The Uniform Securities Ownership and Minors Act (adopted in the majority of States) prevents a minor who has caused any dealings in his securities from disaffirming or avoiding the transaction unless there was prior notice of the minority. Under the Uniform Commercial Code, s. 3–207 (also adopted in most States) a minor who transfers a negotiable instrument may not disaffirm against a holder in due course. Moreover, in many States statutes permit students under the age of majority to make binding contracts for education loans (cf. the Uniform Minor Student Capacity to Borrow Act).
8
Cf. Tan, Annotation, 13 A.L.R. 3d 1251 (1967).
9
Cf. Regensteiner, Annotation, 35 A.L.R. 2d 1302 (1954).
10
- Cady, Emancipation of Minors, 12 Connnecticut L. Rev. 62 (1979).
11
Cf. Denton, Infants’ Contracts: Rights and Remedies, 28 Tenn. L. Rev. 395, at 396 (1961), Kindred, Basic Problems of Minors’ Contractual Capacity: Reform in England, France, Ethiopia and the United States of America, Festschrift Rheinstein, p. 523, at 531, H.H.W., Note: The Status of Infancy, 34 Virg. L. Rev. 829, at 833 (1948).
In general, a surety will be liable on his undertaking in the event of the minor’s default.12 Where, however, the minor disaffirms the contract or where the minor has received nothing under it, the surety will not be bound. The authorities are divided on the question whether the surety will be released from his obligation by the minor’s offer to return the consideration, where the other party refuses to accept the offer.
Apart from cases of fraudulent misrepresentation as to age, a minor will not generally be liable in tort where the tort arose out of or was connected with a contract, insofar as enforcing his liability for the tort would, either directly or indirectly, amount to enforcing his liablity under the contract.
The law in Louisiana relating to minors’ contracts13 contains the main elements of the Civil Law approach, requiring generally that the minor’s tutor approve of the contract and including provisions regarding lesion, familiar in Civil Law jurisdictions.
In California,14 contracts by minors for artistic or creative services and professional sports, if approved by the Court, on application to it by either party, may not thereafter be disaffirmed by the minors. Similar legislation has been enacted in New York.15 Statutes have been enacted in several states enabling minors to enter into binding contracts of life insurance.16
12
Cf. Habeeb, Annotation, 44 A.L.R. 3d 1417 (1972).
13
Cf. Cater, 22 Loyola L. Rev. 1061 (1976).
14
California Civil Code, section 36(a)(2) and section 36(b). See the English Law Commission’s Working Paper No. 81, Minors’ Contracts, 173–174 (1982). For an unsuccessful constitutional challenge to this statute see Warner Bros Pictures v Brodel, 179 P. 2d 57 (Cal. Dist. Ct. of App. 1947).
15
General Obligations Law, section 3–105. See Shields v Gross, 58 N.Y. 2d 338, 461 N.Y.S. 2d 254, 448 N.E. 2d 108 (1983).
16
Cf. Fallon, Contracts and Minors in Life Insurance, [1959] Ins. L. J. 473, at 475 (1959).
Canada17
In Canada, 18 is the age of majority in all provinces save British Columbia, New Brunswick, Newfoundland and Nova Scotia, where it is 19. The law in Quebec is based on the French civil law system. In the other provinces, the common law rules prevail, subject to statutory changes, some similar to, or identical with those affecting the law in this country. In Alberta, a minor is liable on a contract for life insurance; in Manitoba, a minor over 16 living away from home may be liable on a contract to perform work or services unless the Director of Public Welfare declares it void on the ground of injustice.
Proposals for general reform of the law relating to minors’ contracts have been made in Alberta and British Columbia, and the subject has also been considered by the Ontario Law Reform Commission. No legislative changes have yet emerged, however. The work of the law reform agencies in these provinces will be considered in detail later in this chapter and in our own consideration of the policy issues relating to reform of the law.
Australia18
The age of majority in all of the Australian states is 18. The law relating to minors’ contracts is substantially the same as in this country. In New South Wales, however, a radically new approach was introduced by the Minors (Property and Contracts) Act 1970. The Act is considered in detail later in this chapter.
