Contract Law: Can Minors Be Bound?

Minors can enter into contracts, but these agreements are not always legally enforceable. The primary requirement for a contract to be valid is that all parties have the capacity to contract. This means that individuals must have the minimum mental capacity to understand the terms of the agreement. Minors are generally presumed to lack this capacity and are therefore allowed to void contracts. However, there are exceptions to this rule, such as contracts for necessaries like food, health, and education, and certain types of employment contracts. After a minor reaches the age of majority, they may also ratify a contract by choosing to honour it.

Minors and contractual capacity

Minors and their ability to enter into contracts is a complex area of law. In general, minors are not considered to have the capacity to enter into a contract as they are regarded as not having sufficient capacity to understand and pass upon questions involving contractual rights. However, this does not mean that a contract entered into by a minor is automatically invalid.

The law recognises that minors should be protected from being forced to fulfil contractual obligations they do not have the ability to understand. Therefore, minors usually retain the legal right to void a contract whenever they wish, even if the other party is an adult bound by the terms. This is known as the 'right of disaffirmance' or 'voidability'.

However, there are exceptions to this rule. Firstly, minors can only void a contract during their minority status and for a reasonable time after reaching the age of majority. The exact day of 'majority' varies, with some states recognising this as the eighteenth birthday and others the day before the twenty-first birthday. After this reasonable period, the contract is deemed to be ratified and cannot be avoided.

Secondly, certain types of contracts cannot be voided, even if a minor is involved. These include contracts for 'necessaries' or 'necessities', which consist of goods reasonably necessary for the minor's health, comfort, education, or subsistence. This can also include property and services that will enable a person to earn a living and provide for their dependents. Contracts for military service may also be enforceable, as well as some sports and entertainment contracts, depending on state law.

Judicial approval of contracts is also required for minors in the entertainment industry, with limitations on the number of hours they can work.

It is important to note that the parents of a minor are generally not liable for contracts made by the minor, unless they co-sign the contract. In this case, they can be held liable.

Parents' liability for minor contracts

Generally, parents are not liable for contracts made by their minor children merely because they are the parents. However, if a parent or any other adult co-signs a contract with a minor, they can be held liable. For example, if a minor purchases a car and their parent co-signs the loan documents, the parent can be held responsible for the loan even if the minor seeks to avoid the contract.

In the case of Hojnowski v. Vans Skate Park, the New Jersey Supreme Court ruled that a liability waiver signed by a parent on behalf of their minor child was unenforceable. The court held that parents cannot waive their child's right to sue for injuries caused by the negligence of others. This set a precedent in New Jersey, indicating that waivers signed by parents for their minor children in recreational activities are typically unenforceable.

In some cases, contracts involving minors may be invalidated if they are signed under duress, based on a misrepresentation, or if they are unconscionable or shockingly unfair. Additionally, minors have the right to void or disaffirm contracts in most cases, especially if they involve non-essential goods or services. However, there are exceptions to this right, such as in the case of educational loans in Washington State, where minors above the age of 16 can be held to the same standards as adults.

Furthermore, minors who enter into contracts for necessaries, such as food, shelter, medical care, education, and transportation, may be bound by those contracts and unable to void them. This is because these contracts are considered essential for the minor's subsistence, health, comfort, or education.

Enforceable minor contracts

Minors typically retain the legal right to void a contract whenever they wish, as they are not considered to have the capacity to understand contractual rights and obligations. This can result in serious consequences for the non-minor party, so there are some exceptions to this rule.

Firstly, a minor can only void a contract while they are still a minor, or for a reasonable time after they reach the age of majority. If a minor does nothing to void a contract after they turn 18, the contract is deemed to have been ratified and is no longer voidable.

Secondly, if a minor received goods or services through a contract, they must return what remains in their possession. Failing to do so may impact their ability to void the contract.

Thirdly, certain types of contracts cannot be voided, even if a minor is involved. The biggest area of enforceable minor contracts is with 'necessities', which consist of goods reasonably necessary for health, comfort, subsistence, or education. Contracts furnishing these items to a minor cannot be voided. For example, if a minor enlists in the armed services, they are still bound to fulfil their service obligations. Similarly, if a minor has a bank account, the same regulations apply as those imposed on adults.

In addition, minors in the entertainment industry are subject to limitations on the number of hours they can work, and judicial approval of their contracts. Minors above the age of 14 and six months can also enter into a life insurance contract.

Finally, if a parent or other adult co-signs a contract with a minor, they can be held liable if the minor seeks to void the contract.

Minors' right to void contracts

Minors are generally allowed to void contracts as they are not considered to have the legal capacity to enter into legally binding agreements. This means that any entity that enters into a contract with a minor does so at their own risk. The rationale behind this law is to protect minors from assuming responsibilities and obligations that they may not understand.

However, this rule can have harsh results for the other party, so there are some exceptions. For example, contracts that are based on 'necessities' such as food, clothing, medical attention, health, comfort, education, transportation, and housing are enforceable. If a minor enlists in the armed services as a minor, they are still required to fulfil the service obligations. Minors are also bound for educational loans, provided the lender had written notice of enrollment. In addition, minors who misrepresent their age to the other party or operate a business as an adult may not be able to void the contract.

Once a minor reaches the age of majority, they may ratify the contract, and it will become legally binding. This can be done through any words or conduct showing an intent to be bound by the contract, such as continuing to make payments on a car loan.

In some states, judicial approval is required for contracts involving minors in the entertainment industry, as minors have an almost unfettered right to disaffirm contracts in this field.

Misrepresentation by minors

Minors typically have the legal right to void a contract whenever they wish, as they are not considered to have the capacity to understand contractual rights. This can, however, result in serious consequences for the non-minor party, and so there are some exceptions to this rule. For example, if a minor has misrepresented their age, some states would hold that they cannot void the contract. In the majority of countries/states, parents or legal guardians are liable under civil law for any damages caused by their children.

In the case of a minor who misrepresents their age to enter a contract, some states would hold that the contract cannot be voided. However, this is not the common law rule, which states that a minor is not liable to restore benefits conferred under a contract which is unenforceable against them, even if the contract was a result of their fraudulent misrepresentation of their age. In this case, the adult may be able to compel the minor to refund money or restore property obtained by fraud.

In the majority of countries/states, parents or legal guardians are liable under civil law for any damages caused by their children. If a minor makes a contract and a parent or adult signs along with them, the adult can be held liable. However, parents of a minor are not liable for contracts made by the minor just because they are the parents.

Minors are typically required to return any goods or services received under a contract when it is voided. If they are unable to do so, they may still be able to void the contract, but they may be liable for the value of the goods or services they consumed.

In the case of contracts for 'necessities', such as goods reasonably necessary for subsistence, health, comfort, or education, these cannot be voided by the minor. This includes contracts for education loans, which may be limited in their right to disaffirm to ensure that education loans are available to minors.

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