“essential to the maintenance of basic living standards”.92 Whether or not the minor had an actual need of the goods or services in question would not be relevant: it would be enough that the item was suitable to meet such a need if it should exist.
It appears that, in making its recommendations on this matter, the English Law Commission were unhappy with the principle of making a minor’s contractual obligation vary according to his or her particular economic circumstances:
“Whereas the wealthy minor may, in justice be held liable to a supplier in respect of a greater number of more expensive goods than the poor minor, it may be seen as unacceptable to base legal liability, even in this comparatively small area of credit transactions by minors, upon the capacity to pay. It may seem that the notion of ‘reasonable requirements’ according to the ‘condition in life’ is an unsuitable basis for the rules relating to the contractual capacity in a minor.”93
We do not share this view. It appears that the principle of egalitarianism has been invoked in an inappropriate context, so as to result, at least arguably, in injustice to some adults who behave unimpededly in their contractual relationship with minors. The present law proceeds on the basis that, desirable or otherwise, it is a fact that there are inequalities in social, educational, physical and economic circumstances between different minors. What may be regarded as reasonably necessary for one minor to maintain him “in his status and condition”94 may well not be so regarded in respect of another minor in less advantaged economic circumstances. The facts of some of the reported
Id., para. 7.15. See, however, Id., para. 7.5.
“The doctrine of necessaries appears old fashioned because it discriminates between minors on the basis of social condition, but, in as much as it renders liable to pay for goods and services those minors who in general have the money to pay, therein lies its fairness, and also its flexibility.”
Id., para. 2.4.
decisions,95 involving the extravagant life-styles of the Victorian and Edwardian upper classes, not unreasonably may inspire distaste in some modern readers but this should not lead to the conclusion that it is improper for the law to distinguish between minors, so far as concerns their contractual obligations, on the basis of their individual circumstances.
An example will perhaps make this clear. Two small computers, costing £500, are sold to two seventeen-year-old minors. The first minor is from a relatively disadvantaged social background but is an excellent student, studying computer science at the university. Arguably the computer is, for him, a necessary. The second minor is from a more advantaged social background but is virtually innumerate; he has bought the computer as no more than a plaything to amuse himself and impress his friends. Quite possibly, for him, the computer is not a necessary.96
This example makes it plain that distinctions based on individual circumstances should not be regarded as deriving from a premise that the “legitimate” needs of rich people are more extensive than those of poor people.
We have spent some time on this point because we consider that it is as well to be clear on the normative basis of the English Law Commission’s recommendation on an important aspect of the subject.
Of course, if the concept of contracts for necessities were to replace that of contracts for necessaries, then, to the degree that the new concept ranged less extensively than the present concept, there would be a reduction in the rights of adults to enforce contracts against minors. In other words, the English Law Commission recommends the abrogation of the present legal rights of an adult who contracts to supply a minor with a necessary that is not a necessity; it makes this proposal, not because it regards an adult as in any way undeserving but because of entirely independent considerations relating to the principle of egalitarianism.
E.g. Ryder v Wombwell, L.R. 4 Ex. 32 (1868).
The reported cases involving beneficial contracts of service may also be considered in this context.
We will consider below97 whether this proposal would be a desirable basis for change in our law. Before that we must refer to the alternative recommendation made by the English Law Commission in its Working Paper as a substitute for the proposal we have already described, in the event that that proposal did not find acceptance.
In this alternative recommendation98 the English Law Commission proposed that the law relating to necessaries be changed in three respects. We will look briefly at the merits of these proposals, in their own right, before considering the larger question whether the concept of necessaries, in amended form, should be included in our law. Irrespective of our resolution of the larger question, consideration of the English Law Commission’s proposals on necessaries is helpful in clarifying the issues involved.
The first change recommended by the English Law Commission is uncontroversial. It would abolish the requirement that goods must be necessaries both at the time of the making of the contract and at the time of delivery. In their view, “the sensible time”99 for considering whether or not goods are necessaries is the time of the making of the contract; whatever happens afterwards, to which the supplier is not a party, should not affect the issue.
We are of the same opinion. We can see no justification for penalising the supplier because of the subsequent conduct or good or bad fortune of the minor with whom supplier has dealt.
The second change proposed by the English Law Commission in its Working Paper is more controversial. The Commission were rightly concerned with the difficulty facing a supplier in enquiring into the state of the minor’s existing supply of the goods or services in question:
“Obviously he must rely entirely on what the minor tells him, though under the present law the minor will not be bound to the contract if he provides false information.
Infra, pp. 121ff.
Also subsequently abandoned in its Report.
English Law Commission, Working Paper No. 81, Minors’ Contracts, para. 7.9.
