Cecily Zamora
The law regarding minors' contracts is a complex area, with varying legislation in different states. In general, a contract with a minor is considered voidable, as they lack the mental capacity to comprehend the agreement and may disaffirm it at will. However, there are exceptions, such as contracts concerning necessities, penalties, military service, and employment. Some states, like California, have specific laws protecting minors in the entertainment industry, requiring a portion of their earnings to be set aside in a trust. Understanding the specific laws in each state, such as Washington State and California, is crucial when dealing with minors' contracts.
| Characteristics | Values |
|---|---|
| Contractual capacity | A minor does not have the capacity to contract as they may not have the mental competence to understand the terms and conditions of the contract. |
| Voidability | A contract with a minor is typically voidable by the minor, regardless of the contract's merit. |
| Enforceability | Contracts concerning necessities, penalties, military service, instances of minors' age being misinterpreted, or employment contracts are enforceable. |
| Applicable laws | The capacity of a minor to enter into an enforceable contract is determined by the governing law where the contract is made. In California, for example, minors seeking employment in the entertainment industry must obtain an Entertainment Work Permit. |
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What You'll Learn
Contracts concerning necessities
Generally, a contract with a minor is voidable at the minor's discretion. However, this does not apply to contracts concerning necessities, which include goods and services essential for the minor's survival, such as food, shelter, clothing, medical care, education, and transportation. These contracts are enforceable, and minors cannot void them at will. The economic status of the minor's parents is typically considered when determining if specific goods or services are necessary.
Contracts for educational loans are also considered necessities and are enforceable if the lender has written confirmation of the minor's enrolment from the educational institution. In Washington State, a minor cannot void an educational loan if they are 16 or older and the lender has received written confirmation of their enrolment.
Bank accounts are another area where minors are expected to comply with the terms, including penalties and fees similar to those for adults. Additionally, minors are frequently involved in employment contracts, particularly in the sports and entertainment industries. States like New York and California have passed laws preventing minors in these industries from disaffirming their contracts.
While contracts concerning necessities are generally enforceable, there are exceptions. For example, a car is generally not considered a necessity, and a minor can void the contract and return the vehicle within a reasonable time frame. However, this may vary by state, as Washington State considers a car a non-necessary item, while other states may include automobiles as a necessity.
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Minors' capacity to contract
Minors are generally regarded as lacking the capacity to enter into contracts. This is because they are assumed not to understand what they are doing and may not have a full understanding of the terms and conditions. In the US, a minor is anyone under the age of 18 who is still under the obligation of parental support.
Minors who sign a contract can either honour the deal or void it. This is known as 'disaffirmation' and must happen before the minor comes of age. However, there are some exceptions. For example, in most states, a minor cannot void a contract for necessities like food, clothing, and lodging. In addition, a minor can only void a contract while still a minor. If a minor turns 18 and hasn't done anything to void the contract, then the contract can no longer be voided.
In a couple of states, like California and New York, a contract created for a minor is valid and cannot be voided by the minor either before or after they become an adult. For example, in California, a minor can be obligated to a contract negotiated by their parents, such as a talent agent contract.
Under Washington State law, any written obligation signed by a minor 16 years of age or older in consideration of an educational loan from any person is enforceable as if the minor were an adult. This only applies if the educational institution has certified in writing that the minor is enrolled or has been accepted for enrollment.
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Minors' right to disaffirm
A minor's contract is not automatically invalid, but the minor has the right to choose to affirm or void it. This means that, despite having limited competence, minors can enter contracts, but most of those contracts can be avoided or disaffirmed without any reason other than the party being a minor.
A minor may rightfully disaffirm any contract into which they enter, whether or not it has already been performed. In most cases, a minor only needs to give the intention that they intend to disaffirm a contract. The other party, however, remains bound by the contract. Once the minor reaches the age of majority, any contract entered into prior to that age must be either disaffirmed within a reasonable but predetermined period of time, or the contract is ratified.
To disaffirm a contract made before reaching the legal age of majority, the minor must state—either in writing or orally—their intention not to honour the contract. If the minor acts in such a way as to indicate to a reasonable person that they have no intention to honour the contract, that can also count as disaffirmance. The minor will be restored to their original position, meaning they would be entitled to the return of any consideration, without the responsibility of being liable for damages under the contract.
