Contracts With Children

In order to acknowledge the uneven bargaining power between an adult and a person under the age of majority (aka a child or a minor), the law has given children a special power to cancel (void) their contracts at their option. The adult does not have this option; only the child-contracting party.

This is an extraordinary rule of law as the whole foundation of the commercial world is based on freedom of contract and, arguably more importantly, the enforceability of contracts. The mentally-challenged have similar rights but the focus of this article is on the contracts of children.

The law in this regards is, understandably, a bit of a moving target as more and more children are entering the commercial world and the law struggles to keep up; some jurisdictions dissatisfied with the common law and having taken to setting the law out in a statute (see Statutory Considerations below). The Internet has been partly responsible for this but, also, children are ever so slightly more mature at a younger age than previous generations.

1. Void

While there is no bright line in terms of an age under which any child cannot have the mental capacity to contract, a few cases have been published. In R v Oldham, Justice Scott wrote that:

"If a minor is to enter into a contract with the limited efficacy that the law allows, the minor must at least be old enough to understand the nature of the transaction and, if the transaction involves obligations ... of a continuing nature, the nature of those obligations...."

In that same case, the Court mused that while a ten year old might validly contract for candies, a four-year old could not enter into a lease contract.

Child's contractAny contract which a court deems to be detrimental to the interests of the child is void, plain and simple. It is not voidable - it is void. It is as if it never existed. Of course, this takes a court order to achieve but it is an important deterrent to commercial hustlers who would not hesitate to extract money from a child.

This, even if the contract for the necessaries of life (see below).

2. Voidable

The second rule is that a contract to which a child is a party is voidable at the child's option with the only exception being the necessaries of life rule, set out below.

These contracts are fully enforceable to all, including the child, unless the child takes steps to cancel - repudiate - the contract. Millions and millions of contracts are entered into every hour by children - all voidable but so few are ever voided. However, for big ticket items, the child retains the right to void a contract.

As stated in Children And The Law:

"This out for the child, legally referred to as voidability, enables a child to contract with an adult but carries on the tradition of protecting the child against her lack of experience or maturity by ensuring that she can incur no permanent liability until she reaches adulthood."

Once a child repudiates a contract, she must cancel the whole thing: she cannot cherry-pick a clause here or a clause there.

The state of the law is in disarray when it comes to dealing with children who misrepresent themselves either as to their age or in some other fraudulent fashion and then seek to repudiate the contract. In most legal cases, the court have still allowed repudiation. In an 1881 case, Wilbur v Jones, the New Brunswick court wrote:

"(A)n infant stands in no different position from a person of full age in relation to matters of fraud; and therefore, if he makes a representation upon which a person acts, he will not be allowed to impeach the validity of it on the grounds of his minority."

But in Jewel v Broad, the Ontario Court of Appeal disagreed opining:

"(T)he general rule is that, unless for necessities, the contract of an infant is not binding upon him, nor is he liable for a fraudulent representation that he was of full age whereby the plaintiff was induced to contract with him."

3. Necessaries Of Life

According to the common law, a child will not be exempt from his or her obligations as set out in a contract if the contract is for the necessaries of life.

In Johnstone v Marks, Justice Esher wrote of the supplier's burden of proof:

"It lies upon the plaintiff to prove, not that the goods supplied belong to the class of necessities as distinguished from that of luxuries, but that the goods supplied when supplied were necessaries to the infant. The circumstance that the infant was sufficiently supplied at the time of the additional supply is obviously material to this issue, as well as fatal to the contention of the plaintiff with respect to it."

Thus, in the 2008 edition of Chitty on Contracts, these words:

"Meaning of necessaries: such things as relate immediately to the person of the minor, as his necessary food, drink, clothing, lodging and medicine, are matters only as are positively essential to the minor's personal subsistence or support; it is also used to denote articles purchased for real use, so long as they are not merely ornamental, or are used as matters of comfort or convenience only, and it is a relative term to be construed with reference to the minor's age and station in life."

child readingLegal services or medical service contracts have been held to be contracts for the necessaries of life and therefore binding on a minor. While what may or may not be a necessary of life depends on the circumstances of the child - his age, needs and standard of living,1 it is useful to glance at the list set out in Chitty on Contracts:

"The following have been held to be necessaries:  engagement and wedding rings, regimental uniform, presence for a fiancée, a racing bicycle ..., the hire of horses ... and the hire of a car to fetch luggage from a station six miles away.

"On the other hand, the following have been held not to be necessaries: 11 fancy waistcoats ..., expensive dinners ..., a large quantity of tobacco ... and a secondhand sports car."

Employment contracts are held to be prima facie binding upon an infant as contributing towards a child's necessaries of life. In Roberts v Gray (1912), the oft-cited case on this point, the court wrote:

"... that an infant's contract for necessaries is binding ... that doctrine also applied not merely to bread and cheese and clothes, but to education and instruction....

"(E)ducation must not be taken in its narrow technical sense as merely meaning education to enable a man by the work of his hands to hereafter maintain himself as an artisan, but has a much wider meaning than that. It applies to education and instruction in the social state in which the infant is, and in which he may expect to find himself when he becomes an adult.

"(W)hen you get a contract for labour, and you have a remuneration of wages, that contract, I think, must be taken to be prima facie binding upon an infant."

4. Emancipation

When a child reaches the age of majority, she is emancipated in the eyes of the law and receives all her legal rights, privileges and responsibilities as an adult.

In Edwards v Carter (1893), Justice Watson wrote:

"The law gave this minor the privilege of repudiating the obligations which he had undertaken during his minority within a reasonable time after he came of age. It laid no obligation upon him - it merely conferred upon him a privilege of which he might or might not avail himself, as he chose. If he chooses to be inactive, his opportunity passes away. If he chooses to be active, the law comes to his assistance."

She also has a short time to complete her child-deals by repudiating contracts accepted by her when she was a child. The law requires her to do so within a reasonable time, without defining reasonable time. Therefore, every case turns on its own facts. In one case, Murray v Dean, three months delay after attaining the age of majority before giving notice of repudiation was acceptable to the court. Indeed, even a delay of 29 months was acceptable in the peculiar circumstances of Philips v Greater Ottawa.

Conversely, in Shephard, the court held that a three-year post-emancipation delay was unacceptable and refused to repudiate the contract even though it had been signed by a person who was, at that time, a minor.

If a child has received a benefit from the contract, she may not be allowed to repudiate it unless she can return the benefit. As justice

5. Statutory Considerations

Many jurisdictions have tweaked or even radically changed the common law on children and their contracts. Where they conflict, statute law trumps the common law so it is essential to always verify if, in a given jurisdiction, there are laws which could alter, in whole or in part,  what is set out above.

Sale of goods, statute of fraud, infants act - all good search terms too see if a statute exists which codifies the law in regards to contracts taken out by children.

For example, this codification of the law as regards contracts of minors in Ontario, being §3 of the 2009 Sale of Goods Act:

"Capacity to buy and sell is regulated by the general law concerning capacity to contract and to transfer and acquire property, but where necessaries are sold and delivered to a minor ... he or she shall pay a reasonable price therefor. Necessaries means goods suitable to the conditions in life of the minor or other person and to his or her actual requirements at the time of the sale and delivery."

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Published: Wednesday, September 02, 2009
Last updated: Wednesday, January 18, 2012
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