But even if the information provided is correct, the supplier may find it does not greatly help him. Necessaries are not confined to goods and services of which the minor has an immediate and essential need and a thing may be a necessary although the minor possesses others of its kind. The minor’s actual requirements must inevitably be his reasonable requirements.”100
The English Law Commission gave hypothetical practical examples of borderline cases where it might be difficult for the shopkeeper “to have to pick his way among the nice distinctions that may arise ….“101 They went on to propose that the existing state of the minors’ supply of the goods or services in issue should be disregarded in determining his actual requirements at the time of the contract.
While we fully appreciate the difficulties facing a supplier on this question we do not consider that the law should provide an express exemption in all cases from an obligation on the part of the supplier to act reasonably in respect of the existing state of the minor’s supply. It is easy to envisage situations in which a supplier would be well aware of the fact that the minor already had a more than ample supply of the goods in question: the minor may have developed a particular interest in the product in question and, to the supplier’s knowledge, have accumulated a large store of the product.102 It seems to us that it would not be a sound rule for the law to require that such knowledge be ignored. We do not consider that the present law is fair or sensible in assuming a knowledge on the part of the supplier that does not exist; equally we do not consider it
Id., para. 7.11.
The English Law Commission (para. 7.12) gave as an example a minor who seeks to buy a 250cc motorcycle and who tells the salesman that he already possesses a moped. Such a case is borderline. But there will also be clearer cases, as, for example, where the salesman is aware that the minor purchaser of a motorcycle is interested in racing and already owns several other motorcycles. It seems to us quite artificial for the law to take no account of this knowledge in determining whether the latest purchase is for a necessary, where the minor already owns three or four motorcycles – manifestly it is not.
would be fair or sensible for the law to ignore such knowledge when it does exist. We consider that the question should best be resolved in terms of a criterion of reasonableness of belief rather than imposing, or exempting, responsibility for actual knowledge in cases such as this.103
The third major change in relation to necessaries recommended in its Working Paper104 by the English Law Commission was that the supplier should be able to rely on the answers given by the minor to his enquiries, provided these answers appear reasonable in the circumstances. This recommendation seems to us sensible and uncontroversial.
We must now consider what general approach the legislation should take to the problem. We could, of course, propose that the present law on necessaries, with all its imperfections, should be continued, on the basis that, whatever theoretical criticisms may be made against it, it has worked out quite satisfactorily in practice. Another approach would be to replace the concept of “necessaries” by that of “necessities”. As we have seen, the English Law Commission looked with favour on this approach in its
The English Law Commission mentioned two other objections to what they proposed. First, they noted that the effect of their recommendation might be that in some cases a minor would be bound to pay for something of which he had no particular need. They state (para. 7.12) that they were “not much troubled by this”, because in practice such cases would be rare. Secondly they stated (id.) that their recommendation would be “somewhat artificial” in excluding from the calculation of the minor’s actual requirements the state of his existing supply. They stated that they were “prepared to accept this artificiality in the interests of achieving a simple, workable concept which …. would, we think, in most cases provide a just result”. Neither argument commends itself to us. As to the first, we do not consider that it is necessary for the law to be framed so that any cases “should cause hardship” to either party. As to the second, we do not consider that “a simple, workable concept” requires the creation of an artificial criterion. In both cases a criterion based on reasonableness should work fairly and sensibly in the interests of both parties.
English Law Commission Working Paper No. 81, Minors’ Contracts, para. 7.13.
Working Paper. We have already recorded105 our doubts as to its utility. It is interesting to note that, in its Report published in June 1984 the English Law Commission abandoned the proposal. They noted that, in consultation with interested parties:
“our concept of ‘necessities’, as a replacement for ‘necessaries’ did not find favour. It was argued that the distinction between the two concepts was largely verbal and that the introduction of a new concept so similar to the existing one would serve only to cause confusion. Few commentators saw any advantage in making the change; most thought it would do more harm than good.”106
A third approach to the problem would be to retain the concept of necessaries but amend it on the specific lines considered above. A fourth, more radical, solution would be to abolish the concept entirely.
It can be argued that, in practice, those who trade with minors do not generally do so on account of their reliance on the doctrine of necessaries and that if such contracts ceased to be binding, little if any change in trading practice would result.
Having considered each of these possible approaches and analysed their implications so far as the restitutionary principle is concerned, we have come to the following conclusions.
On balance we consider that the restitutionary principle will be sufficiently flexible to ensure that justice will be done between the parties, and that existing trading practices will not be likely to be disturbed to any significant extent. We recommend, further, that the legislation should include specific provisions enabling the Court, in applying the restitutionary principle, to have regard to whether the goods or services which were the subject matter of the contract were suitable to the
Supra, pp. 117–118.
