Civil Obligations - Agreements

A contract is a legally binding document, and for a contract to exist both parties must have contractual capacity. There are certain persons and classes of persons that lack the capacity to enter into a contract. The consequences resulting from entering a contract such as this , is that the contract will not be enforceable. The lack of capacity now stems from a fear of vulnerability to exploitation. Any person is competent to bind themself to any contract they choose to make, provided that it is not illegal or void for reasons of public policy. An example of exceptions to this law are minors. Minors are just one of the many groups that are included in this rule. Under common law people under the age of 18 are designated as “minors” and only have a limited capacity to enter a contract. The capacity of a minor to enter a contract is still regulated by the common law, and modified by the Minors' (Property and Contracts) Act 1970.

The general principle is that a contract between a minor and an adult is binding on behalf of the adult but not on the minor. If, after attaining his majority, he ratifies it through an act confirming the promise he made when officially a minor, he is bound legally to the contract. There’s no need for consideration for the act of ratification. A contract by a minor is not void and any money or property transferred by him under the contract can be recovered only if there has been a total lack of consideration. There are three exceptional cases which a minor is to some extent bound.

When necessaries are involved a minor is bound to pay for necessaries supplied to him under a contract. The Sale of Goods Act 1895 s.3 provides:

"… where necessaries are sold and delivered to an infant (or minor) … he must pay a reasonable price therefore 'Necessaries' in this section means goods suitable to the condition of life of such infant (or minor) … and to his actual requirements at the time of sale and delivery."

"Necessaries" are those things without which a person cannot reasonably exist and include things such as, food, clothing, lodging, education or training in a trade ...

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When necessaries are involved a minor is bound to pay for necessaries supplied to him under a contract. The Sale of Goods Act 1895 s.3 provides:

"Necessaries" are those things without which a person cannot reasonably exist and include things such as, food, clothing, lodging, education or training in a trade and essential services. The "condition of life" of the minor means his social status and his wealth. What is regarded as necessary for the minor such as residing in a stately home may be unnecessary for the resident of a council flat. Whatever the minor's status, the goods must be suitable to his actual requirements as discussed in Nash v. Inman [1908] 2 KB 1.

The nature of the minor's liability for necessary goods is uncertain. The Sale of Goods Act makes him liable only for goods that are "sold and delivered" and to pay, not any agreed price, but a reasonable price. This suggests quasi-contractual liability meaning he must pay, not because he has contracted to do so, but because the law requires him to recompense the seller for a benefit conferred and accepted. Some dicta support this view while others treat the minor's liability as contractual. In Roberts’s v Gray [1913] KB 520, a minor was held liable for his failure to perform a contract for a tour with the plaintiff, a noted billiards player. It was a contract for the instruction of the minor. The contract was wholly executory and but it was held that the contract was binding from its formation. It may be thought that there is a distinction between necessary goods and necessary services but this is difficult to justify logically or historically. Perhaps the contract in Roberts v. Gray belongs more so to the category of beneficial contracts of service, rather than being defined as ‘necessaries’.

A contract is not binding on behalf of a minor merely because it is proven to be for the minor's benefit instead a contract which would otherwise be binding by being deemed as a contract for necessaries is not so if it contains harsh and onerous terms this can be shown through the case of Fawcett v. Smethurst (1914) 84 LJKB 473.

It is for the minor's benefit that they should be able to obtain employment which would be difficult if he was not capable of entering a binding contract. The law allows the minor to do so, providing that the contract, taken as a whole, is manifestly for his benefit. So when a young railway porter agreed to join an insurance scheme and to forgo any claims he might have under the Employers' Liability Act, he had forfeited his rights under the Act, the contract as a whole being for his benefit. Contracts enabling a minor to pursue a career as a professional boxer and as an author have been held binding as being for their benefit as proclaimed in Clements v North Western Railway [1894] 2 QB 482

Acquisition of property with obligations, when a minor acquires "a subject of a permanent nature … with certain obligations attached to it" such as a leasehold, or shares in a company means he is bound by the obligations as long as he retains the subject. He must pay the rent or calls on the shares. The contract is voidable by the minor meaning he may repudiate it any time during his minority or within a reasonable time thereafter. It is uncertain whether avoidance here means rescission of the contracts or avoidance of only future obligations; but, whether it is retrospective or not, it seems that the minor cannot recover money which he has already paid unless there has been a total failure of consideration.

Restitution by a minor, where a minor has obtained property under a contract which is not enforceable against him, means the adult party who can neither sue for the price nor get the property back may suffer an injustice. Even where the minor has lied about his age, no action in deceit will lie because this would, in effect, enable the contract to be enforced against him; and for the same reason it is improbable that the minor would be stopped from asserting his true age. The Minors' Contracts Act 1970, s3, now affords a limited measure of redress. Where a contract made after the commencement of the Act is unenforceable against a defendant because he was a minor when it was made:

"… the court may, if it is just and equitable to do so, require the defendant to transfer to the plaintiff any property acquired by the defendant under the contract or any property representing it."

This may assist the plaintiff where the property is identifiable but where the plaintiff has loaned the money it will usually not be. The plaintiff will then be able to recover in equity only if he is able to prove that he loaned the money for the express purpose of enabling the minor to buy necessaries and that he in fact did so.

The Minors (Property & Contract) act 1970, s3, provides

"Nothing in this section shall be taken to prejudice any other remedy available to the plaintiff."

The plaintiff might rely on the equitable doctrine which required a fraudulent minor to return property which they had obtained by deception and which was still identifiable in his possession; but it is not clear that there would be any advantage in doing so, since the remedy under section 3 appears to overlap the equitable remedy and does not require proof of fraud.

Guarantee of a minor's contract. Section 2 of the Minors (Property & Contract) act 1970 provides that a guarantee of a minor's contract is not unenforceable against the guarantor merely because the contract made by the minor is unenforceable against him on the ground that he is a minor. The section does not apply if the contract made by the minor is unenforceable against him for some other reason, for example misrepresentation or duress by the adult party. In such a case the guarantor would not be bound.

From this we are able to see various conditions regarding a contract. When entering a contract, both parties have to have contractual capacity. There are exceptions from this law these exceptions can be classified by persons or groups of persons. A major group included in these exceptions are Minors. Under the Minors (Property & Contracts) Act 1970, with minors being excluded in the contract law a minor can still get a job, only if they take the contract as a whole and is manifestly best for the minors benefit. These laws have been put in place as due to the fear that due to the lack of the minor’s capacity some people could take advantage of them and exploit them. Any person is competent to bind themself to any contract they choose to make, provided that it is no illegal or is voidable by contract terms.