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Contractual Capacity of Minors in pakistan

Farqaleet Khokhar*

I. Introduction

Section 11 of the Contract Act 1872 (“1872 Act”) provides the statutory backing to the capacity of the parties competent to create a legally enforceable contract.[1] Section 11 of the 1872 Act reads as follows:

“Every person is competent to contract who is of the age of majority according to the law to which he is subject and who is of sound mind, and is not disqualified from contracting by any law to which he is subject”.[2]

Under Section 11, the policy of law has categorised two kinds of persons that are incompetent to contract, i.e., minors and unsound-minded persons. This case note is limited to a critical analysis of the contractual capacity of minors. The legal disability of the minor is because of the tenderness of age and immaturity of mind, which causes him to fail to develop a specific level of understanding to form a rational judgment to protect his interest in contract formation. Therefore, the minor is incompetent in consenting to the contract, which is sine qua non for a valid contract.[3]

Thereby, this case note scrutinises the recent judgment of the Supreme Court of Pakistan on significant issues relating to the contractual capacity of minors in Yar Muhammad Khan v Sajjad Abbas (“Yar Muhammad Khan”).[4] The first issue highlights when a minor attains the age of majority to create a legally enforceable contract. The second issue highlights the effect of a contract concluded by the guardian of a minor. The third issue oscillates between the question “limitation periods” to bring the claim to the court when a minor who attains majority desires to avoid a specific transaction. In each segment, a critical and comparative appraisal of Pakistani law with Islamic law and English law is provided for the sake of completeness.

II. Facts of the Case

The real brother of two claimants prepared a fictitious general power of attorney and got it registered with the relevant authorities on September 15, 1976, and he appointed himself as the claimants' attorney. He fraudulently sold the land of the claimants comprising 116 Kanals and 7 Marlas in Kanipur village, Tehsil Depalpur, District Okara, for consideration of PKR 145,437.50 by exercising power to sell the land granted to him through a general power of attorney. The claimants brought a claim and asserted that they were minors at the time of execution of the general power of attorney and sale deed, therefore, the court should declare the sale made on their behalf void.[5]

III. Decision and Comment

The Trial Court dismissed the plea of minors on the ground that their claim was time-barred. They failed to bring the claim within three years of attaining a majority as provided under Section 6 of the Limitation Act 1908 (“1908 Act”).[6]

The Appellate Court set aside the sale on the ground that at the time of execution of the general power of attorney and sale deed, the claimants were minors. However, the Appellate Court directed the minors to return the sale consideration and additionally pay PKR 300,000, which the purchasers spent on improving the land after its sale.[7] The revision was filed in the High Court, where the judgment of the Appellate Court was maintained to the extent of setting aside the sale, but the High Court allowed a revision concerning the return of sale consideration and additional amount.[8]

Feeling aggrieved by the High Court, the matter was brought to the Supreme Court. The Supreme Court considered this issue as a matter of the minors’ interest. The Supreme Court stated that Section 11 of the 1872 Act explicitly stipulates that an individual who attained majority will be able to enter into a contract according to law.[9]

A. Determination of Age of Majority

In Yar Muhammad Khan, the Supreme Court stated that under Pakistani law, the Majority Act 1875 (“1875 Act”) specifies the age of majority of an individual in Section 3. In simpliciter case, the minor attains majority at 18 years. Additionally, the minor under the superintendence of a guardian attains majority at the age not earlier than 21.[10]

However, in Islamic law, the capacity or Ahliyyah to conclude the contract is “aliyyah al ada.” Intellect and discretion are two foundations of aliyyah al ada. Muslim jurists relate the development of intellect with puberty and associate the majority of a person with fully developed intellect (aql) and puberty (bulugh).[11] Hence, when a person attains puberty, it is presumed that his intellect has been completely developed. The person’s puberty is determined by physical manifestation. For instance, menstruation in females and ejaculation in males. The presumption of aql attached to the bulugh is rebuttable and if it is proved that aql has not developed fully on bulugh, then he would be declared not to have the complete capacity for execution.Therefore, the pubescent male or female with developed aql would have the capacity to execute the valid contract.[12]

To that end, in the Federal Shariat Court of Pakistan (“Shariat Court”), the conformity of Section 3 of the 1875 Act, read with Section 11 of the 1872 Act with Islamic injunctions, was challenged in the landmark case of Fayyaz v. Pakistan, as Article 203-B(c) of the Constitution of Islamic Republic of Pakistan 1973 (“1973 Constitution”) gives jurisdiction to Federal Shariat Court to scrutinise laws on the touchstone of Islamic injunctions laid contained in the Holy Quran and Sunnah of Prophet Muhammad.[13]

The main issue discussed in the Shariat Court was that the age of 18 mentioned in Section 3 is a source of botheration for the father who has to pay the maintenance to his child until the age of 18 years despite his child having attained puberty much earlier according to Islamic injunctions. Therefore, according to Muslim jurists' view, a person should be declared an adult and puberty should be a determinant of a person’s majority.

