Explain the effect of contract made by the person not qualified to contract

For entering in to a valid contract the parties must be competent to contract Every person is competent to contract who is of age of majority, is of sound mind and is not disqualified from contracting by law Nature of minor’s agreement

  1. Void agreement
  2. Minor as a partner
  3. Minor as a beneficiary
  4. Minor as a agent
  5. Minor and insolvency
  6. Minor and ratification
  7. Contract by minor and adult
  8. Minor as member of company
  9. Surety for a minor
  10. Minor’s parent
  • Void Agreement Minor is a person who has not attained the age of majority (18 years). Agreement with minor is void from beginning because minor has no legal capacity to enter in to an agreement.  He is not liable to perform any act or promise under the agreement.
    Example Rashid enter in to an agreement with a minor Shahid, on the date of performance Shahid refuses to perform the contract. Rashid cannot sue Shahid because agreement with minor is  void.
  • Minor as a partner A minor cannot become a partner in profit and losses of a firm. However a minor can be admitted to the benefits of the firm only.
    Example Ali, and Shahid are partners in a firm they admitted a new partner sajid a minor in profits and loss of firm. This is a void agreement as minor cannot be admitted to profits and loss. Bashir and Nazir are partners in a firm; they admitted a minor Bilal in profits of the firm only. This is valid agreement
  • Minor as a beneficiary If an agreement is made for the benefit of minor then the minor can take the benefit of that  agreement. A minor can enter in to any agreement which do not required to bear any  obligation. A minor can enforce a promissory note which is prepared in his favor but he is not  liable. Example Sajid,  a  minor  delivered  goods  to  Habib  under  an  agreement.  Habib  refused  to  make Payment. It was held that minor can recover the price of goods
  • Minor as Agent A minor can act as an agent. But a minor is not responsible for any negligence. If a minor breaches any duty, he cannot be held responsible. Therefore the whole the risk goes to the principal.
    Example Ali appoints Munir a minor as his agent to sell his house to a third party. Munir makes an agreement to sale his house to sajid. The agreement is valid.
  • Minor and insolvency A minor cannot be considered insolvent because he is not liable to perform any obligations. Only his property is liable. If he has no property than the payment cannot be recovered
     Example Shahid a minor buys medicine from Riaz under an agreement. Shahid has no property. Shahidcannot be held responsible. He cannot be declared insolvent.
  • Minor and Ratification A minor cannot confirm those agreements that were formed during the age of minority. It is necessary that a fresh agreement should be made after attaining the age of majority.
  • Contract by minor and adult If a minor and major (adult) jointly enter into an agreement with other party, only major will be liable but a minor will not be responsible
    Example Khalid a Minor and adult jointly enter in to an agreement to purchase Ali’s house. In case of breach of contract only adult is liable but not minor.
  • Minor as Member of company A minor cannot directly buy shares of the company because he is not competent to contract. If parents of a minor are shareholders of a company, the company can transfer shares in favor of minor after the death of his parents.
    Example Jamaal holds share of a company. He dies and leaves Zain (His Son) a minor as his legal representative. Company is bound to transfer shares to M.
  • Surety for Minor When an adult gives surety in a contract of guarantee, only the adult is liable under the contract. Minor is not responsible for any obligation. Example Ali a minor makes a contract with waqas. Ahmed gives surety for Ali. The contract is valid.
  • Minor’s parents If an agreement is made by a minor than parents of minor are not responsible for the payment. The parents are responsible only when minor acts as an agent of his parent.
    Example Ali sends his son to buy goods from Jamaal, his son bought goods from Jamaal. Ali is liable to make payment.

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