Question

Principle: Every person, who is of the age of majority, is competent to contract according to the law to which he is subject.

Facts: A minor mortgaged his house in favour of Thakur Das, a money lender, to secure a loan of Rs. 20000. A part of this, i.e. Rs. 10500 was actually advanced to him. While considering the proposed advance, the attorney who was acting for the money lender, received information that the plaintiff was still a minor. Subsequently the minor commenced an action stating that he was underage when he executed the mortgage and the same should, therefore, be cancelled. He prayed for setting aside the mortgage. The mortgagee money lender prayed for the refund of Rs. 10500 from the minor.

• A. As a minor's contract is void, any money advanced to a minor can be recovered.
• B. A minor's contract is void ab initio, any money advanced to a minor cannot be recovered.
• C. A minor's contract is voidable; any money advanced to a minor can be recovered
• D. Advanced money can be recovered because minor has given wrong information about his age.

Hint:

Ask whether the minor ever had competence to contract, or whether he had it and lost it. The answer decides between void ab initio and voidable, and that in turn decides the refund.

Answer 1

The Correct Option is B

Step 1: Understanding the Question:
A minor mortgaged his house and received Rs. 10500. He now wants the mortgage cancelled, and the money lender wants his money back. Two separate outcomes are being asked about, the fate of the mortgage and the fate of the Rs. 10500.

Step 2: Key Formula or Approach:
The Principle says every person who is of the age of majority is competent to contract. Read the sentence carefully. Competence is tied to majority. Turn it around and a person below the age of majority is not competent to contract at all. Competence is not something a minor has and then loses, it is something he never had. An agreement made by a party who was never competent is void from the very beginning, that is, void ab initio.

Step 3: Detailed Explanation:
Apply that to the mortgage. The mortgagor was a minor on the day he executed it, so he was outside the class of persons the Principle makes competent. The mortgage never became a contract in the eye of law. There is nothing to enforce, and the court will set it aside.
Now apply it to the Rs. 10500. The money lender wants a refund. But a refund can only be ordered on the strength of some contract, and here the whole transaction is a nullity. If the court ordered the minor to repay, it would be enforcing the very agreement that the law says never existed. So the money lender cannot recover the sum.
The facts add one more useful detail. The lender's own attorney was told, before the advance, that the borrower was still a minor. So the lender went in with knowledge, and cannot say he was misled.

Step 4: Checking the wrong options:
Option (A) starts correctly by calling the contract void, then contradicts itself by allowing recovery. If the agreement is a nullity, there is no legal footing for a refund.
Option (C) calls the contract voidable. Voidable means valid until one side cancels it, which would give the minor's agreement legal life it never had under the Principle.
Option (D) rests on a misrepresentation of age, but the facts say the attorney already knew the borrower was a minor, so there was no deceit that the lender acted upon.

Step 5: Final Answer:
A minor's agreement is void ab initio and the Rs. 10500 cannot be recovered. That is option (B).