3A Law of Contract

Given:
- Ramesh sells his bike to Suresh for Rs. 50,000/-.
- The market price of the bike is Rs. 65,000/-.
- The transaction is between friends.

Concept/Legal Provision:
Under the Indian Contract Act, 1872 (ICA), Section 2(d) defines consideration as something done, abstained from, or promised at the desire of the promisor. Section 25 of the ICA states that an agreement without consideration is void. However, the law does not require consideration to be adequate — it only requires that consideration must be real and of some value in the eyes of law.

Further, Section 10 of the ICA lays down the essentials of a valid contract:
1. Free consent of parties
2. Competency of parties
3. Lawful consideration
4. Lawful object
5. Not expressly declared void

Analysis:
- The consideration here is Rs. 50,000/-, which is a real and tangible amount of money. The law does not mandate that consideration must be equal to the market value of the subject matter.
- The fact that the bike's market price is Rs. 65,000/- does not make the consideration inadequate in the legal sense, as long as both parties have freely consented to the price of Rs. 50,000/-.
- There is no indication of coercion, undue influence, fraud, or misrepresentation.
- Both parties appear to be competent to contract.
- The object (sale of a bike) is lawful.

Conclusion:
The agreement between Ramesh and Suresh is valid and enforceable under the Law of Contract. Inadequacy of consideration alone does not make a contract void, provided the consent was freely given. As held in various judicial interpretations of the ICA, courts will not question the adequacy of consideration so long as it exists and consent is free.

Given:
- D is a minor.
- D borrowed money from M and executed a mortgage of his property in favour of M.
- D subsequently sued for cancellation of the mortgage.

Concept/Legal Provision:
Under Section 11 of the Indian Contract Act, 1872, every person is competent to contract who:
1. Has attained the age of majority (18 years as per the Indian Majority Act, 1875),
2. Is of sound mind, and
3. Is not disqualified from contracting by any law.

A minor is not competent to contract. Any agreement entered into by a minor is void ab initio (void from the very beginning). This was firmly established in the landmark case of Mohori Bibee v. Dharmodas Ghose (1903), where the Privy Council held that a mortgage executed by a minor is void and cannot be enforced.

Analysis:

(i) Validity of the Mortgage Contract:
- Since D is a minor, he lacks the legal capacity to enter into a contract.
- The mortgage executed by D in favour of M is therefore void ab initio.
- D's suit for cancellation of the mortgage will succeed, as the contract was never legally valid.

(ii) Recovery of Money by M:
- Since the contract is void, M cannot sue D for recovery of the loan amount on the basis of the contract.
- A minor's agreement being void means no obligations arise from it — neither can the minor be asked to repay the money nor can the mortgage be enforced.
- However, under Section 65 of the ICA (restitution), if a person received any advantage under a void agreement, they must restore it. But courts have generally held that Section 65 does not apply to minors because a minor was never competent to contract in the first place.
- M may, in some circumstances, seek relief under the doctrine of restitution in equity (not under contract law), but this is limited and uncertain.

Conclusion:
- The contract of mortgage is not valid — it is void ab initio.
- D's suit for cancellation of the mortgage will succeed.
- M cannot recover the sum advanced to D through contractual remedies, as the law does not allow enforcement of a contract against a minor. M bears the loss due to his own negligence in lending money to a minor.