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Tuesday, 9 August 2011

Discuss the position of minor in business contract or Describe the law relating to the minors act

Minor's Position In The Contract Act or Effects Of Law On Minor Agreement :-

Any person who has not attained the age of eighteen tears, is minor in the eye of law.

A minor has no capacity to enter into contract. His agreement is absolutely void. The contract act very clearly says that the parties to a contract must be competent to contract. A person is a competent who is of the age of majority. An agreement entered into by a minor is not enforceable at law.


REASON :-
Law is a guardian and it protects the minor against his own in-experience and improper acts made in the early years of life. A minor is supposed to be incapable of judging what is good and what is bad for him.


1. Minor and Equitable Consideration :-
A minor is not liable to perform what he has promised to do under the agreement not to repay the money that he has received under it. According to the law a minor can not be compelled to compensate for any benefit received by him under his agreement which is void.


2. Estoppel Case :-
Estoppel means when someone makes an other person to believe that a particular thing or fact is true. Then later on he can not be allowed to deny the truth of that thing.

Example :- Mr. Kashif a minor induces Miss. Sheela to enter into a contract with him by a fraudulent misrepresentation that he is of full age. Now after attaining the age of majority, he says that he was minor at the time of entering into contract. No doubt Mr. Kashif deceived Miss. Sheela but a minor cannot be stopped from setting up defence of his infancy.


3. Rules About Partnership :-
A minor cannot become a partner, but with the consent of all other partners, he can be admitted in the benefits of the partnership. He is not liable only upto his shares in the firm.


4. Rules About Favourable Agreement :-
A minor can take benefit of that agreement which is made for his benefit.

Example 1 :- Mr Karmu borrows the money from Mr. Nutwar a minor and executes a mortgage of a house in favour of Mr. Nutwar (a minor) then Mr. Nutwar can enforce the mortgage as it is in favour of the minor.

Example 2 :- If Mr. Nutwar a minor borrows the money from Mr. Karmu and executes a mortgage of a house in a favour of Mr. Karmu then Mr. Kermu cannot enforce the mortgage as it was executed by the minor.

Example 3 :- In case of promissory notes bonds and bill of exchange executed by a minor are not enforceable by law, if these are against the benefit of the minor. On the other hand minor may enforce a promissory note or bond executed in his favour.


Note : If a guardian purchases an immoveable property on behalf of the minor the contract is valid.


5. Rules About Agent :-
A minor can be an agent. On behalf of the principal he may enter into contract with the third party. He can make his principal responsible by his acts. But he himself is not liable to his principal.


Note : No doubt a minor cannot enter into a valid contract but minority does not affect adoption, marriage dower and divorce.


6. Minors Surety :-
In case of contract guarantee an adult stands surely for minor. In this case minor is not awarded but adults is liable under the contract.

Example :- Mr. Nadir a minor makes a contract with Mr. Riaz. Mr. Noor stands surety for Mr. Nadir. The contract is valid.


7. Parents Position :-
The parents of minor are not liable for agreements made by their minor. The parents can be held responsible of the minor acts as their agent.

Example :- Mr. Agha send his son to Mr. Noor a minor to buy goods from Mr. Habib. Mr. Noor buys goods but Mr. Agha who is father is responsible for payment.


8. Minor & Negotiable Instruments :-
A minor can draw and deliver the negotiable instruments. He is not liable but all the other parties to the instruments are liable.

Example :- A minor draws a bill on Y. Y accept the bill. S endorses it to K. The bill is valid.


9. Case Of Insolvency :-
In this case minor cannot be declared insolvent. If he has no property then payment cannot be recovered.


10. Adult and Minor Agreement :-
If the above two enter in to the agreement with the third party, the adult will be liable but minor will be not responsible.

Example :- The Mr. Jacky minor and Mr. Arif adult make an agreement with Mr. Nash to purchase a factory. The contract is valid.


11. Company Shares :-
A minor cannot become the share holder of the company. But in case of fully paid up shares a minor can become a shareholder of the company.

Example :- Jacky has fully paid up shares in a company. He dies and leaves Mr. Anderson a minor as a legal representative. The company is bound to transfer the shares to Mr. Anderson.


12. Necessaries of Minor :-
A person who provides the necessaries to the minor is entitled to recover from the property of the minor. If the minor s not liable personally.

Example :- Mr. Vitory supplies necessaries to Mr. Kim a minor for his life. Mr. Vitory can recover the amount from Mr. Kim's property. If property is not available then Mr. Kim is personally not liable.


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