Law of Contract: Minors’s Contracts, para. 5.5. (Law Com. No. 134, 1984).
condition in life of the minor and to his actual requirements at the time of the making of the contract, so far as the other party was, or could reasonably be, aware, having regard to the circumstances, including any information given by the minor on this question. We are satisfied that specific inclusion of provisions to this effect will ensure that adequate weight will be affored to the adult party’s interests in these circumstances.
Although we have rejected the proposal that the legislation include contracts for necessaries as a special category of enforceable contracts, we must now consider whether certain types of contracts for necessaries (and analogous contracts) should be enforceable. We have in mind contracts of employment and for personal services.
Let us begin by considering contracts of employment. Under present law, as we have seen,107a contract of employment will bind a minor if, taken as a whole, it is for his benefit. We see great merit in this approach and recommend that it be continued. As the English Law Commission noted in its Working Paper:
“To do otherwise would diverge from commercial reality and common sense, and run the risk of deterring adults from entering into such contracts. Moreover, contracts of employment often contain terms settled by collective bargaining and designed to regulate the relations between the employer and his work-force as a whole. It would be undesirable if these terms were not enforceable against some members of the work-force merely because they were minors.”108
In these difficult times when teenage employment is hard to come by, we would not want the law to create any unnecessary disincentive to the employment of minors. We are satisfied that the present law in this respect does not work unduly harshly on minors and we recommend that it continue to apply, subject to the modification and clarification that we will propose below.
Supra, pp. 14ff.
English Law Commission’s Working Paper No. 81, Minors’ Contracts, para. 7.28 (1982).
The modification that we recommend would apply where the Court found that a contract, taken as a whole, was not for the minor’s benefit, because it contained a particular term or terms. In such circumstances, rather than being obliged to declare the contract unenforceable against the minor, we recommend that the Court should have power to strike out the term or terms in question, if severable from the rest of the contract.
The English Law Commission in their Working Paper in 1982 made a recommendation to this effect.109 We agree with their qualification110 that, in exercising this power, the Court should not be entitled to re-draft the contract, and that the contract as enforced should be substantially the same as the original contract. We also agree with their proposal111 that the Court should take into account the interests of the employer before deciding to enforce the contract without the unduly onerous term or terms.
A small matter which we think the legislature could with benefit clarify is the fact that minority may be relevant
Id., para. 7.31. The English Law Commission abandoned this proposal in its Report published in June 1984 on the basis that, “in the absence of any need for [this measure], and of any evidence that such an enactment would resolve any practical difficulties, we do not think the case for legislation is made out”: Law of Contract: Minors’ Contracts, para. 5.2 (Law Com. No. 134, 1984). It should be noted that, in contrast to our reference to “a particular term or terms” of the contract which render it not for the minor’s benefit, the English Law Commission in their Working Paper spoke variously of “a term …. sufficiently harsh to render the contract …. not to the minor’s benefit” (id.), an “unfair term” (id.), “unduly onerous terms” (id.) and “any terms which is not for the minor’s benefit” (para. 13.22). Rather than complicate matters by raising issues of “fairness”, “harshness” and “due” or “undue” degrees of onerousness, we have preferred to adopt the most general and neutral description of the term or terms in the contract which render the contract, taken as a whole, not for the minor’s benefit.
Id., para. 7.31.
Id The Proposal was abandoned in the English Law Commission’s Report: cf. fn. 106, supra.
in determining whether a covenant in restraint of trade is reasonable. Clearly, the question may arise in respect of a contract of employment of a minor.112 It seems to us sensible that minority should be a factor to be taken into account in such circumstances. The English Law Commission in its Working Paper considered that “such is already the law”,113 but that, for the avoidance of doubt, specific provision should be made to that effect. We agree.
We now turn to consider contracts for personal services, which, as we have seen,114 are governed by the same principles as contracts of employment. It appears to us that the same principles as we have already recommended with respect to contracts of employment should apply to contracts for personal services.115
We do not consider, however, that all contracts should be treated in the same manner. As the English Law Commission in its Working Paper observed, “a minor who is trading on his own account is generally carrying on a commercially more hazardous activity than are employees: in the latter case someone else is bearing the direct risk of the business.”116 The English Law Commission reached the provisional conclusion117 that, as regards contracts by virtue of which
Cf. supra, pp. 14ff.
English Law Commission, Working Paper No. 81, Minors’ Contracts, para. 7.32 (1982). But in its Report, the English Law Commission abandoned this proposal: cf. fn. 106, supra.
Supra, pp. 14ff. The present law on this matter, as has been pointd out, is somewhat uncertain, since the Irish Courts on occasion appear to have gone well beyond the concept of contracts for personal services. Our recommendations relate only to contract for personal services in the narrow, rather than this broader, sense.
