Chapter 7:

Class Comments

Ø Minors/Infants

Minors have historically been in a protected class and their contracts were “void.” Under modern contract law, however, their contracts are “voidable” by members of the protected class. In most states, minors are under 18.

Example: Nile, a sixteen-year-old, agrees to buy Greg’s car. In reliance on this agreement, Greg buys a new car. However, Nile subsequently tells Greg that he can’t buy the car; Greg has no legal recourse because as a minor, Greg can void the contract.

v Minority as a Defense (Shield)

A minor may disaffirm (deny) a contract during minority or within a reasonable time after reaching the age of majority. Only the minor may disaffirm the contract and the other party cannot then enforce the contract. Therefore, minority acts as a shield to a breach of contract action.

Restitution/Unjust Enrichment Action: A party contracting with a minor cannot bring a claim for restitution or unjust enrichment.

Misrepresentation: A party contracting with a minor could maintain an action for misrepresentation because a minor should not profit from fraudulent acts.

Example: When Dean was 16, he purchased a car from a local dealer, representing to the dealer that he was 18. When Alexander was 17, he disaffirmed the contract and discontinued payments. Although the car dealer could not sue Alexander for breach of contract, they could maintain an action for misrepresentation.

Ratification/Confirmation: If a minor does not disaffirm a contract within a reasonable time after reaching the age of majority, the court will consider this a ratification (confirmation/acceptance) of the contract provisions.

v Minority as Offense (Sword)

A minor who has entered into a contract may take the offensive: disaffirming the contract (denying it) and arguing for return/restitution of the benefit conferred by the minor on another. Interestingly, if the minor seeks to be returned to the pre-contract position (get back what was his/hers), in exchange the minor only has to return what the minor received from the contract and what is still in his/her possession.

Key: ONLY the minor can disaffirm the contract, not the other contracting party.

Example: Ben, a sixteen-year-old purchased a pocket bike from Fred’s Electronics. After driving the bike for 6 months, he decides that he would like to try an electric scooter. Ben can return the bike on the basis of his minority, but the question remains if he will have to compensate Fred’s for the loss in value of the item to them (a new pocket bike vs. a used pocket bike). Courts are divided on this issue, but most would require that Ben be liable for some portion of the bike.

v Recovery in Contracts with Minors

§ Necessaries

Minors are always liable for necessaries (BASIC food, clothing, and shelter). Many state statutes require their parents or guardians to pay for such items used/consumed by the minor.

Example: Is the following a “necessary?”: Holly, a 17 year old, stayed in the Honeymoon sweet of the Bel Aire Hotel for one week. The bill was $10,000. Was this expense necessary? Most courts would say, quite reasonably, no. However, if the hotel was a Motel 6 charging $20.00 per night, courts would probably require reimbursement (to encourage such businesses to provide basic necessities for minors in need).

§ Mental Incapacity

Historically, a person who was mental incapacitated could not enter into a contract. However, modern trends allow the mentally incapacitated to contract, however, the contract is voidable by one who is mentally incapacitated; however, the court may grant relief to the other party “as justice requires.”

Example: Mindi believes that she is Batwoman; she dresses and talks like Batwoman and refers to herself as the “Batwoman.” Paul, a used car salesman, sells Mindi a black corvette. Mindi, who is dressed as Batwoman, that she loves her new “Batmobile” and is excited about its “superpowers.” Paul figures that Mindi is a little off her rocker but sells her the car. Mindi later disaffirms the contract on the basis of her mental delusion. The court would allow her to void the contract.

§ Incapacity Due to Alcohol and/or Other Drugs

Incapacity due to intoxication is based upon the degree of incapacity. If, from an objective standard, it is clear that the person is intoxicated or under the influence of drugs, they do not have the ability to enter into an enforceable contract. However, the standard imposed by courts in these situations is strict: The person who voluntarily intoxicated/influenced himself/herself generally bears the burden of proving: (1) the degree of intoxication and (2) that the other party knew or had reason to know of the intoxication.

Example Steven is an alcoholic who is able to consume a significant quantity of alcohol before he displays his intoxication. After visiting his favorite “watering hole” one day, Steven purchases a new car from a local dealer. Steven crashes the car on the way home and wants to void his contract. At trial, Steven claims that he was intoxicated based upon an objective standard. However, the dealer testifies that Steven showed no signs of intoxication, that he test drove the car in a safe and reasonable manner, and that he negotiated the purchase price rationally. It is unlikely that given such testimony, Steven could claim that the dealer knew or should have known of Steven’s intoxication.

Note: Even if Steven could prove intoxication sufficient to void his contract, he would still be liable for restitution.