THE LAW REFORM COMMISSION

AN COIMISIÚN UM ATHCHÓIRIÚ AN DLÍ

(LRC 15 – 1985)

REPORT ON MINORS' CONTRACTS

IRELAND

The Law Reform Commission,

Ardilaun Centre, 111 St Stephen's Green, Dublin 2

© Copyright The Law Reform Commission 1985

First Published 1985

THE LAW REFORM COMMISSION

REPORT ON MINORS' CONTRACTS

CHAPTER 1 INTRODUCTION

In December, 1975, pursuant to the provisions of section 4, subsection (2)(c) of the Law Reform Commission Act 1975, the Attorney General requested the Law Reform Commission to initiate an examination of, and research in, “the law relating to the age of majority” and if thought fit to formulate proposals for the reform of the law and submit these proposals to him.

We duly commenced the investigation into the law relating to the age of majority. As the research progressed it became clear to us that we could not limit ourselves to the simple question of whether or not an alteration should be made in the law as to the age of majority: other related questions would of necessity require examination. One of these related questions is concerned with whether the law relating to the contractual capacity of a minor should be changed.

In due course the Commission published a Working Paper entitled “The Law Relating to the Age of Majority, the Age for Marriage and Some Connected Subjects”.¹ In the Working Paper we recommended² a reduction in the age of majority to 18, or to the date of marriage, if below that age; and we dealt with the consequences of the reduction in the age of majority. The Working Paper also gave a brief outline³ of the law relating to the contractual and other obligations of a minor. The only change in the existing law of contract

that we recommended⁴ in the Working Paper was that a minor should acquire full contractual capacity on reaching full age at the proposed age of majority (i.e. 18 or on marriage if below 18) rather than at 21 years. In our Report on the Age of Majority, the Age for Marriage and Some Connected Subjects,⁵ published in 1983, we made recommendations to the same effect.

These recommendations were given effect by section 2(1) of the Age of Majority Act 1985, which came into operation on 1 March 1985. We are of the opinion that the entire law regarding the contractual capacity of a minor should be revised and modernised having regard to modern social and economic developments.

The present Report sets out⁶ the main features relating to the contractual capacity of a minor. It briefly describes the legal position elsewhere and considers the legislation and proposals for legislation on the subject in certain other jurisdictions.⁷ Finally, in this Report, we analyse⁸ the deficiencies in the present law and make recommendations for its reform.

CHAPTER 2 THE LAW IN IRELAND RELATING TO MINORS' CONTRACTS

The basic principle of the present law¹ is that a minor must be protected against his immaturity in his dealings with other persons.² At the same time the policy of the law is to mitigate some of the hardships that might be imposed on persons dealing with a minor, so as to encourage them to enter into contracts that are for the minor's benefit.

The contracts of a minor may be dealt with under the following three headings:–

(1) Contracts that are Binding on a Minor

Where a minor enters into a contract with another person, whereby that person sells or supplies him with a necessary or necessaries, the contract will bind the minor. The courts have considered it in the minor's interest (as well as that of the other party) that he should be able to enter

into binding contracts for necessaries.³ The law relating to the sale of necessary goods is governed by section 2 of the Sale of Goods Act 1893, and the law relating to the supply of other necessaries is governed by the common law. In substance, however, the concept of what a necessary means is the same whether the statute or the common law applies. By way of extension of the concept of necessaries, certain contracts of service will bind a minor if they are for his benefit.

Section 2 of the Sale of Goods Act 1893 provides that where necessaries are sold and delivered to a minor he must pay a reasonable price for them. Necessaries in this section are defined as meaning “goods suitable to the condition in life of [a minor] .... and to his actual requirements at the time of the sale and delivery”.