17
See Mueller, 130–133, 230, Percy, The Present Law of Infants’ Contracts, 53 Can. Bar Rev. 1 (1975), the Scottish Law Commission’s Consultative Memorandum No. 65, Legal Capacity and Responsibility of Minors and Pupils, paras. 4.11–4–13 (1985).
18
See Finlay, paras. 607–612 and the Scottish Law Commission’s Consultative Memorandum, Legal Capacity and Responsibility of Minors and Pupils, para. 4.9 (1985).
Minors’ Contracts in Civil Law Systems
Although there are certain differences between the legal provisions of the various jurisdictions within the civil law system, a number of similarities may be discerned. Most of these jurisdictions permit guardians, curators or tutors of minors to enter into certain contracts on their behalf. Other common provisions relate to emancipation and capacity to enter employment and business contracts.
(a) Emancipation
Emancipation is a common feature in most jurisdictions with civil law systems: see the Law Reform Commission’s Working Paper No. 2, The Law Relating to the Age of Majority, the Age for Marriage and Some Connected Subjects, paras 240ff (1977). It exists, for example, in Belgium, France, Greece, Italy, Luxembourg, Malta, the Netherlands, Quebec and Spain. The effect of emancipation, whether by order of the Court, marriage or by parental permission, is that the minor acquires full contractual capacity or, at all events, capacity to act in ordinary business situations. A limited form of emancipation, solely to confer contractual capacity for business purposes, is also possible in some countries (e.g. Malta).
(b) Employment and Business
A minor is frequently permitted to enter into employment and business contracts, usually on attaining the age of sixteen or, if under that age, with the consent of his legal personal representatives (normally his parents). Provisions on these general lines are contained in the law of several jurisdictions, including Belgium, Cyprus, Denmark, Luxembourg, the Netherlands, Quebec, Sweden, Switzerland and Turkey. In some countries (for example, the Federal Republic of Germany) the consent of a Court is also required. In others, (Austria, Finland, Greece, Norway and Spain for example) the consent of any other person or the court is not necessary.
REFORM PROPOSALS AND LEGISLATION IN OTHER LEGAL JURISDICTIONS
Proposals for the reform of the law relating to minors’ contracts have been made in a number of jurisdictions and legislation has been enacted in New Zealand and New South Wales. The subject has also been analysed, without any specific recommendations being made, by the Ontario Law Reform Commission. A brief description of these developments is provided below, dealing first with England, then Scotland, followed by New Zealand, New South Wales, Ontario, Alberta and finally British Columbia.
ENGLAND
The Latey Committee Report
In 1967 the Latey Committee, in its Report on the Age of Majority,19 considered the law relating to minors’ contracts. The Committee approached the subject on the basis that it should make general recommendations only, since it was
“conscious of the fact that it is unlikely that proposals for the reform of this part of the law of contract will be implemented by legislation before the Law Commission has considered them in relation to the law of contract as a whole.”
The following are the principal recommendations made by the Committee:
(1)
That the age for attaining full contractual capacity should be reduced to eighteen years.20
19
Report on the Committee on the Age of Majority (the “Latey Committee”) (Cmnd. 3342, 1967), analysed by Evans, The Need for Reform of the Law of Infants’ Contracts – Some Comments on the Latey Report, Auckland U. L. Rev. 65 (1969).
20
Id., para. 280.
(2)
That the Infants Relief Act 1874 be repealed21 and that (subject to the Committee’s other recommendations) contracts entered into by a minor should not be enforceable against him.22
(3)
That where a minor received money, property or services under a contract which he failed to perform he should be liable to account to the other party for the benefit he had received (subject to the Court relieving him from this liability to such extent as it might think fit).23
(4)
That where a minor had parted with money or property under a contract which was unenforceable against him he should be entitled to its return, subject to his obligation to account to the other party for any benefit the minor had received, if he resiled from the contract before it was fully performed.24
(5)
That the Court should have a discretion whether to give effect to any term in a minor’s contract of service or apprenticeship if it was of the opinion that the term was unreasonable or harsh or not in the minor’s interest.25
(6)
That the Court should have wide discretionary powers in restitutionary actions against minors.26
(7)
That section 5 of the Betting and Loans (Infants) Act 1892 be repealed,27 but that section 2 be retained.28
21
Id., para. 293.