The English Law Commission in its Working Paper made a similar proposal: Working Paper No. 81, Minors’ Contracts, para. 7.29 (1982). The proposal was abandoned in the Report: cf. fn. 106, supra.
Para. 7.30 of Working Paper No. 81.
Subsequently abandoned in its Report: cf. fn. 106, supra.
a minor might earn his living other than contracts of employment and contracts for the provision of personal services “the need to protect the minor outweighs the fact that minors may have a particular interest in such contracts and may derive particular benefit from them”.118 We agree. We consider that minors’ trading contracts should be governed by the restitutionary principle rather than treated in the same manner as employment contracts and contracts for personal services.
Loans to Minors
As we have seen119 the present law relating to loans to minors goes very far in protecting minors against claims by lenders, whether commercial or private. We must now consider what the future policy on this question should be.
It could be argued that the present law gives too much protection to the minor, especially in the light of the increased protection that contract law today offers parties to contracts generally, in contrast to the late nineteenth century when the specific protection in respect of loans to minors was fashioned by legislation.120
It could also be argued that the best disincentive to commercial institutions lending money to minors is not the law but the sound commercial judgment that, on account of their comparatively low earning power and uncertain prospects, minors may not be a good credit risk.121
These arguments have some force but they do not, in our view, outweigh the policy that minors should, so far as the
Supra, pp. 25ff.
Cf. the English Law Commissions’s Working Paper No. 81, Minors’ Contracts, para. 7.34–7.35 (1982).
Cf. id., paras. 1.8, 7.36.
law may reasonably bring this about, be discouraged and protected from entering into contracts that may be for their detriment. Contracts for the loan of money in a significant number of cases result in hardship to minors. We consider that the best approach is to continue the policy of making such contracts void. We do not consider that it would be desirable to apply the restitutionary principle in this context, since it might encourage less scrupulous adults to lend money to minors in the hope that at least some of these minors would be intimidated by the threat of legal proceedings, albeit only for an order of restitution based on judicial consideration of all the circumstances.
In recommending that contracts of loan to minors should be void we include the principle122that no action may be brought on a promise made after full age to pay any debt contracted during infancy, and the principle123that a fresh promise after majority to pay a loan that is void in law, and any negotiable instrument given in respect of such a loan, are void and may not be enforced against the former minor.
We do not consider that the legislation should include any exception with regard to loans for necessaries.124 We do not believe that this refinement to the present law is of any practical importance. Even though, under other proposals, we have recommended the abolition of the concept of necessaries, it would present no substantial difficulty for us to recommend the retention of the concept in the present context if we thought that it would serve any useful purpose.125 But we do not think that it would do so. We consider, on balance, that a clearcut rule to the effect
Cf. the Infants Relief Act 1874, section 2.
Cf. the Betting and Loans (Infants) Act 1892, section 5.
Cf. supra, pp. 12–13.
The English Law Commission recommended that contracts for the loan of money made to a minor for the purchase of necessities (or necessaries, if the present concept were retained) should be binding on the minor whether or not the money was in fact used for that purpose: Working Paper No. 81, Minors’ Contracts, para. 7.39 (1982). This proposal was not proceeded with in the English Law Commission’s Report.
that all contracts of loan are to be void is more likely to protect the minor’s interests than would a rule that would allow for debate as to its enforceability, after the event. The risk that a change in the law in this specific area will in practice result in actual damage to the interests of minors seems to us to be a small one, outweighed by the benefits for the minor the change will bring about.
Ratification and Repudiation
Under present law, as we have seen,126 section 2 of the Infants Relief Act 1874 provides that no action may be brought to charge any person on any promise made after full age to pay any debt contracted during minority, or on ratification made after full age of any promise or contract made during minority, whether or not there is any new consideration for that promise or ratification after full age.
A new contract, however, made for good consideration after reaching full age is not a ratification of a contract made during minority even though it may do the same thing as intended by the earlier contract. We have seen127 how difficult it is in present practice to draw this distinction. We have also seen128 that certain types of contract involving obligations of a continuous nature – such as contracts for the purchase or lease of lands, partnership agreements and marriage settlements – are binding unless repudiated within a reasonable time after reaching majority.
We must now consider how best the law can be formulated with respect to ratification and repudiation in the light of our proposals earlier in this Report. We will first examine the changes made or proposed in other jurisdictions.
In New South Wales, a civil act (including a contract), whether originally binding or not, is binding on a minor
Supra, p. 26.
Supra, pp. 26–28.
Supra, pp. 19ff.
unless he repudiates it within one year of reaching full age, or unless the Court repudiates it on behalf of the minor before the minor has reached full age.129