The burden of showing not only that the goods were suitable to the condition in life of the minor but also that they were suitable to his actual requirements at the time of the sale and delivery, rests upon the supplier of the goods.⁴ Thus, where a minor has already been sufficiently supplied with the goods in question, even though this fact is not known to the supplier,⁵ the contract will

not bind him.⁶

Whether or not goods or services are necessaries is determined in two stages. First, the court must determine, as a matter of law, whether the particular goods or services are capable of being necessaries: that is, “whether there are any grounds on which they might be said to be needed to maintain the minor in his status or condition”.⁷ Secondly, assuming that the goods or services are capable of being necessaries, the plaintiff must prove that, as a matter of fact, they are necessaries in his or her particular circumstances.⁸ This two-stage process has lost much of

its former significance in the absence of trial by jury in contract cases.⁹

What constitutes necessaries will depend largely on the individual circumstances and requirements of the minor¹⁰ but the following general categories include the principal types of case:

(i) Food and Drink

Since the early development of the law of contract, the courts have held that food and drink may be necessaries in certain circumstances.¹¹ But equally clearly there can be occasion where beverages may not constitute necessaries.¹²

(ii) Clothing

The courts have frequently held that clothing may be a necessary,¹³ but it is of course clear that certain items of

apparel may not be necessaries.¹⁴

(iii) Board and Lodging

The provision of board and lodging may constitute a necessary in certain cases.¹⁵

(iv) Transport

It was held¹⁶ in 1898 that a racing bicycle used “occasionally” for transportation rather than in races may nonetheless be a necessary. In two Irish decisions, Skrine v Gordon¹⁷ and In re Mead,¹⁸ the purchase of a hunter

was held not to bind the minor,¹⁹ although in In re Mead²⁰ Sir Ignatius O'Brien, L.C., made it clear that he was not “laying down that under no circumstances could a hunter be a necessary”. In O'Neill v Read,²¹ the purchase of a horse by a minor who claimed that his health was delicate and that he required “horse exercise”²² was held by the jury to constitute a necessary.

Motor vehicles have caused more difficulty for the Courts. In Fawcett v Smethurst,²³ 1914, Mr Justice Atkin held that a contract made by a comfortably-off 20-year-old youth for the hire of a car at taxi-cab rates to drive a journey of six miles was binding on him as a necessary. In the United States the majority of jurisdictions still hold that a car

is not a necessary for a minor save in cases of clear business necessities.²⁴

One commentator in the United States, writing in 1952, speculated that:

Canadian courts have, until relatively recently, “uniformly refused to regard a car as a necessary”,²⁶ but in the British Columbia decision of First Charter Financial Corp. Ltd. v Musclow²⁷ in 1974, Mr Justice Craig, while holding on the facts that the evidence did not establish that the car sold to the infant was necessary, stated:

In Australia the trend of decisions appears to be towards recognising that a car may be a necessary for a minor, depending on the circumstances of the minor and the purpose for which the car is obtained.²⁹

Train journeys have been held to constitute necessaries in a number of cases.³⁰ While it would appear likely that the purchase of an air ticket could in some cases³¹ be held to be a necessary, at all events for long distances, an English decision³² has held that flying lessons for a law student did not constitute a necessary.

(v) Medical Aid

The provision of medical aid may constitute a necessary³³

provided that the assistance is not of frivolous or merely cosmetic nature. Thus, where, for example, a dentist fills a minor's teeth without the prior knowledge of the minor's parent³⁴ or contrary to parental instructions,³⁵ the court will not normally hold that this intervention constitutes necessary services.

(vi) Legal Aid

The provision of legal aid for the purposes of litigation or for non-litigous matters such as the preparation of a marriage settlement may constitute a necessary.³⁶

(vii) Funeral Expenses

Under the law formerly, it appeared³⁷ that a minor widow or widower would be bound in respect of a contract for the

burial of his or her deceased spouse or children. A minor would not appear, however, to be liable for funeral expenses incurred for the benefit of a parent or brother or sister.³⁸

Loans for Necessaries

At common law, a loan of money to a minor to pay for necessaries was not recoverable.³⁹ But where a minor had borrowed money for this purpose and had actually paid the money for the necessary the lender could stand in the place of the person who had supplied the necessary and sue for the money lent.⁴⁰ This rule has “most probably survived”⁴¹ the

prohibition relating to loans to minors in section 1 of the Infants Relief Act 1874. However, any security given in respect of a loan is unenforceable even though the money was required for necessaries, and an account stated is void in spite of the fact that some of the items in the account are necessaries.⁴² A bill of exchange or promissory note is void as against both the minor and any third person even though given in payment of necessaries.⁴³

The Basis of Minors' Liability for Necessary Goods

The question whether a minor's liability for necessary goods is to be determined by reference to a contractual or a quasi-contractual restitutionary principle has not yet been resolved. The issue is of practical significance because if the minor's liability is based on contract he will be liable on a executory contract for necessaries, whereas if it is based on quasi-contract⁴⁴ he will be liable only on supply of the necessary goods. In Nash v Inman,⁴⁵ Fletcher Moulton, L.J. suggested that the obligation rested on quasi-contract, but in the same case Buckley, L.J. based⁴⁶ the minor's liability on contract.

