4.1 Minors and Contracts
2 min read•july 22, 2024
Minors generally can't enter legally binding contracts due to their age and vulnerability. The law aims to protect them from exploitation and poor judgment. However, there are exceptions for necessities and beneficial agreements.
Minors can usually disaffirm contracts by communicating their intention and returning any consideration. Adults remain bound until but can recover remaining consideration if the minor backs out. These rules balance protecting minors with fairness to adults.
Minors and Contracts
Minors' capacity to contract
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- General rule: Minors lack capacity to enter legally binding contracts due to age (typically under 18 years old)
- Law seeks to protect minors from inexperience and immaturity
- Considered more vulnerable to exploitation and unfair dealings (high-pressure sales tactics, complex legal language)
- Aims to shield minors from consequences of poor judgment (impulsive purchases, long-term financial obligations)
Binding contracts for minors
- Contracts for necessaries bind minors for goods or services essential for health and well-being
- Includes food, clothing, shelter, medical care, and education
- Goods or services must be actually necessary, not just desired by minor (designer clothing vs. basic attire)
- Price must be reasonable and minor must not have legal guardian to provide necessaries
- may bind minors if they provide net benefit without imposing obligations or detriments
- Contracts for gifts or those securing advantages for minor (trust fund, scholarship)
Process of contract disaffirmance
- Disaffirmance allows minors to cancel or void most contracts, except binding ones (necessaries and beneficial contracts)
- Steps for minors to disaffirm:
- Communicate intention to disaffirm to other party through written notice or actions inconsistent with contract (refusing to make payments, returning goods)
- Return any remaining consideration (goods or money) received under contract, if possible
- Consideration consumed or destroyed may not need to be returned (used clothing, perishable goods)
- Disaffirm within reasonable time after reaching age of majority or after contract made (if still minor)
Adults' rights in minor contracts
- Adults bound by contracts with minors, even if minor later disaffirms
- Must perform obligations under contract unless and until minor disaffirms (deliver goods, provide services)
- If minor disaffirms, adult has right to recover any remaining consideration provided (returned goods, refunded money)
- May seek restitution for reasonable value of necessaries provided, even if minor disaffirms (medical bills, educational expenses)
- Cannot enforce specific performance of contract against minor who has disaffirmed (requiring minor to complete payments, continue services)
Key Terms to Review (15)
Beneficial Contracts: Beneficial contracts are agreements that provide advantages or benefits to one or both parties involved. In the context of minors and contracts, these types of contracts are significant because they may be enforceable even if a minor lacks the legal capacity to enter into a contract. The idea behind beneficial contracts is to protect minors from exploitation while allowing them to benefit from certain agreements that serve their best interests.
Capacity to Contract: Capacity to contract refers to the legal ability of individuals to enter into binding agreements. This ability is influenced by various factors, including age, mental competency, and intoxication levels, which determine whether a person can understand the nature and consequences of the contract they are entering into. When individuals lack capacity, the contracts they enter may be voidable or unenforceable, protecting those who may not fully grasp their contractual obligations.
Contracts for necessities: Contracts for necessities are legally binding agreements for goods and services that are essential for a person's basic living needs, such as food, clothing, shelter, and medical care. These contracts are particularly significant when entered into by minors, as they hold the minor to a higher standard of responsibility than typical contracts, allowing them to be enforceable even though minors generally have limited capacity to contract.
Corpe v Overton: Corpe v Overton is a legal case that established important principles regarding the enforceability of contracts made by minors. This case emphasized that contracts entered into by individuals under the age of majority are generally voidable at the discretion of the minor, reflecting the legal system's recognition of the need to protect minors from exploitation in contractual agreements.
Court approval: Court approval refers to the legal process in which a court reviews and validates certain actions or agreements, particularly those involving minors or individuals unable to enter contracts independently. This process is essential when minors are parties to a contract to ensure their rights and interests are protected, recognizing that they may not have the capacity to fully understand the implications of contractual obligations.
Disaffirmance: Disaffirmance is the legal right of a party, particularly minors, to void or cancel a contract that they have entered into. This principle is rooted in the idea that individuals who lack the capacity to enter into contracts, like minors, should be able to protect themselves from obligations they may not fully understand. Disaffirmance allows these individuals to escape potential liabilities and consequences arising from contracts made while they were not fully capable of understanding the implications.
Emancipation: Emancipation refers to the legal process through which a minor gains independence from parental control, allowing them to enter into contracts and make decisions without needing parental consent. This process is significant as it recognizes the ability of minors to manage their own affairs, acknowledging their maturity and capacity to make informed choices. Emancipation can be granted through court orders or through specific conditions that demonstrate a minor's ability to live independently and manage their finances.
Hawkins v. McGee: Hawkins v. McGee is a landmark case in contract law that addresses issues of damages and expectation in the context of a contract involving a minor. The case revolves around a surgical operation that went wrong, leading to the plaintiff, Hawkins, claiming damages against McGee, the surgeon. This case is significant because it highlights how the law treats contracts made with minors, especially regarding enforceability and the expectations that arise from such agreements.
Minor's liability: Minor's liability refers to the legal responsibilities and obligations that minors, typically individuals under the age of 18, have when entering into contracts. While generally, contracts made by minors are voidable at their discretion, there are specific instances where minors can be held liable, such as for necessaries or when they misrepresent their age. Understanding minor's liability helps in evaluating the enforceability of contracts involving minors and their rights under contract law.
Minors' Contracts Act: The Minors' Contracts Act is a legal framework that governs the validity of contracts entered into by minors, typically individuals under the age of 18. This act recognizes that minors may lack the capacity to fully understand and commit to contractual obligations, thus protecting them from exploitation. Under this act, contracts made by minors are generally voidable at their discretion, allowing them the option to affirm or reject the agreement upon reaching adulthood.
Protection of Minors: The protection of minors refers to the legal principles that safeguard individuals under the age of majority from entering into contracts that could be harmful or exploitative. This concept ensures that minors have the ability to disaffirm contracts, thus preventing them from being bound by agreements they may not fully understand or that could disadvantage them significantly.
Public Policy: Public policy refers to the principles and standards that guide governmental decisions and actions, particularly in relation to laws and regulations that affect society as a whole. It acts as a foundation for determining what contracts may be deemed enforceable or unenforceable based on their compatibility with societal interests and values. In legal contexts, public policy ensures that agreements do not contravene the ethical and moral standards upheld by society.
Unenforceable contract: An unenforceable contract is an agreement that, despite having all the necessary elements to be considered valid, cannot be enforced in a court of law due to certain legal defenses or requirements not being met. This situation typically arises when a contract fails to comply with specific legal statutes, rendering it voidable or lacking enforceability. Factors such as incapacity of a party, illegality of the contract’s subject matter, or a lack of consideration can lead to a contract being deemed unenforceable.
Uniform Commercial Code Provisions for Minors: The Uniform Commercial Code (UCC) provisions for minors establish that contracts entered into by minors are generally voidable at the minor's discretion. This means that a minor can choose to affirm or void a contract before reaching the age of majority, protecting them from exploitation and ensuring their ability to make informed decisions about their agreements.
Voidable Contract: A voidable contract is an agreement that may be legally enforced but can be rejected by one or more parties due to certain circumstances. These circumstances often involve issues of consent or capacity, allowing the affected party to either affirm or void the contract based on factors like undue influence, mistake, duress, or the status of the parties involved.