The Shariat Court stated that it has great regard for the Muslim jurists’ opinions. However, as per constitutional requirements, it cannot declare any provision of law repugnant to injunctions of Islam by merely following the Muslim juristic opinions. Consequently, the Shariat Court held that Section 3 of the 1875 Act, read with Section 11 of the 1872 Act, is not inconsistent with Islam.[14]

The Shariat Court reasoned that it failed to pinpoint any particular verse or passage of the Holy Quran or specific insight from Hadith on one’s capacity to execute a valid enforceable contract. In addition, the external physical manifestation of reaching puberty are inadequate symptoms to determine whether the concerned individual has attained maturity or majority. Despite these symptoms, in certain cases, the Quran in “Surah Annoor’s Verse 59” and “Surah Annisa’s Verse 6” has considered the psychological, emotional and mental aspects as a fundamental basis in that regard.[15]

The Shariat Court highlighted a significant element that the ages in reaching pubescent vary from person to person and area to area. There are no definite and specified criteria for the precise determination of who reached adolescence and on which date. This is the main factor that causes the divergence and inconsistency in the juristic opinion about the age of puberty. The Shariat Court went further by saying that, to prevent the parties from complications and controversies about puberty determination, it is appreciable that a particular age has been fixed by Pakistani legislature, due to which the ones who enter litigations in this regard are suitably stick to definite legal provisions to follow the same.[16]

It is submitted that, following the Muslim jurists’ view, puberty is not a determinant of capacity but an indicator or sign of intellect. Hence, the determinant of the capacity to create an enforceable contract shall be assessed according to one’s intellect in the views of jurists. The Shariat Court has appropriately highlighted the fact that it is difficult to determine the uniform and precise criteria or time for the onset of puberty. For instance, every area has its own environmental conditions. The climate and ecological exposures influence pubertal timing.[17] If, however, the ascertainment of criteria and time of puberty becomes feasible for some reason, the subsequent assessment of whether an individual has attained intellect to a level required for capacity post-adolescence is more difficult.

In addition, in the Pakistani legal landscape, the merits of the cases are decided long after the institution of the case. For instance, the claim in Yar Muhammad Khan was brought on September 21, 1991, while its merits were decided approximately 30 years later in 2021. It would become difficult to determine whether a specific individual had sufficient intellect at a particular time in the past while executing a contract, which would make the case more complicated.

However, psychologists also relate the maturity of judgment to age. Human psychology states that cognitive and non-cognitive factors impact the maturity of an individual’s judgment. Non-cognitive factors include spontaneity, social influence and sentiment or emotion, while cognitive factors include the capacity to understand, think, and reason.[18] Non-cognitive factors are further divided into temperance, perspective and responsibility. The interaction between both factors causes “mature judgment”. However, the absence of any of these factors results in the impairment of the decision-making process.[19]

Psychologists think that by the age of 16, cognitive factors are not fully but sufficiently developed, while the non-cognitive factors of responsibility and perspective are fully developed by the age of 18 but temperance is in the phase of development even by the late twenties.[20]

Psychologists' perspectives are further contextualised into two contexts. First, decisions are made by individuals under social or emotional influence. Second, decisions are made by an individual in a situation where the advice of an expert is available, or there is space for deliberation and reflection. Therefore, decisions are made free from social or emotional influence. Psychologists suggest that in the first context, 18 is a reasonable legal age to make a mature judgment, while in the second context, even 16 is sufficient.[21] However, it would not be easy to prove whether or not an individual made the decision to conclude the contract under social or emotional influence.

The association of the majority with a fixed age creates certainty. However, the existence of two different ages of a majority—i.e., 16 and 18 as stated by physiologists, and 18 and 21 in the Pakistani legal landscape— appears problematic, inconsistent and uncertain. For instance, if the maturity of the mind is tested by fixing a specific majority age, it is hard to rationalise and appreciate as to how such maturity of mind is attained in one case at 18 years of age and in other cases the same maturity is attained at 16 because there was the presence of expert advice or at 21 years merely because the guardian is appointed for such person or the property of such person is under the supervision of Court of Wards.

