Contracts Made by Minors Are Void: All You Need to Know
Contracts made by minors are void since, by law, they lack the legal capacity or ability to enter into legally binding agreements or contracts by themselves.3 min read
2. Definition of a Minor
4. Voidable Contract
5. Rules of Voiding a Contract
Contracts made by minors are void since, by law, they lack the legal capacity or ability to enter into legally binding agreements or contracts by themselves. The law presumes that these individuals are not fully aware of what they are doing and as such, are placed into special categories. In addition to minors, this category of persons also includes mentally ill individuals.
If the mentally ill persons or legal minors enter into an agreement or contract, such contracts can be “voided” by them. This means that the individual who lacked the ability to make such agreements can either allow the contract to proceed as stipulated or end it. This prevents the other party from taking advantage of the minor due to the latter's lack of ability to make decisions.
Definition of a Minor
In legal proceedings, the terms “infant” and minor are used interchangeably to describe persons who are not legally adults. Traditionally, a minor is any person under 21; however, this was changed by the statutes of virtually every state and now refers to individuals under 18. Generally, any entity that enters into a contract with a minor or infant does so at their own risk since the law enables minors to exit or void the contract whenever they want.
The universal justification for this law is that it protects minors and infants from assuming responsibilities and obligations that they can't understand. Although this law is applicable in every case, there are a few general exceptions. In most states, minors (i.e. individuals under 18) are considered to have mental deficiency and as such, lack the ability to enter into contracts.
Therefore, minors are allowed to sign contracts, but they can choose to either void the contract or honor it. This enables them to avoid any legal liability under the contract. When they come into their majority, they can choose to ratify or affirm contracts and thus, make it legally binding. Once a minor expresses an intent to void a contract, the avoidance is accomplished.
For instance, Sean, who is a snowboarder and 17 years old enters into a long-term endorsement contract for a sportswear brand where he agrees to endorse the products for several years and accept compensation. On turning 19, Sean chooses to void the agreement in order to accept a better endorsement deal from another brand. He claims that he lacked sufficient capacity at the age of 17 when the prior endorsement deal was signed. In this case, it is very probable that a court will not allow Sean to void the contract.
Statutes and courts provide minors and infants the ability to exit contracts at their discretion. Since this rule can cause harsh results for the other party or be abused by minors, some exceptions were created. The following are contracts that minors and infants cannot void:
- Military contracts
- Bank regulations
Rules of Voiding a Contract
When an infant decides to void a contract/agreement, certain rules apply to any property or compensation the minor received while the contract was in effect. If such compensation is still in the minor's possession, he/she must return it when seeking to exit the contract. In such a situation, if the minor doesn't return the property, the contract cannot be voided; however, if the property/compensation has been destroyed, damaged, or spent, the minor can still exit the contract.
For instance, Helen (aged 17) wanted to purchase a motorcycle but didn't have the cash. She convinced the dealer to sell to her on credit. The dealer sold to her because she claimed to be 22 and provided a false identification card that backed up her claim. A few days later, Helen damaged the motorcycle and then returned it to the dealer and stated that she wanted to void the contract because she was a minor when signing the agreement.
Helen can avoid such a contract since states that follow common law will rule that neither Helen's misrepresentation of age or damage to the motorcycle prevents her from exiting the contract. However, some states will rule that Helen must pay for the damage since she misrepresented her age and defrauded the dealer.
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