In respect of necessary services, the English case of Roberts v Gray⁴⁷ in 1913 held that a contract by a minor of a broadly educational nature could be enforced against him although it was still to a large extent executory. Hamilton, L.J. was:

Although some commentators⁴⁹ have tentatively tried to do so, it is difficult to reconcile these differing approaches.⁵⁰

Other Contracts Beneficial to a Minor, including Contracts for Education, Apprenticeship Contracts, and Contracts of Service

Certain contracts which, taken as a whole, are for the minor's benefit, are treated as though they were contracts for necessaries, and will bind the minor. These include

contracts of apprenticeship,⁵¹ education,⁵² and service,⁵³ and contracts in analogous areas.⁵⁴

The Irish courts have gone some distance further than their counterparts in other jurisdictions in their treatment of this subject. In Keays v Great Southern Railways Co.,⁵⁵ in 1940, the plaintiff was a twelve-year-old schoolgirl who held a “school season ticket” from the defendant railway company, which transported her to and from school. The ticket was issued at a significantly reduced rate, and contained special conditions absolving the company from all liability for injuries carried by their negligence. The plaintiff was injured in a railway accident, allegedly caused by the defendant company's negligence. The company relied inter alia on the conditions contained in the contract.

Hanna, J. refused the application for a direction made by counsel for the defendant at the conclusion of the plaintiff's case. He said:

Hanna, J. considered it to be “manifestly absurd”⁵⁷ to think that a school child, even of twelve years of age and even of the intelligence of the plaintiff, should be expected to be aware of the contractual limitation on her rights:

Hanna, J. was of opinion that the contract in question was “very unfair to the infant because it deprives her of practically every common law right that she has against the railway company in respect of .... negligence ....”⁵⁹ For that reason he considered that the contract was not for her benefit and that the plaintiff's case based on negligence should proceed.

It is apparent that the passages quoted from the decision lend themselves to a very broad interpretation since they would appear capable of appplying to all contracts made by minors. Elsewhere in the judgment, however, Hanna, J.

speaks in more qualified terms,⁶⁰ and his reliance on an English precedent⁶¹ clearly in point would suggest that his broader statements should perhaps be read in this more orthodox context. It could scarcely be contested strongly that a contract for transport to and from school is sufficiently related to, and analogous with, a contract for education for it to fall within the category.

A decision more difficult to rationalise in these limited conventional terms is Harnedy v National Greyhound Racing Co. Ltd,⁶² three years later, where the plaintiff was a nine-year-old girl who entered her greyhound for a racing trial and auction sale to be conducted by the defendants. During the trial the greyhound was injured, and the plaintiff sued the defendants alleging negligence in the conduct of the trial. The defendants relied on broadly drafted exemption clauses.

Geoghegan, J., in the High Court, affirming the Circuit Court decision in favour of the plaintiff, considered that, as a result of the comprehensive exclusion from liability:

In arriving at this conclusion, Geoghegan, J. stated that he had “followed”⁶⁴ the decision of Keays v Great Southern Railways Co.⁶⁵ and Flower v London & North Western Railway Co.⁶⁶

It is difficult to see how those decisions could have assisted the Court in Harnedy v National Greyhound Racing Co. Ltd,⁶⁷ where the contract does not appear to have had any connection, whether by way of analogy or otherwise, with contracts for the education or employment of children or contacts for personal services.

It is clear that trading contracts do not bind a minor.⁶⁸ The distinction between trading contracts and contracts for apprenticeship and education and analogous contracts may often be difficult to draw. Treitel has commented that:

There is no general principle that, if a contract is for the minor's benefit, it will bind him. For an apprenticeship, service or other contract specifed above, to be binding on the minor, it is necessary that, taking all aspects into account, it should be for his benefit.

