Capacity (Minors only)

Question 1

Family Law Reform 1969

Answer 1

-Made significant changes to the laws relating to minors, reduced the age of a minor from 21 to 18.
-Section 9 states that a person now reaches the age of majority at 18.

Question 2

Categories of contracts

Answer 2

Minor’s contracts can be divided into 3 categories:
1. Necessaries
2. Beneficial contracts of service
3. Voidable

Question 3

Necessaries

Answer 3

The law states that:
* minors should be allowed to enter contracts
* minors should pay for goods & services that are supplied to them, and that are classed as ‘necessaries’ according to their station in life as well as current needs
-This rule allows minors to enter contracts that are beneficial to them, but also prevents unscrupulous businesses from taking advantage of them.
-‘Necessary’ is a specific legal term and doesn’t have the same meaning as ‘necessity’. What’s necessary depends on the minor’s background e.g what’s necesarry for a prince may not be the same as what’s necessary for another child.
CL: Chapple v Cooper: A young widow(minor) was successfully sued for payment of her husband’s funeral as this was necessary, under obligation to bury her husband.
Nash v Inman: A tailor successfully sued a minor as the clothes were not deemed necessary
-For a valid & enforceable contract to exist, the goods actually have to be supplied and the minor is only obliged to pay a reasonable price.

Question 4

Beneficial contracts of service

Answer 4

• Minors must be able to support themselves financially, and therefore need the capacity to enter into contracts of employment.
• However, the terms of the contract need to substantially benefit the minor
  CL: Clements v London and North Western Railway Company- A minor was bound by the employer’s scheme as it was beneficial to him.
  compared with:
  De Francesco v Barnum- A minor wasn’t bound under the terms of her apprenticeship
• The courts have become progressively more lenient as to what might be binding on a minor
• CL: Doyle v White City Stadium Ltd- The contract was binding, as it encouraged the minor to be a clean and proficient boxer, which was to his advantage

Question 5

Voidable(continuing obligations)

Answer 5

• These are contracts that a minor can validly enter into but may repudiate while still a minor or within a reasonable time after reaching the age of 18.
• The common feature of these contracts is that the subject matter has some permanency. They are known as contracts of continuous/reccuring obligations. The main classes are:
  -leases of property
  -buying shares
  -partnerships
  -marriage settlements
• They are voidable because of their potentially onerous content
• Whether the minor repudiates in time to avoid the obligation is a matter of fact and is determined case by case.
• CL: Edwards v Carter: A man couldn’t repudiate a marriage settlement drawn up while he was a minor, as it was too late
• Where there are no obligations /conditions in force there is not a problem; the problem arises only when the obligation has arisen. It is generally felt that the minor should be liable for debts that have arisen before the obligation.
• CL: Steinberg v Scala(Leeds) Ltd- A minor could repudiate the contract and thus not have to pay the second instalment, but she couldn’t recover the sums paid in the first instalment.

Question 6

Remedies against Minors

Answer 6

• The general rule is that minors aren’t bound by contracts into which they have entered and do not incur liability.
• Liability can be incurred if they ratify the contract
• In addition, where the contract has been performed by the minor, they’ll be unable to recover the benefits they conferred on the other party

Question 7

The Minors Contracts Act 1987

Answer 7

This Act states that a contract made by a minor is unenforceable and cannot be binding.
This has the following implications:
* Even though the minor may not be bound by the contract, the other party will be
* If the minor has already paid money under the contract, they may be able to recover it if no consideration has been made to them.
* When the minor reaches 18, they can confirm the contract if they so wish.
* Ratification can be implied just with the minor continuing with the contract.

Guarantees- S 2 of the Act provides that where there is a guarantor to the contract, their liability will not be avoided due to their guarantee being a minor.

In equity- S 3 of the Act provides that where ‘it is just and equitable to do so’, the court may require the minor to transfer any property acquired under the contract back to the OG owner

Question 8

Limits

Answer 8

• The def of ‘necessaries’ is very wide and under s 3(3) of the Sale of Goods Act they are considered to be ‘goods suitable to the condition in life of the minor’.
• A minor is bound in contract of employment, if that contract is generally for their benefit
• Certain contracts are voidable rather than void, and therefore the contract will be valid and binding until the minor repudiates. If they perform their side of the contract, it is unlikely that a voidable contract can be made void.
• A contract with a minor is effective to pass property to the minor. Under s 3(1) of the Minor’s Contracts Act, it is also effective ti pass property from a minor.