Felthouse vs. Bindley
EWHC CP J35, 11 CB (NS) 869, 142 ER 1037
Case Summary
FACTS
Dharmodas Ghose, a minor, mortgaged his property to secure a loan from his uncle, Brahmo Dutt. The mortgage was later sold to the plaintiff, Mohori Bibee. At the time of entering into the contract, Dharmodas Ghose was a minor, meaning he was below the age of 18. The representative of Brahmo Dutt was fully aware of his legal incompetence to enter into contracts or mortgage his property. Dharmodas Ghose and his mother initiated legal action against Brahmo Dutta, arguing that the mortgage executed during Dharmodas's minority was void and improper, requiring the contract's revocation.
During the proceedings, Brahmo Dutta passed away, and the appeal was continued by his executors.
The plaintiff contended that no leniency should be granted, alleging that the defendant had knowingly misrepresented Dharmodas's age.
The Trial Court ruled that the mortgage contract was void since it was entered into by a minor.Brahmo Dutta, dissatisfied with the verdict, appealed to the Calcutta High Court.The Calcutta High Court upheld the Trial Court's decision, agreeing that the mortgage contract was void and dismissed Brahmo Dutta's appeal.
ISSUES
Whether the deed was void under Sections 2, 10 and 11 of the Indian Contract Act, 1872 (ICA) or not?
Whether the defendant was liable to return the amount of loan which he had received by him under such deed or mortgage or not?
Whether the mortgage commenced by the defendant was voidable or not?
RELEVANT PROVISIONS
Law Of Estoppel: In Felthouse v. Bindley (1862), the Law of Estoppel was not directly applied, but the case illustrates that silence cannot be considered acceptance in contract law. Estoppel prevents a party from denying a statement or conduct that led another party to rely on it. However, in this case, Felthouse assumed acceptance of his offer due to Bindley’s silence, which the court rejected, reaffirming that acceptance must be communicated.
Section 64 and 65 of Indian Contract Act, 1872: Sections 64 and 65 deal with the consequences of contract rescission. Section 64 states that when a party at whose option a contract is voidable rescinds it, they must restore any benefits received. Section 65 mandates that when an agreement is discovered to be void, any benefits received must be restored. In Felthouse v. Bindley, there was no binding contract, so these provisions did not apply, but they emphasize restitution in contract law.
Refund under Specific Relief Act, 1877: Under the Specific Relief Act, 1877 (now largely replaced by the 1963 Act), a refund could be sought if a contract was rescinded or found unenforceable. In Felthouse v. Bindley, since no valid contract was formed due to lack of acceptance, the case did not involve a refund claim. However, if a party had partially performed under a mistaken belief of a contract, they could seek restitution under the Act’s principles.
JUDGEMENT
After carefully examining the facts of the case, the Privy Council ruled that the agreement made with a minor is void ab initio, which means it is void from the very beginning. The court also addressed the defendant’s arguments.
Firstly, the court in Mohori Bibee vs Dharmodas Ghose determined that the law of estoppel would not apply in this case since Brahmo Dutta’s attorney had knowledge of Dharmodas’s minority status.
Secondly, the court clarified that Section 64 and 65 of the Indian Contract Act would not apply because there was no valid agreement in the first place and for these sections to be applicable, the contract must be between competent parties.
As a result, the court in Mohori Bibee vs Dharmodas Ghose established a precedent that agreements with minors are void ab initio based on this case.
-Kush Kuthiala
Himachal Pradesh National Law University.
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