22
Id., para. 299.
23
Id., para. 309.
24
Id., para. 310.
25
Id., para. 326.
26
Id., para. 335.
27
Id., para. 340.
28
Id., para. 366.
(8)
That the law should be clarified so as to ensure that a minor would be liable in tort for deceit unconnected with his age even if the effect would be indirectly to enforce a contract,29 but that a minor should remain exempt from liability in tort for deceit as to his age which induced a contract.30
(9)
That contracts of guarantee by persons of full age in respect of minors should be enforceable notwithstanding the unenforceability or nullity of the minor’s undertakings,31 but that this fact should be made clear to the guarantor in specific terms in the contract to be specified by legislation.32
A minority of the Committee agreed with the recommendation that the age for attaining full capacity should be reduced to eighteen years,33 but considered that, where a minor could show that a contract to which he or she was a party was harsh or oppressive, the minor should be entitled to have it set aside and to further relief to such extent as the Court might consider just and equitable34 (except in the case of completed contracts for the disposition of interests in land).35
The English Law Commission’s Working Paper No. 81, Minors’ Contracts
In 1982 the English Law Commission published a Working Paper on Minors’ Contracts.36 The Working Paper analysed the
29
Id., para. 351.
30
Id., para. 354.
31
Id., para. 362.
32
Id., para. 366.
33
Id.
34
Id., para. 598.
35
Id.
36
Law Commission, Working Paper No. 81, Minors’ Contracts, (1982).
issue in great detail and made an important contribution to the public debate on law reform on the subject. Many of the Commission’s recommendations in its Working Paper and subsequent Report will be considered in detail later in this Report; on this account, the summary of the recommendations in the present chapter will be brief.
In the Working Paper the Commission proposed two alternative approaches. The first would be to reform the present law in specific respects. The second, more radical, approach would be that all contracts should be fully binding on minors aged 16 and over, and not binding at all on those aged below 16.
As regards the first alternative, the Commission proposed that the basic principle of the law of minors’ contracts should be “qualified enforceability”: a minor’s contract should ordinarily be uneforceable against him or her though enforceable by the minor.37 The Commission recommended38 the repeal of the Infants Relief Act 1874. It considered39 that property should be capable of passing under any contract made with a minor, notwithstanding the fact that the contract is unenforceable against him. The Commission recommended40 that, in any action brought by a minor to enforce a contract, the adult party should be entitled to raise any defence to the action which would be available to him if the minor had been an adult. The adult party should also be able to plead a set-off or counterclaim up to the value of the minor’s claim, but not beyond.
Where a minor was in breach of a contract and was in possession of property which had passed to him under the contract, the Commission recommended41 that the adult party should be entitled to the return in specie of that property, but not to any other remedy. If the minor wished to retain the property he should pay for it. If the minor was unable to retain the property, he should pay for it unless the
37
Id., paras. 5.8, 6.1–6.3.
38
Id., para. 6.1.
39
Id., para. 6.2.
40
Id., para. 6.3.
41
Id., paras. 6.5–6.12.
minor could prove that he did not dispose of it in order to defeat the claims of the supplier. The adult should not be entitled to recover the proceeds of sale of any such property which the minor had sold, or property acquired by the minor wholly or partly in exchange for the property.
In ordinary contracts of sale, the remedy proposed by the Commission where a minor was in breach of contract should be exercisable by the adult only by order of the court.42 In this context, the Commission recommended that the court should have power to order restitution, or to order payment of the purchase price, in either case subject to such variations as it thought fit.43 In hire purchase and credit sale transactions, the Commission recommended44 that existing statutory provisions under the (English) Hire Purchase Act 1965 and (English) Consumer Credit Act 1974 should apply.
