ACTG 355 Chapter 14

Minors

persons who are under the age of majority (usually 18 years).

Liability on Contracts (Minors)

a minor’s contracts are voidable at the minor’s option.

Disaffirmance (Liability on Contracts)

avoidance of the contract; may be done during minority and for a reasonable time after reaching majority, but not after ratifying the contract. Cannot disaffirm sale of land until after reaching age of majority.

Restitution (Liability on Contracts)

A minor who has disaffirmed contract is entitled to restitution; courts are divided on whether minor is LIABLE for restitution.

Ratification (Liability on Contracts)

Affirmation of the entire contract; may be done upon reaching majority.

Liability for Necessaries

A minor is liable for the reasonable value of necessary items (those that reasonably supply a person’s needs).

Liability for Misrepresentation of Age

Prevailing view is that a minor may disaffirm the contract. Some states prohibit disaffirmance; some states require repayment and some allow defrauded party to recover damages.

Liability for Tort Connected with Contract

if a tort and a contract are so intertwined that to enforce the tort the court must enforce the contract, the minor is not liable in tort.

Person Under Guardianship

Contracts made by a person placed under guardianship by court order are void.

Mental Illness or Defect

A contract entered into by a mentally incompetent person (one who is unable to understand the nature and consequences of his acts) is voidable.  Either party may be liable in restitution.

Intoxicated Persons

A contract entered into by an intoxicated person (one who cannot understand the nature and consequence of her action) is voidable.