There are some instances in which minors cannot disaffirm a contract. In most states, they cannot disaffirm a contract for necessities such as food, shelter, clothing, healthcare, or employment. Minors may also not disaffirm a contract for the purchase or sale of real estate. In addition, in a couple of states, such as California and New York, a contract created for a minor child is valid and cannot be voided by the minor either before or after they reach maturity.
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Contracts and misrepresentation
Minors typically lack the capacity to contract, as they are assumed not to have a full understanding of the terms and conditions. This means that a contract with a minor is generally invalid and can be disaffirmed by the minor. However, there are exceptions to this, such as contracts concerning necessities, penalties, military service, instances of minors' ages being misinterpreted, or employment contracts. In these cases, the minor is bound by the contract and cannot void it. This also applies in certain US states, such as California and New York, where a contract negotiated by a minor's parents or guardians is valid and cannot be voided by the minor.
Now, turning to the topic of contracts and misrepresentation, this area of law focuses on statements made prior to or during the formation of a contract that may be false or misleading. A misrepresentation can occur when a party to a contract makes an unambiguous, false statement of fact that induces the other party to enter into the contract. This can include not only verbal statements but also conduct and half-truths that are misleading due to the omission of relevant information.
For example, in Attwood v Small, the seller made false claims about the capabilities of his mines and steelworks. The buyer, Attwood, employed agents to verify these claims, who confirmed that they were true. In this case, the House of Lords held that Attwood could not rescind the contract as he relied on his agents' verification rather than the seller's initial claims.
Remedies for misrepresentation include rescission and/or damages. An action in misrepresentation can only be brought by the misled party, who must show that they relied on the misstatement and were induced into the contract because of it. It is important to note that silence can also form the basis of misrepresentation in certain relationships, such as between agents and their principals, or employers and employees.
In conclusion, while contracts with minors are generally invalid due to their lack of capacity to contract, there are exceptions where the minor is bound by the contract. Misrepresentation in contract law involves false or misleading statements or conduct that induce a party to enter into a contract, with remedies available to the misled party.
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Minors in the entertainment industry
Minors are generally excluded from having the capacity to contract due to a lack of mental competence to comprehend the contract agreement. However, this varies depending on the state and the type of contract. In California, for example, a contract created for a minor child is valid and cannot be voided by the minor. This means that the minor is legally bound to the terms of the contract, and if they choose to disaffirm or void it, they may face legal consequences.
In the entertainment industry, specifically in California, all minors working in this sector must register and obtain an entertainment work permit. The process involves completing an application and providing various documents, including a letter from a production company. There are different types of permits available, such as the 10-day and 6-month permits, each with its own requirements and fees. Additionally, applicants between the ages of 14 and 17 must undergo sexual harassment prevention training.
Similar regulations are in place in Georgia, where state law and Department of Labor rules apply to minors employed in the entertainment industry. Minors must register with the Department and obtain certification to work legally. The Georgia Department of Labor also requires a Child Labor Coordinator Certification, which involves reviewing relevant materials and passing a test. This ensures that the safety and welfare of minors are prioritised during their employment in the industry.
It is important to note that the laws regarding minors' contracts can vary from state to state, and it is always advisable to consult the relevant state labour office for the most accurate and up-to-date information. While some states may allow contracts with minors in specific sectors, others may have more restrictive laws to protect minors from legal obligations they may not fully comprehend.
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Frequently asked questions
In California, minors' contracts are considered voidable by the minor, and the minor's right to disaffirm contracts can cause problems in the entertainment industry. To protect both the industry and minor performers, California has passed legislation that requires 15% of a minor's gross earnings to be set aside in a "blocked account" until the minor reaches 18. Minors seeking employment in the entertainment industry must obtain an Entertainment Work Permit, which is valid for six months.
New York is one of the few states where a contract created for a minor is valid and cannot be voided by the minor.
Contracts concerning necessities, penalties, military service, instances of minors' age being misinterpreted, or employment contracts are considered valid for minors. In Washington State, any written obligation signed by a minor for an educational loan is also enforceable.
