Contracts With Minors (Vic)
One of the requirements for a contract to be valid is that all parties have the capacity to contract. A person lacks the capacity to contract if they lack the maturity or ability to fully understand the agreements they make with other people. There are certain classes of people that the law considers to lack capacity, and in general, contracts will be unenforceable against those people. Persons under 18 are one of these classes of people. However, the law does recognise that minors can enter into enforceable and valid contracts in some circumstances. Whether or not a contract is enforceable against a minor will depend on the subject of the contract and its effect. In Victoria, common law and legislation consider the circumstances for when contracts with minors will be enforceable.
Contracts with minors at common law
At common law, a contract made by anyone under the age of eighteen is voidable. However, there are exceptions to this rule.
Contracts for things that are necessities
If a person under 18 enters into a contract for something necessary to maintain their everyday lifestyle, that contract will be binding. Their lifestyle, when entering into the agreement, is what is considered when determining whether the subject of the contract is necessary for maintaining it. The Goods Act 1958 (Victoria) enshrines this common law principle.
The case of Ryder v Wombwell (1868) LR 4 Exch 32 determined that the plaintiff had the duty of establishing that the contract with the minor was for a necessity.
Nash v Inman  2 KB 1 considered whether a contract for clothing with a minor was binding. In this case, the defendant, Inman, was an undergraduate student. He had purchased clothes from Nash, a tailor. Inman came from an affluent family and, before buying the clothes, already had an ample supply. The court found no contract between Nash and Inman because the clothes had not been necessities. A plaintiff who is trying to enforce a contract with a minor needs to prove two things. These are:
- That the contract was for goods that were reasonably necessary for the minor to maintain their lifestyle; and
- They did not already have a sufficient supply of the goods.
If an employment contract benefits a minor and is not oppressive or unfair, that contract will be binding on both parties. However, the young person has a right to repudiate the contract once they attain the age of majority (eighteen).
Doyle v White City Stadium Ltd  1 KB 110 was the first case to consider whether a work contract was beneficial to a minor. The young person in this case, was contracted to box professionally. The agreement stated that if the boxer were disqualified, they would have to forfeit the money they had been paid for the match. In this case, the boxer was disqualified and was asked to refund the money he had been paid. The minor boxer refused on the grounds that the contract was not enforceable as he was a minor. The minor boxer failed in his argument as the contract was like an employment agreement, and it had been an agreement that had been beneficial to the minor boxer. The minor boxer was required to refund the money.
Contracts where a minor acquires property
The other case where a contract will be binding according to the common law is where the contract is one from which they acquire property permanently or where they acquire ongoing obligations, such as where they enter a partnership. In these cases, unless the minor repudiates the contract, the contract is binding.
Other contracts with minors at common law
If a contract with a minor does not fall within one of the above categories, it will not be binding according to the common law unless the young person affirms the contract somehow.
Contracts with minors under legislation
The Supreme Court Act 1986 specifies that specific contracts with minors are void. These are:
- Contracts that are agreements about the repayment of money that has been lent or is to be lent;
- Contracts for goods and services that are not necessities; and
- Contracts about an account stated.
Contracts for buying land or employment contracts are not covered in the above categories. The common law still applies to those types of contracts.
Interestingly, contrary to the common law, section 50 of the Supreme Court Act 1987 prevents a person from ratifying a contract made while they are a minor. Further section 51 provides that a minor alone cannot agree to repay a loan. A loan of that type is void.
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