It cannot be denied that when the age of majority is postponed till 21 years, the freedom of such minor to enter into any transaction is restricted, and such restriction does not follow the mandate of the 1973 Constitution. For instance, the freedom of a minor to deal with his property is restricted, and this restriction does not sit comfortably with Articles 18[22], 23[23], and 24 of the 1973 Constitution, which respectively preserve one’s freedom of trade and business, protect one’s property rights, and permit every individual to hold, acquire and dispose of his property and debar anyone depriving any individual of his property.[24]

The English legal regime has adopted 18 years as the majority age in all cases. Initially, it was 21 years, but Section 1 of the Family Law Reform Act 1969 has reduced the age of capacity from 21 to 18 years.[25] Bringing certainty in jurisprudence, in England, there is only one age of majority, i.e. 18 years to enter into a contract.[26] Therefore, in Pakistan, there is a need to reconsider this restriction that extends a person’s disability for three more years. Additionally, this restriction is an inconvenience as in the present Pakistani scenario, the concept of Courts of Wards has been almost extinct.

B. Effect of Contract by Guardian of Minor

In Yar Muhammad Khan, the Supreme Court held that a minor can neither create an agreement nor grant a power of attorney to someone to do so.[27] However, there is a long-standing principle that a guardian may facilitate the creation of a valid contract on behalf of a minor, and has the authority to alienate a minor’s assets.[28]

Based on this principle, the question arises whether a brother can be the minor’s guardian. The Lahore High Court in Iftikhar v Raiz-ul-Haq held that the “father, executor appointed by the father’s will, father’s father [and] the executor appointed by the will of father’s father” can be the guardian of a minor.[29] Therefore, the minor’s brother could be his guardian if he was appointed as a legal executor in any of the wills. However, in any case, all these guardians are required not to enter into defaulted transactions on the minor’s behalf. If these guardians enter into a defaulted transaction, the court, being the State’s representative, may appoint a guardian in order to protect the minor’s interests. In addition, a de facto guardian, which will neither be a natural guardian, nor a guardian appointed by the Court, can also voluntarily take charge of the assets of the minor. Such a guardian will not be more than the custodian of such assets.[30]

However, there seems to be inconsistency in the Pakistani courts’ jurisprudence with regard to the “defaulted transaction” entered into by a guardian on a minor’s behalf. Initially, the Pakistani courts held that the transaction would not be defaulted if the guardian sold the minor’s property at a price double of its value.[31] This standard was declined, and a new approach was adopted due to the impossibility of selling any property as high as double of its value. According to the new approach, the transaction must show that the aim of the guardian was not to exploit the minor’s property. This new approach relies on the highly subjective factor of the guardian’s intention in such a transaction. Under this approach, the transaction will be defaulted if the guardian entered the transaction mala fide.[32]

Islamic law considers the contract enforceable if it is concluded by the guardian on the minor’s behalf.[33] However, the guardian is not allowed to create a harmful contract such as the execution of trust or gift on the property of the minor or lending the minor’s money to someone else. However, as the Qazi (Judge) has the power to recover the loan, he can extend such a loan from the minor’s property.[34]

With the permission of the guardian, the minor can conclude a contract oscillating between the risk of loss and profit because the suggestion or advice of the guardian vanishes the possibility of harm. In such a transaction, the minor acts like an adult, and this would mean that the transaction has been concluded by the guardian. The transaction’s validity shall be suspended till the permission of the guardian if the minor concluded such a transaction without the guardian’s permission.[35]

The fundamental rule is that a minor lacks the capacity to give consent in order to conclude a contract, as enshrined in Section 11 of the 1872 Act.[36] Hence, the regulatory force to examine the enforceability and validity of the minor’s contract is based on the minor’s incapacity to give free consent. Permitting the guardian to conclude the contract on the minor’s behalf is another but a different concept that does not change the capacity of the minor from nonexistence to existence. If the minor concludes a contract with the permission of the guardian, and the essential terms of the contracts are negotiated by the guardian – including timing, price and delivery – in such cases, rather than the minor, it would be the guardian who would be actually entering into such a contract but on the minor’s behalf. Therefore, neither Islamic nor Pakistani law permits the minor to conclude the contract; however, permission is given due to or to the guardian because he applies his mind to examine the transaction’s pros and cons. In both regimes, the guardian is restricted from concluding the contract if it is defaulted or non-beneficial for the minor.[37]

