As we stated in our first article, The Basics to Contract Law, that the Common Law generally considers minors not to have the capacity to enter a contract, and any contract entered by a minor is voidable.
There are a number of general exceptions to this principle which are outlined below.
Contracts for Necessities
A contract by a minor for necessities is binding on both parties. Necessities are determined by reference to the minor’s ‘existing life style’ and must be necessary for maintaining that lifestyle. Maintaining this lifestyle generally means food, clothing, shelter and access to medical treatment.
In defining supply of necessities, the courts have usually given the concept a wide interpretation – such as a contract of apprenticeship. However, in order for a contract of apprenticeship to meet the supply of necessities test, it must also be for the child’s benefit.
Nash v Inman [1908] 2 KB 1
Facts
Nash,a tailor on Savile Row, entered into a contract to supply Inman (a Cambridge undergraduate student) with, amongst other things, 11 fancy waistcoats. Inman was a minor who was already adequately supplied with clothes by his father. When Nash claimed the cost of these clothes Inman sought to rely on lack of capacity and succeeded at first instance.
Held
Fletcher-Moulton LJ
‘An infant, like a lunatic, is incapable of making a contract of purchase in the strict sense of the words; but if a man satisfies the needs of the infant or lunatic by supplying to him necessaries, the law will imply an obligation to repay him for the services so rendered, and will enforce that obligation against the estate of the infant or lunatic.’
However, the foundation of such a claim is not contractual, but rather an obligation to make ‘fair payment in respect of needs satisfied.’
Buckley LJ
‘At common law … the contracts of an infant were voidable except such as were necessarily to his prejudice; these last were void.’
However, infants have a limited capacity to contract. To succeed, the plaintiff had to prove the contract within this limited capacity, which his Honour defined as follows:
An infant may contract for the supply at a reasonable price of articles reasonably necessary for his support in his station in life if he has not already a sufficient supply. To render an infant's contract for necessaries an enforceable contract two conditions must be satisfied, namely, (1.) the contract must be for goods reasonably necessary for his support in his station in life, and (2.) he must not have already a sufficient supply of these necessaries.
This could not be satisfied here
Beneficial contracts of employment
A contract by a minor for employment is binding provided beneficial (not unfair or oppressive). A minor can, however, repudiate such a contract upon adulthood.
How can a contract of employment be a benefit to the child?
In contrast to the ‘supply of necessities’, the courts tend to construe the concept of ‘benefit’ more narrowly, as a consequence, when assessing whether the contract is beneficial to the child, a balance between the advantages and disadvantages of the contract will generally be looked at. Furthermore, the contract will be looked at as a whole and the circumstances surrounding each individual case will also be looked at to see if the contract is a benefit to the minor.
Although, a contract of employment may be considered as benefitting a child if either it provides a means for self-support, or provides a means for gaining instruction or education, thus, allowing the child to earn a living via a trade or profession may be some of the relevant factors.
The effect of minority at common law
Contracts not falling within either of the above exceptions are voidable. However, (apparently for the sake of causing confusion) the Courts treat ‘voidable’ in this context differently from voidable as normally understood in contract. Where the contract results in the minor permanently acquiring property (eg land) or involves ongoing obligations (eg partnerships) then the contract is binding unless and until avoided by the minor – the minor remains bound by any obligations that arising prior to that point.
All other contracts entered into a minor are not binding unless ratified (taking positive steps to affirm) by a minor when they become an adult.