In De Francesco v Barnum,⁷⁰ Fry, L.J., stated:

(2) Contracts Valid Unless Repudiated

Where a minor enters into a contract involving the acquisition of an interest in property of a permanent nature, with continuing obligations attached to it, he may repudiate⁷¹ it at his option either before⁷² or within a reasonable time after attaining his majority.⁷³ There is judicial authority recognising five types of contract falling within this general category. Whether or not this list is exclusive is not clear:⁷⁴ what does seem plain, however, it that there is no general principle to the effect

that any contract conferring an interest in a subject-matter of a permanent nature is valid until repudiated.⁷⁵

The five types of contract are as follows:

(i) Contracts for the Lease or Purchase of Lands

Where a contract made by a minor involves the acquisition of an interest in property of a permanent nature with continuing obligations attached to it, the minor may, at his option, avoid the contract either before or within a reasonable time after he attains majority.⁷⁶ Until he avoids the contract, he is bound by the obligations under it.

(ii) Contracts to Subscribe for the Purchase of Shares

Similarly, a contract by a minor to purchase shares will bind him until he repudiates it during minority or within a reasonable time thereafter.⁷⁷

(iii) Marriage Settlements

A marriage settlement, or an agreement for a marriage settlement, may be avoided by a minor during minority or

within a reasonable time thereafter.⁷⁸ The minor must either accept or reject the settlement in its entirety.⁷⁹

(iv) Partnership Agreements

An infant partner is not liable to creditors of the partnership for partnership debts contracted during his infancy,⁸⁰ although he may not prevent their discharge out of the partnership assets.⁸¹ During minority or within a reasonable time of reaching full age, he may repudiate the partnership contract altogether⁸² but if he fails to do so he will be liable for all debts contracted since he came of age on account of having held himself out as a continuing partner.⁸³

(v) Insurance Contracts

There is Irish authority for including insurance contracts, involving an obligation to pay premiums periodically, within the category of positive voidable contracts. In Stapleton

v Prudential Assurance Co. Ltd.,⁸⁴ in 1928 the High Court held that a contract for life insurance made by a minor was “a continuing contract, and the [minor] if she wished to repudiate it on attaining full age was bound to do so within a reasonable time.”⁸⁵

The length of time after reaching full age during which a person may avoid a contract that he made during his minority will depend on the circumstances of each case. A minor may not plead ignorance of his right to repudiate as an excuse for failing to exercise that right within a reasonable time.⁸⁶ On repudiation by a minor, the following rules apply:

(3) Contracts “Absolutely Void” Under the Infants Relief Act 1874

Section 1 of the Infants Relief Act 1874⁸⁹ provides that:

The effect of this section is not totally clear but a few points may be noted. It applies to only the contracts specified in it, namely –

The section does not affect the law as to contracts for necessaries or contracts of apprenticeship, service and education mentioned above. Nor does it apply to cases where money is lent or goods supplied by the minor or accounts are stated by him with others.

As a leading commentator noted, “[i]t has .... long been recognised that this section does not mean what it says”.⁹² What it does mean, however, is not so clear. The expression “absolutely void”⁹³ has given rise to varying interpretations in different contexts. In some cases⁹⁴ the words have been given their full effect, but it would appear clear that nevertheless the minor is unable to recover back money paid on account of goods when they have been consumed or used by him: only where there has been a total failure of consideration may the minor recover.⁹⁵ Moreover, the property in non-necessary goods sold to a minor would appear

to pass on delivery⁹⁶ (at all events where the parties so intend⁹⁷) or perhaps even without delivery.⁹⁸ On the important question of whether a minor may sue upon contracts falling within the scope of the section, there is no direct authority,⁹⁹ and the commentators are divided.¹⁰⁰ The view that has gained most support is that a minor may sue on such contracts.