As an exception to the proposed general rule of unenforeceability, the Commission recommended45 that where, under any contract, the minor’s performance was postponed to that of the adult, the act of issuing a writ should make the minor himself liable on the contract. In such a case, where the adult had performed his part, he should be able to enforce the contract against the minor if, when the time came for the minor’s performance the minor failed to abide by his obligations.
The Commission recommended46 that a minor should, in an appropriate case, be entitled to enforce a contract by a decree of specific performance against the adult, if the minor had performed his part of the bargain or if the contract was in any event binding on the minor, but then on condition that the minor should perform his part when the relevant time came. Similarly in cases where the minor’s performance was postponed to that of the adult and
42
Id., para. 6.10.
43
Id.
44
Id., para. 6.11.
45
Id., paras. 6.14–6.20.
46
Id., paras. 6.22–6.24.
the minor sued to enforce performance by the adult, the minor should be liable to have a decree of specific performance made against him.
The Commission recommended47 that the category of “necessaries” should be abolished, and replaced by “necessities” these “necessities” should be limited to items essential to maintain a minimum standard of living. In deciding what are, and what are not, “necessities”, the Court should have regard to the status, social position, means or state of supply of the minor in question.48 Failing the abolition of necessaries, the Commission considered49 that the concept should be amended in order to render it more appropriate to modern trading conditions.
The Commission recommended50 that contracts of employment should continue to be excepted from the general rule and should be binding on a minor, provided that, taken as a whole, the contract was for the minor’s benefit. The Court should have power to sever from the contract any term which was not for the minor’s benefit and could reasonably be severed from the rest of the contract without unduly prejudicing the employer, and to enforce the contract without that term. Contracts for the provision of personal services by a minor should be treated in the same way as employment contracts, and should be binding on the minor subject to the same provisos and restrictions as employment contracts.51 The Commission recommended52 that trading contracts should continue to be governed by the general rule and should be unenforceable against a minor.
The Commission proposed53 that a minor should be bound by a covenant in restraint of trade if, in accordance with the
47
Id., paras. 7.1–7.35.
48
Id., paras. 7.15–7.19.
49
Id., paras. 7.5–7.14, 7.25.
50
Id., paras. 7.26–7.28, 7.31.
51
Id., para. 7.29.
52
Id., para. 7.30.
53
Id., para. 7.32.
general law concerning such covenants, it was an enforceable covenant. In considering whether or not the covenant was an enforceable covenant the Court should be specifically empowered to take into account the fact that the employee was a minor. The Commission recommended54 that loans of money to minors should be governed by the general rule of unenforceability, but considered that there was no need for particular rules further penalising contracts of loans to minors. It considered55 that loans of money to a minor for the purchase of necessities (or necessaries, if that concept is retained) should be recoverable whether or not the money was in fact used for that purpose: in other words, the loan contract would be binding on the minor.
The Commission was of the view that there was no reason to retain any category of contracts binding on a minor until formally repudiated by the minor before, or within a reasonable time after, attaining his minority. Accordingly, it recommended56 abolition of this category.
The Commission did not consider57 that there should be any general power to re-open executed contracts. Where, however, a minor could prove that an adult induced him to enter into an important transaction, by taking advantage of his immaturity and lack of experience, the Court should have power to re-open the contract.
The Commission recommended58 that an adult recently come of age should not be permitted to ratify a contract made during his minority, so as to render that contract binding on him. The Commission considered that it would be inappropriate to prohibit the making of a new contract, for fresh consideration, to do the same thing as previously contracted for during the young adult’s minority, but it recommended that, in any action brought against the erstwhile minor to enforce such a contract he should be entitled to claim
54
Id., paras. 7.33–7.38.
55
Id., para. 7.39.
56
Id., para. 7.40.
57
Cf. id., paras. 5.6, 8.1–8.15.
58
Id., paras. 9.1–9.9.
relief from it on the ground that its terms are unfair.