ALBERTA
The Institute of Law Research and Reform of Alberta published a Report entitled Minors’ Contracts167 in 1975. After a review of the law in Alberta168 and of reforms elsewhere,169 the Report made a number of recommendations for change, since its authors considered that the present law was “unsatisfactory”,170“often uncertain”,171 and “sometimes harsh”172, the Court not having power to relieve against its harshness.
The Report recommended173 that, as a general principle, a contract made by a minor should not be enforceable against other parties as if he had reached full age. Where a contract was unenforceable for this reason, the Report recommended174 that an action for relief might be brought either by the minor or, after he had repudiated the contract, by an adult party. In such an action the Court might grant to any party “such relief by way of compensation or restitution of property or both as is just”.175
On the question whether there should be a special category of contracts enforceable against minors, the Institute could not agree. The majority considered that there should be such a category, expressing its philosophy on the matter as follows:
“[We] believe that the law should interfere with contracts only to the extent necessary to give
167
Report No. 14 (January, 1975).
168
Id., pp. 2–20.
169
Id., pp. 20–27.
170
Id., p. 27.
171
Id.
172
Id.
173
Id., p. 28.
174
Id., p. 29.
175
Id.
reasonable protection to minors against unwise contracts; that the law should recognise that it is essential for minors to be able to acquire things and services by contract; that it should recognise the interest of adults in being able to deal with minors; that it should not allow a minor to take unconscionable advantage of the protection given to him by law; and that it should be as simple and intelligible as possible.”176
On this basis, the majority recommended that the following provision be introduced into the law:
(1)
(i)
An adult may enforce a contract against a minor if he satisfies the Court:
(a)
that at the time the contract was made the adult party believed it to be fair and reasonable in itself and in the circumstances of the minor; and
(b)
that his belief was reasonable.
(ii)
In determining whether or not the adult party’s belief was reasonable the Court should have regard only to the circumstances which were or should have been known to the adult party.
(2)
Notwithstanding subsection (1) a Court may refuse to enforce a contract against a minor if the minor satisfies the Court:
(i)
that the contract was improvident in the interest of the minor; and
(ii)
that the minor by restitution or compensation or a combination of both has put or will put the adult party in as good a position as if the contract had not been made.”177
The minority would have preferred not to include this provision. Stating that their position was similar to that of the Latey Committee and that they accepted its reasoning, the minority were of the view that:
176
Id., pp. 29–30.
177
Id., pp. 31–32.
“[n]o difficulty should be placed in the way of a minor who wants to withdraw from an unwise contract; but if he wishes to withdraw he should compensate the adult for any benefit received.”178
They considered that paragraph (1) of the majority’s proposed provision “would increase uncertainty and complexity without commensurate advantage”179 and that paragraph (2) “would add to the complication of the law while giving little relief to the minor”.180
The Report unanimously recommended181 that the proposed legislation should apply to executed as well as to executory contracts, the Institute being of the view that
“[t]he fact that the adult has pocketed the minor’s money or otherwise received the benefit of performance by the minor should not deprive the minor of the protection of the law.”182
On the question of affirmation and repudiation of the contract, the Report recommended183 that a minor should be able to affirm a contract after reaching full age or repudiate it within a year thereafter.
With two members of the Institute dissenting, the Report also recommended184 that the adult party should be able to ascertain his position by giving written notice to the minor after majority requiring him to affirm or repudiate the contract within thirty days. If the minor did not repudiate it within that period, the contract should become
178
Id., p 33.
179
Id.
180
Id.
181
Id., p. 34.
182
Id.
183
Id., pp. 35–36.
184
Id.
enforceable against him. If he did repudiate, the adult party should be entitled to apply to the Court for discretionary relief by way of compensation or restitution.
The Report recommended185 that the proposed legislation should apply whether or not the adult party was aware that the minor had not reached the age of majority. The Report argued that
“[a]lthough it is the minor who knows the facts, his failure to inform is likely to arise from the very inexperience and immaturity against which the law should protect him; and standard forms of contracts would otherwise easily circumvent the law.”186
Furthermore, it argued,187 the adult party would have the protection of the Court even if the contract was unenforceable, whilst if an improvident contract were to be treated as enforceable the results to the minor might be serious.
With two members dissenting, the Institute recommended188 that the proposed legislation should apply even to a case where the minor lied about his age.
On the question of the minor’s liability in tort, the Report recommended189 that an adult should have no recourse against a minor in tort where the minor had lied about his age. Apart from this limited case, however, the Report recommended190 that it should not be a defence to an action in tort against a minor that the tort was connected with a contract or that the cause of action for the tort was in substance a cause of action in contract (save to the extent that the contract would provide a defence for the minor if
185
Id., p. 36.
186
Id.
187
Id.
188
Id.
189
Id., p. 37.
190
Id.
he had been of full age. The Report condemned the distinction in existing law between tort actions which are in substance actions on a contract and those which are not as being “artificial and uncertain”,191 the Institute considering that
“the distinction should be abolished insofar as it puts a minor in a different position from an adult.”192
The Report recommended193 that the Court should be empowered to approve a contract on behalf of a minor on application to it by either party to the contract. The Court should not do so “unless satisfied that approval is for the benefit of the minor ….”194
The Report also recommended that the Court should be empowered to grant a minor capacity “to enter into contracts or any description of contracts”195 when satisfied that to do so would be for the benefit of the minor.
On the question of the position of disposition of property by a minor under a contract that was unenforceable against him, the Report considered that
“the proposed Act should place beyond dispute the effect of [such] disposition[s] …. It would be unsatisfactory to leave title to property in limbo
191
Id.
192
Id.
193
Id., p. 39.
194
Id. The Report proposed a monetary division of jurisdiction between the Family Court and the Trial Division of the Supreme Court of Alberta: the Family Court would have jurisdiction where the consideration given by the minor had a value not exceeding two thousand five hundred dollars: Id.
195
Id., p. 40. Only the Trial Division of the Supreme Court of Alberta would have jurisdiction in this matter: Id.
until the contract becomes binding or the court deals with the matters.”196
The Report accordingly recommended197 the inclusion of the following provision in the proposed legislation:
(1)
A disposition of property or a grant of a security or other interest therein made under a contract which is unenforceable against a minor is effective to transfer the property or interest unless and until the court orders restitution ….
(2)
A disposition of property or a grant of a security or other interest therein to a bona fide transferee or grantee for value is not invalid for the reason only that the transferor or grantor acquired the property under a contract which is unenforceable against a minor.”
The authors of the Report saw no reason why an adult-guarantor should receive the protection which the law gives to minors and accordingly recommended198 that the guarantor of an obligation of a minor should be bound by his guarantee to the same extent that he would be bound if the minor were an adult. The Report also recommended199 that the guarantor should be permitted to seek an indemnity from the minor only to the same extent as any other person dealing with the minor would. The Report stated:
“We recognise that many guarantees are given gratuitously and that it may appear harsh to hold a guarantor to his guarantee without giving him the right to recoup himself fully from the principal debtor, but we think that the protection of the minor must come first and that the intervention of a guarantor should not be a means of indirectly enforcing the contract against the minor.”200
196
Id.
197
Id., p. 41.
198
Id., p. 42.
199
Id.
200
Id., pp. 41–42.
In a number of miscellaneous recommendations concluding its Report, the Institute proposed that a minor should be capable of appointing an agent by power of attorney or otherwise201 and that certain statutory provisions already in existence permitting contracts to be made by minors in certain cases202 should be retained.203
No reform of the law relating to minors’ contracts has yet taken place in Alberta.