Contracts Falling Within the Scope of Section 2 of the Infants Relief Act 1874

Section 2 of the 1874 Act provides as follows:

This section applies to all contracts made by a minor other than contracts for necessaries, education or services (which are binding on him) and contracts for the acquisition of some interest in property of a permanent character (which are voidable by him).¹⁰¹

Until its abolition by statute in 1981,¹⁰² the type of contract affected by section 2 which led to most reported litigation¹⁰³ was the promise to marry.¹⁰⁴ The question frequently arose as to whether a minor on reaching full age had made a new promise to marry (in which case he or she would be bound) or had merely ratified a promise to marry made during minority (in which case, in accordance with section 2 of the 1874 Act, he or she would not be liable). This distinction had been criticised as being “perplexing”¹⁰⁵ and “somewhat subtle”¹⁰⁶ and as leading to “some extreme refinements”.¹⁰⁷

In Belfast Banking Co. v Doherty,¹⁰⁸ in 1879, it was held that an action is maintainable by a bona fide indorsee for value, against an acceptor of a bill of exchange, accepted by the latter after attaining full age, for a debt contracted by him during minority (though not in respect of necessaries). It is clear that considerations of practical commercial convenience weighed heavily with the Court. Fitzgerald, J. said:

The practical effect of this decison was severely circumscribed by the enactment of section 5 of the Betting and Loans (Infants) Act 1892, which will be considered immediately below. But the reasoning of the case would still apply if, for example, the debt did not arise out of a contract of loans or the loan was not void because it was one for necessaries.

Contracts Void Under Section 5 of the Betting and Loans (Infants) Act 1892

A fresh promise given after majority to pay a loan that is void in law, and any negotiable instrument given in respect of such a loan, are “void absolutely as against all persons whomsoever” by virtue of section 5 of the Betting and Loans (Infants) Act 1892.¹¹⁰

Specific Performance

A minor may not enforce a contract by an action for specific performance, since the court would not enforce the contract

against him.¹¹¹ But where the minor reaches full age and adopts the contract, thereby becoming bound by it, he may take proceedings for specific performance in relation to it.¹¹²

Non-Contractual Transactions Involving Minors

Where a minor is involved in a non-contractual transaction, such as a gift or a disclaimer or discharge, for example, it appears that the minor is not fully bound.¹¹³ Thus, if a minor makes a gift of property, whether real or personal, he or she may avoid this at any time on the basis that he or she was by reason of age incapable of giving the necessary assent.¹¹⁴ This rule applies even where the gift is made in the form of a deed.¹¹⁵

Where property is given to a minor, it vests in the minor immediately upon the gift being completed.¹¹⁶ A gift inter vivos to a minor may not be revoked subsequently by the donor.¹¹⁷ It seems however that the minor may repudiate the gift on attaining full age, whereupon the estate or item of personal property, as the case may be, reverts to the grantor.¹¹⁸

Liability of Minors in Tort

Where a cause is really founded on the wrongful mode of performance of a contract the injured party may not proceed by framing his action in tort. But a minor will be liable for a tort, even where the injury may have occurred in a contractual setting, if the tort is independent of the contract.¹¹⁹ At what point an act ceases to be merely a misperformance of the contract and becomes instead conduct altogether outside the contract is a different question¹²⁰ and clearly will depend greatly on the Court's assessment of the facts of the case in question.

Thus, where a minor hired a horse for riding, he was held not liable in tort for injuring the horse through moderate

riding¹²¹ but, in another case¹²² involving the hiring of a horse, the minor was held liable in contract where, contrary to the express instructions of the owner, he injured the horse by jumping it.

Liability of Minors for Fraudulent Misrepresentation

A minor who, by fraudulent misrepresentation of fact, has induced another to contract with him, may not be held liable for damages in the tort of deceit, since the imposition of liability in such circumstances would facilitate an evasion of the minor's contractual immunity.¹²³ Notwithstanding this exemption of the minor from liability, the other party to the contract may avoid the contract.¹²⁴

The Equitable Doctrine of Restitution

The limits of the doctrine of restitution in respect of benefits acquired by minors “are somewhat ill-defined”.¹²⁵ The commentators are divided on the question whether the doctrine should be premised upon a false representation by the minor that he is of full age,¹²⁶ or, more generally,

upon any false representation of fact by the minor,¹²⁷ or simply on the right of the other party to recover his property, whether or not the minor was guilty of any fraud in either the legal or equitable sense of the term.¹²⁸

It seems clear, at all events, that restitution may be ordered where the minor obtains goods by fraud and remains in possession of them.¹²⁹ Where the minor has obtained the goods by fraud but no longer possesses them the position becomes less certain. Before examining the case-law it is perhaps desirable to mention briefly the competing policy considerations.

