Contracts of Minors

Terms:

Majority:
The age at which parental responsibility for support ends—usually at age 18.

Disaffirm:
To repudiate or revoke consent once given.

Ratification:
In a broad sense, the confirmation of a previous act done (such as a contract) either by the party himself or by another; as, confirmation of a voidable act.

Voidable contract:
A contract that is valid, but which may be legally voided at the option of one of the parties.

As with contracts entered into by adults, minors have to fulfill certain prerequisites before a contract is considered enforceable.  The primary requirement is having the capacity to contract.  Capacity to contract is questionable when dealing with minors because the rationale is that a minor is regarded as not having sufficient capacity to understand and pass upon questions involving contractual rights.  Accordingly, a person dealing with a minor does so at his or her peril and subject to the right of the minor to avoid the contract.

Yet, some contracts cannot be voided.  Specifically, a minor remains liable for certain contractual obligations:

  • Taxes
  • Penalties
  • Bank regulations
  • Military
  • Necessaries

For instance, perhaps the biggest area of enforceable minor contracts deals with necessaries, which consist of goods reasonably necessary for subsistence, health, comfort or education.  As such, contracts furnishing these items to a minor cannot be disaffirmed.

Example: Janice and Fred marry and purchase a home.  They are both minors.  To obtain a mortgage, Fred lies about his age to get a loan from the seller.  Six months later Janice and Fred separate; Janice moves back home with her parents.  Fred has second thoughts about the mortgage and sues the seller to recover payments made on the mortgage.  The seller counter sues to foreclose on the mortgage.  The court held that Fred was liable for the mortgage, although he signed the contract as a minor.  Since housing falls into the category of necessaries, Fred cannot just walk away from his obligation to pay the mortgage.  See, e.g., Merrick v. Stephens, 337 S.W.2d 713 (Mo. App. 1960); see also Cal. Fam. Code § 6712 (2005).

If a minor enlists in the armed services as a minor, he or she is still on the hook for fulfilling the service obligations, despite being under age at the time the contract was signed.  In addition, if a minor has a bank account, the same bank regulations apply to the minor’s banking relationship as those imposed on adults.

New York provides special rules for minors’ insurance contracts.  Specifically,

A minor above the age of fourteen years and six months shall be deemed competent to enter into a contract for, be the owner of, and exercise all rights relating to, a policy of life insurance upon the life of the minor or upon the life of any person in whom the minor has an insurable interest, but the beneficiary of such policy may be only the minor or the parent, spouse, brother, sister, child or grandparent of the minor.

See NY CLS Ins. § 3207 (2005).

Minors’ Employment Contracts

An infant's almost unfettered right to disaffirm contracts presents significant problems in the entertainment industry, due to the large number of substantial contracts with minors.  In recognition of this problem, first California, and then New York, passed legislation providing for court approval of a minor's entertainment industry contracts that limits the minor's right of disaffirmance. 

Example: Cindy was a very popular child actress.  To make as much as possible off her image, her father, Paul, signed many contracts on her behalf, including several contracts regarding the use of photographs.  Many of the contracts were unfavorable.  At age 21, Cindy wanted to disaffirm these contracts; however, a statute in her jurisdiction allowed a child’s guardian to contract on behalf of a performer, making these contracts unavoidable.  Accordingly, Cindy could not cancel the contracts.  See, e.g., Shields v. Gross, 448 N.E. 2d 108 (N.Y. 1983).

Under California law:

A contract, otherwise valid, of a type described in Section 6750, entered into during minority, cannot be disaffirmed on that ground either during the minority of the person entering into the contract, or at any time thereafter, if the contract has been approved by the superior court in any county in which the minor resides or is employed or in which any party to the contract has its principal office in this state for the transaction of business.

See Cal. Fam. Code § 6751(a) (2005).

Example: Jackie was 11 years old when she got a part on a soap opera.  Her mother made sure to get judicial approval for the contract at the time it was signed.  When Jackie turned 19, she wanted to void a few provisions of the contract, citing the fact that she was a minor at the time the contract was signed.  Given the fact that the contract was approved by the court, Jackie has no grounds to disaffirm any aspect of the contract.  See, e.g., Cal. Fam. Code § 6751 (2005).

In certain circumstances, contracting by a guardian (versus the minor child) will bind the child into adulthood.

In addition to judicial approval of contracts, minors in the entertainment industry are also subject to limitations in the number of hours they can work.

Cal. Lab. Code § 1308.7(a) (2005) states:  

No minor shall be employed in the entertainment industry more than eight hours in one day of 24 hours, or more than 48 hours in one week, or before 5 a.m., or after 10 p.m. on any day preceding a school day. However, a minor may work the hours authorized by this section during any evening preceding a non school day until 12:30 a.m. of the non school day.

Judicial approval of contracts by infant entertainers is also authorized in New York.  See NY CLS Art & Cult. Affr. § 35.03 (2005).  Such approval applies only to performing artists, such as actors, musicians, dancers and professional athletes.  The statute attempts to provide a degree of certainty for parties contracting with infants in the entertainment industry, so that the validity of such contracts is less likely to be the subject of litigation.

In more traditional employment, New York allows teenagers (age 16 or 17) to work as long as they have a work permit.  See NY CLS Labor § 132 (2005).  In addition, there are also limitations on the number of hours minors can work.  See Cal. Ed. Code § 49116 (2005).

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