Examine the validity of the following contracts as per the Indian Contract Act, 1872 giving reasons.
i) X aged 16 years borrowed a loan of ₹ 50,000 for his personal purposes. Few months later he had become major and could not pay back the amount borrowed, on due date. The lender wants to file a suit against X.
ii) Unit – 4
i) According to Section 11 of the Indian Contract Act, 1872, every person is competent to contract who is of the age of majority according to the law to which he is subject and therefore, a minor is not competent to contract and any agreement with or by a minor is void from the very beginning. A minor cannot ratify it on attaining the majority as the original agreement is void ab initio.
According to Section 68 of the Act, a claim for necessaries supplied to a minor is enforceable by law.
In the present case, X, the borrower, was minor at the time of taking the loan, therefore, the agreement was void ab initio. Attaining majority thereafter will not validate the contract nor X can ratify it. The loan was for personal purposes and not for necessaries supplied to him. Hence, the lender cannot file a suit against X for recovery of the loan as it is not enforceable by law.
Necessaries mean those things that are essentially needed by a minor. They cannot include luxuries or costly or unnecessary articles.
Exam Strategy Tip
When answering law questions in the CA Foundation exam, follow the "Provision -> Facts -> Conclusion" structure for maximum marks. Ensure to state the relevant sections where applicable to earn bonus marks from the evaluator.
Test your knowledge under timed conditions in our dedicated Writing Practice Mode. Get a feel for the real exam pressure.
Enter Writing Practice