot enforce these agreements by law, for example:A case Jones v/s Paday If ‘ A’ give invitation of dinner to ‘ B ‘ and ‘ B ‘ accept this but does not go to dinner then’ A‘ suffers damage after this. But ‘ A ‘ cannot file a sue against ‘ B ‘ because it is Social Agreement which is not enforceable by law. FAMILY LAW:- Family law are not made contract as in the case of : Balfour v/s Balfour:- In this case the defendant who was employed in Govt.,job in Ceylon went to England with his wife on love. For health reasons the wife was unable to return to Ceylon. The husband promised to pay 30 ponds per month to his wife as maintenance for the period she had to live abart. The husband failed to pay this amount. The wife filed a suit against her husband for this money. The court held that this agreement is not enforceable by law. Case : Jones v/s Padavllon : Where a girl left service to join legal education on the promise of her mother to stand the expenses. It was held to be a family ...