C. Limitation Period

Pakistan has a well-established principle that remedies are required to be pursued within a prescribed period of limitation.[38] If a minor, after attaining the majority, feels to avoid any specific arrangement that was concluded by his guardian on his behalf when he was a minor, he is required to challenge such transaction in the court within three years of reaching majority.[39] This ground was invoked by the defendant in Yar Muhammad Khan as he argued that once a person reaches majority, the suit should be instituted within the extended period of three years as provided in Article 6 of Limitation Act 1908 (1908 Act) read with the first schedule. He added that the first minor was born on June 29, 1970, and he attained majority on June 28, 1988, while the second minor was born on February 1963 and reached majority on February 1981; the present suit was filed on September 21, 1991. Hence, it was time-barred.[40] The Trial Court agreed with the defendant but this argument was rejected by the Supreme Court.

The Supreme Court highlighted the distinction between the limitation period of the agreement executed by the minor (first category) and the agreement concluded by the natural guardian or a guardian appointed by the court (second category). The first category of cases will follow the scheme of the 1908 Act, which requires that the minor challenge the transaction’s validity within three years. In the second category, if the transaction is defaulted, the contract will be void ab initio; however, it can be challenged within a “reasonable time” when the minor gets adequate knowledge of the defaulted transaction, but challenging such a transaction cannot be postponed indefinitely.[41]

Yar Muhammad Khan falls into the second category, and the minors were required to challenge the default transaction within a reasonable time. The Supreme Court examined the date for challenging the defaulted transaction, i.e., the date of institution of this case, and construed it to be within a reasonable period.[42]

However, as it has been established that the contracts falling in the second category are void ab initio; it seems less rational why the obligation of reasonable time has been prescribed to challenge a contract that has already been declared void ab initio. Moreover, the case of Yar Muhammad Khan was filed on the date when the age of the second claimant (minor) was 28.7 years old and the first claimant (minor) was of 21.7 years; that means ten years and seven months have passed since the second minor reached majority, and three years and seven months have passed after the first minor attained majority. It is not clear which computational formula has been used by the Supreme Court to compute reasonable time, resulting in the same effect of reasonableness to three years and seven months in the first minor’s case and ten years and seven months in the second minor’s case.

IV. Conclusion

Pakistani jurisprudence identifies the competence of a person to execute a contract with two ages, i.e., 18 and 21 years; psychologist also relates maturity of judgment with two ages, i.e., 16 and 18 while Muslim jurists have related it with discretion that is fully developed with puberty. The association of the majority with a certain age is more convincing. The Supreme Court in Yar Muhammad Khan has significantly discussed the matter of the contractual capacity of a minor. However, the judgment has opened doors for further discussions on the determination of a single age of majority to bring more security and certainty by considering one specific age of majority in all cases, like the English legal regime. Moreover, the fundamental rule is that the minor is incompetent as he has no capacity to consent to conclude the contract. However, on the minor’s behalf, a guardian can create the contract, but neither Pakistani nor Islamic law gives general permission to the guardian to conclude every contract on the minor’s behalf. In both regimes, the guardian can only conclude beneficial contracts on the minor’s behalf.

* Corporate lawyer and a Gold Medallist based in Islamabad, Pakistan. The author can be reached at [email protected].

[1] Abdul Ghani v Mst. Yasmeen Khan (2011) 44 SCMR 837 (Pakistan).

[2] Contract Act, 1872, s 11, online: <https://pakistancode.gov.pk/english/UY2FqaJw1-apaUY2Fqa-a50%3D-sg-jjjjjjjjjjjjj>.

[3] Noorullah v Ghulam Murtaza (2024) 57 SCMR 150 (Pakistan); Mujtaba v Saddiq (2017) 18 YLRN (Lahore) 290 (Pakistan).

[4] Yar Muhammad Khan v Sajjad Abbas (2021) 54 SCMR 1401 (Pakistan) [Yar Muhammad Khan].

[5] Ibid at [1]-[2].

[6] Ibid at [2]; Limitation Act, 1908, s 6.

[7] Ibid at [3].

[8] Yar Muhammad Khan v Sajjad Abbas (2012) 64 PLD (Lahore) 115 (Pakistan).

[9] Yar Muhammad Khan, supra note 4 at [8].

[10] Ibid at [8]. See also Majority Act, 1875, s 3.

