You can enter into a contract with anyone you want. And most contracts work out just fine, with no need for legal recourse. But if something happens, and one party breaches (violates) the contract, only a valid contract can be taken to a court and be adjudicated (tried).
Whether you are selling something or buying something from a minor, you need to be aware of the pitfalls of any agreement between you and this young person. Most contracts with minors aren't upheld by a court.
If you want to enter into a contract with someone and you want to be able to take the person to court if the contract is violated, you must be sure the contract is valid. For a contract to be considered valid, six contract elements must all be present. The first three relate to the contract itself. The second three elements relate to the parties involved.
- Mutual consent
- Legal purpose
Minors and Contract Capacity
For a contract to be legally binding, both parties must have the capacity to sign the contract. The test for mental capacity to enter into a contract is whether the person had the ability to understand the nature and consequences of the agreement.
By definition, minors don't have capacity; in most states children are considered minors until age 18. If you engage in a contract with a minor, even if it's not a written contract, the contract may be considered void if the minor doesn't want to fulfill their responsibilities. This element of capacity is designed to protect parties lacking capacity.
Capacity, like other contract matters, is based on state law. The age at which someone is considered a minor varies by state. For details about your state's laws relating to minors, check with your state legislature website.
When a Minor Disaffirms a Contract
Let's say you contracted with a minor to do some painting at your office. You gave the person the money to buy paint, and they never did the work. When contacted, they said they no longer wanted to do the work.
A minor can walk away from a contract (it's called "disaffirming" or "voiding" the contract). The minor can disaffirm the contract at any time during their minority or for a reasonable time after. The minor can't disaffirm just part of the contract; they must disaffirm all of it. Of course, the minor must give the money back or face criminal charges. In some states, the minor must take steps to restore the adult to their state before the contract.
In another example, you sell a car to a minor on a private payment plan contract. If the minor stops making payments, you can't take them to court for violating the contract. The court will say the person didn't have the capacity to give consent to the contract.
A minor can cancel or disaffirm a contract, but an adult cannot. A contract must be taken to court to determine if the minor can legally disallow it.
More About Contracts with Minors
There are numerous problems that can arise when a contract includes a minor Employment contracts with minors also require specific consideration.
Voiding a Contract
A minor can decide to void a contract before reaching the age of maturity (depending on the state, but usually 18). The minor can make this decision at any time and even if the contract has been fully performed (both parties have fulfilled their contractual obligations)
Contracts for Necessary Items
A minor cannot disaffirm a contract for something necessary for life, nor can a contract with a minor for necessary items be voided. The problem is determining what's truly necessary. Examples of necessities would include food, clothing, and shelter. Transportation to get to work to pay for living expenses might also be considered a necessary item; a court would have to determine this.
A contract can only be disaffirmed while the individual is a minor. After the person reaches maturity, if the contract continues, the former minor is considered to have ratified the contract and is now bound by the contract terms. A person may ratify by signing something, or by continuing to abide by the contract (making payments, for example).
Property Under Contract
If a minor seeks to void a contract, he or she must return any property purchased. In the second example above, the minor must return the car if he or she cannot keep up the payments. The minor may also have to pay restitution for any damages to the property.
Misrepresentation of Age
If a minor misrepresents his or her age and then declares he/she is a minor, the contract is still not valid.
Parents of a Minor
If a minor enters into a contract, the parents are not a party to the contract and may not be held liable if the minor doesn't fulfill the contract terms. But if a parent or both parents co-sign a contract along with the minor, the contract is valid, and they are bound by the terms.
Before You Enter into a Contract With a Minor
Before You Sign a Contract with a Minor
- It should be obvious that it's not a good idea to enter into a contract with a minor. The minor can walk away, and you are left holding the proverbial bag. And if the contract is for property and the property is damaged, you might be left with less than nothing.
- If you aren't sure if someone is a minor, check identification. Do a background check.
- Require a co-signer on any loans or payment plans, if you suspect that your customer might be a minor.