Can I Enter Into a Contract with a Minor?
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.
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).
Why Is a Contract With a Minor so Tricky?
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, these six contract elements must all be present.
The first three elements--offer, acceptance, and mutual consent--relate to the contract itself. The second three elements--consideration, legal purpose, and competency--relate to the parties. Competency is the element that's at issue here.
What If I Enter Into a Contract With a Minor and the Person Defaults?
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 he never did the work. He says, "I don't want to do the work." A minor can walk away from a contract (it's called "disaffirming" or "voiding" the contract). (Of course, he has to give the money back or face criminal charges.)
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 him or her to court for violating the contract. The court says the person was not competent to give consent to the contract.
- 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. In one example, a minor took out a mortgage on a home, then tried to get out of it. The court held that the house was necessary. Transportation to get to work to pay for living expenses might also be considered a necessary item; a court would have to determine this.
- Entire Contract. A minor cannot disaffirm part of a contract and agree to another part of a contract; the contract is considered in its entirety.
- Ratification. 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.
This is just a short list of issues with entering into a contract with a minor and employment contracts with minors also require specific consideration. Remember that any of these disputes are not decided by the parties, but must be taken to a court to decide if the competency issue is present.
Before You Enter into 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.