[11] Joseph Schacht, An Introduction to Islamic Law (Oxford: Clarendon Press, 1964) at 124-133; Ahmed M. Al-Zarqa, Al-Madkhal Al-Fikh Al-‘am, 6th ed (Dar al-Fikr, 1959) at 733.

[12] Abnul Humam & Wa Sharhuhu Abnu Amirul Haj, Al Taqreer Wal Tahbeer Fi Sharha Kitabut Tahreer (Matba Al Kubra Al Amiriyya, 1316) at 164.

[13] Muhammad Fayyaz v Pakistan (2007) 59 PLD (Federal Shariat Court) 1 (Pakistan).

[14] Ibid at [9].

[15] Ibid.

[16] Ibid.

[17] Marisa M. Fisher & Erica A. Eugster, “What is in our Environment that Effects Puberty?” (2014) 44 Reproductive Toxicology 7.

[18] Elizabeth S. Scott, N. Dickson Reppucci & Jennifer L. Woolard, “Evaluating Adolescent Decision Making in Legal Contexts” (1995) 19(3) Law and Hum. Behav. 221.

[19] Laurence Steinberg & Elizabeth Cauffman, “Maturity of Judgment in Adolescence: Psychosocial Factors in Adolescent Decision Making” (1996) 20(3) Law and Hum. Behav. 249.

[20] Ibid.

[21] Ibid.

[22] See Constitution of the Islamic Republic of Pakistan, 1973, art 18, online: <https://na.gov.pk/uploads/documents/1549886415_632.pdf> [Constitution].

[23] See Constitution, ibid, art 23.

[24] See Constitution, ibid, art 24.

[25] See Family Law Reform Act 1969 (UK), c 46, s 1.

[26] Hugh Beale, ed, Chitty on Contracts, 32nd ed (London, UK: Sweet & Maxwell, 2012), Part 3 Capacity of Parties.

[27] Yar Muhammad Khan, supra note 4 at [8].

[28] Sher Baz Khan v Mst. Malkani Sahibzadi Tiwana (1996) 48 PLD (Lahore) 483 (Pakistan).

[29] Iftikhar Ali v Raiz-ul-Haq (2023) 24 YLR (Lahore) 854 (Pakistan).

[30] See also Abdul Waheed Khan v Mst. Ruqia Bibi (2016) 38 CLCN (Peshawar) 147 (Pakistan) [Waheed v Ruqia]; Fasil v Mst. Khursheed Akhtar (2015) 67 PLD Sindh 46 (Pakistan).

[31] Hussain v Khan (1991) 13 CLC (Lahore) 640 (Pakistan); Haji Sharif v Abdur Rahman (2000) 22 CLC (Karachi) 4 (Pakistan).

[32]Dr Khalida Malik v Mst. Farida Malik (1994) 12 MLD (Quetta) 2348 (Pakistan.). See Yamin Khan v Rais Jhangli Khan (1999) 21 CLC (Karachi) 1755 (Pakistan).

[33] David Sutherland, The Indian Contract Act (Act IX of 1872) and the Specific Relief Act (Act I of 1877): With a Full Commentary (Calcutta: Thacker, Spink & Co, 1879) at 17.

[34]Humam & Haj, supra note 12 at 170.

[35] Ibn Abidin, Nasamat al-ashar fi manaqib wa-karamat al-awliya al-akhyar, Dar al-Kutub al-Ilmiyah; al-Tabah, 1198/1783 - 1252/1836 at 252.

[36] Khalid v District Judge (2022) 40 MLD (Lahore) 1363 (Pakistan).

[37] See generally, Waheed v Ruqia, supra note 30.

[38] Ghulam Qadir v Sh. Abdul Wadood (2016) 68 PLD Supreme Court 712 (Pakistan); Sher Muhammad v Mst. Fatima (2016) 34 MLD (Lahore) 185 (Pakistan); Irfan Ahmad v Ahmad Shah (2016) 38 CLC (Lahore) 114 (Pakistan); Muhammad Yousuf v Fazal Ellahi (2017) 35 MLD (Lahore) 1997 (Pakistan).

[39] Mahmood Khan v Muhammad Hasan (1991) 24 SCMR 1566 (Pakistan); Muhammad Hanif v Arshad Ali (2003) 23 MLD (Lahore) 568 (Pakistan); Siyar Khan v Ibrahim (2015) 35 MLD (Peshawar) 258 (Pakistan).

[40] Yar Muhammad Khan, supra note 4 at [5].

[41] Ibid at [9].

[42] Ibid at [9]-[10].