Beyond 18: Rethinking Capacity in Indian Contract Law.

Imagine you are a 17.9-year-old freelancer who has built a modest online presence and has secured a few clients or have just landed a paid deal with a startup. The work is real and the pay is fair so you decide to sign a contract. But here’s the catch, the contract that you just signed is void ab initio (void from the start). Not voidable, not questionable but completely without any effect. Why? Because under Indian Contract law, you’re not 18, and that single fact makes you incapable to enter into any binding contract. It does not matter if you understand the terms and conditions, the work profile, the law does not see you as a capable young adult but as a minor who lacks capacity.

This raises an urgent question: In an age where teenagers (minors) are creating (monetizing) content, taking up remote internships, freelancing online and even launching businesses, how appropriate is it to treat all minors as legally incapable of understanding contract? And is it fair to perceive a 17.9-year-old and a 12-year-old minor under the same blanket rule? This paper argues that the treatment of minors under the Indian Contract Law is excessively rigid and somewhat outdated and that it must evolve to account for the realities of economic participation by minors in the 21st century.

The Law as it stands today: One age fit all Under Section 11 of the Indian Contract Act, 1872, only those individuals who are of the age of majority, are of sound mind and are not disqualified by law are competent to contract. The age of majority is defined under Section 3 of the Indian Majority Act, 1875, as 18 years (or 21 years in case of court- appointed guardianship). The language is clear, until a person is 18 or turns 18, they cannot legally enter into a contract. This doctrinal clarity was given in the landmark judgement by the Privy Council in Mohori Bibee v. Dharmodas Ghose (1903) 30 IA 114. In this case, a minor executed a mortgage in favor of a moneylender. The court held that the agreement was void ab initio and could not be enforced by either of the parties. The privy council ruled:

“A contract with a minor is void ab initio… The minor’s promise does not give rise to any legal obligation.” This decision has become a centre of how Indian law treats minors’ contracts. No matter how mature or informed the minor may be , the agreement is deemed legally non-existent.

Even after attaining majority, the individual cannot ratify the agreement. In Subramanyam v. Subba Rao, AIR 1948 Mad 91, the Madras High Court held that:
“A void agreement cannot be made valid merely because the minor, on attaining majority, expresses a desire to carry it into effect”. This Blanket Rule allows for no exceptions and no gradation of capacity. Whether a minor is nine or on the cusp of turning eighteen, their contractual position remains the same.

Where the Law and Reality Clash.

 This one size fits all legal approach is increasingly misaligned with the lived experience of modern minors. In todays economy, individuals between the ages of 16-18 often possess significant economic agency. Many are freelance writers, graphic designers, coders, social media influencers or content creators on monetized platforms. Yet, why is it that these economically active minors find themselves without legal standing? As K. Swaminathan and M. Surana observe:

“The Indian contract regime, by treating all minors alike, denies the possibility that an older minor may possess sufficient maturity to understand and participate in contractual relations.^[1]”

This legal vacuum generated several unfair outcomes:

• Minors who act in good faith cannot enforce their rights.
• Adults avoid getting into a contract with minors altogether to mitigate the risk.
• Minors can take advantage of their legal incapacity by accepting benefits and later disowning obligations.

Equity and Restitution in Indian Case Law.

While Mohori Bibee remains a binding precedent, Indian courts have often cited Leslie v. Sheill (1914) 3 KB 607, a UK case where a minor fraudulently borrowed money and then refuse dot repay. The court refused to enforce the contract but held:

“To enforce restitution in such a case is not to enforce the contract, but to prevent the minor from retaining an unjust advantage.^[2]”

From cases like Srikakulam Subrahmanyam v. Kurra Subba Rao, AIR 1948 Mad 213 or Raghava Chariar v. Srinivasa, (1916) ILR 39 Mad 308, we understand that Indian courts are aware of the doctrine’s rigidity and attempt to mitigate injustice through peripheral relief. However, they remain bound by Mohori Bibee, and cannot grant full enforceability to minor’s contracts.

A workable middle path.

India must reconsider its doctrinal rigidity and adopt a more pragmatic framework. A workable middle path would:

• Permit beneficial contracts of service, education, and digital work involving minors who are aged 16 and above.
• Allow judicial discretion in determining whether a minor has really understood the contract and whether it was in their interest.
• Recognize the concept of ratification upon majority. (subject to safeguards)
• Apply the doctrine of restitution more expansively, including cases involving personal liability where the minor has clearly benefited but aced dishonest.

These changes would not only align Indian law with global standards but also empower a growing section of minors who are economically active and capable of informed consent.

Conclusion

The current framework of Indian Contract law is ill-suited to a world where teenagers are working independently. By maintaining a blanket rule for minors, Indian law not only deprives capable minors of legal recourse but also created opportunity for exploitation and inequity. Contracts are not just legal tools but are instruments of agency, autonomy and economic participation. The future of Contract law lies in acknowledging that capacity is not binary, and that responsibility when nurtured begins well before the 18^th birthday.

[1] Contracts with Minors: A Comparative Analysis, JILI, 2022

[2] Leslie v. Sheill (1914) 3 KB 607

[3] Mohori Bibee v. Dharmodas Ghose (1903) 30 IA 114

[4] Subramanyam v. Subba Rao, AIR 1948 Mad 91