From the standpoint of minors, it can be argued that for the case to go beyond restitution of the very goods obtained to impose liability to repay their value, or to restore another article for which they have been exchanged, “would in effect be to enforce a contract declared void by statute”.¹³⁰ The general approach of the law has been “to safeguard the weakness of [minors] at large, even though here and there a juvenile knave slipped through”.¹³¹ From the standpoint of the parties contracting with minors – especially fraudulent minors – it can be argued that a restitutionary principle limited to cases where the minor retains the goods or property exchanged for these goods would allow some minors to profit on a rather arbitrary principle.

The decisions on the question are difficult to reconcile. The narrow approach was favoured in the English case pf

Leslie (R.) v Sheill,¹³² where A.T. Lawrence, J. said that:

In the same case Lord Summer expressed the view that:

The contrary approach had been favoured in 1913 in the case of Stocks v Wilson¹³⁴ where a minor who had obtained goods by misrepresenting his age and had later sold them was held accountable for the proceeds of sale.

The question has not been resolved in the Irish courts.¹³⁵ Decisions in other common-law jurisdictions are divided,¹³⁶ and academic commentators take opposing views.¹³⁷ In a

recent text on Irish contract law, Dr Robert Clark expresses¹³⁸ the hope that the wider view of equitable restitution may prevail in Ireland.

Guarantees and Indemnities¹³⁹

It appears that a guarantee of a loan to a minor that is “absolutely void” is itself void. This was held in Coutts & Co. v Brown-Lecky,¹⁴⁰ in relation to guarantees by adults of a minor's overdraft from a bank. Oliver, J. stated that since there was no debt, “for the Act of 1874 says so”,¹⁴¹ it was not possible to make a legally binding guarantee in respect of credit advanced to a minor for the purchase of non-necessary goods or services. On the other hand, an indemnity in respect of such a loan or credit will be binding,¹⁴² since an indemnity is not collateral to any legal liability on the part of another person. The legal reasoning behind this distinction has been described as “impeccable”,¹⁴³ but whether it represents a sound policy has been doubted.¹⁴⁴

This distinction between guarantees and indemnities has been widely criticised¹⁴⁵ on the basis that minority is a

personal privilege merely, and it has not been followed in some Canadian decisions.¹⁴⁶ In the British Columbia case of First Charter Financial Corporation v Musclow,¹⁴⁷ in 1974, Craig, J. stated, obiter:

CHAPTER 3 COMPARATIVE ASPECTS

In this chapter we will look briefly at the main features of the law in other jurisdictions and at structures for reform proposed, and in some cases enacted, elsewhere.

Northern Ireland

The law in Northern Ireland is in substance similar to the law in this jurisdiction. One important difference is that the age of majority is 18 in all cases, regardless of whether a person may have married under that age.

England and Wales

In England, the law is also similar but, as will be seen, the English Law Commission has made detailed proposals for reform in its Working Paper, Minors' Contracts, published in 1982, subsequently revised in its Report, Law of Contract: Minors' Contracts (Law Com. No. 134, 1984).

Scotland¹

Persons under the age of majority (18 years) are divided into two categories: pupils and minors. Pupils are boys under 14 years of age and girls under 12 years of age. Subject to what is said below, a pupil has not the capacity to enter a contract on his own behalf, but a tutor may enter certain contracts on his behalf. The pupil's father is normally tutor; if the father is dead, the mother will be tutor. A parent has power to nominate a tutor after his or her death; in default, the Court will do so.

A tutor may enter into contracts on behalf of the pupil

where they are consistent with the purpose of his office. Contracts designed to preserve rather than dispose of the pupil's property will normally fall within the scope of the tutor's authority. Purchases from a tutor may not be challenged but, where the tutor has acted outside his authority, he becomes liable for breach of trust. The tutor may protect himself against liability by obtaining the authority of the Court for a proposed transaction.

At any time within four years after reaching full age, the pupil may challenge a contract entered into by a tutor on the grounds of minority and lesion. Challenges on these grounds are rare and are difficult to sustain.

The authorities are divided on the question whether a pupil, acting without a tutor, may ever enter an enforceable contract. On one view he may not, but on another he may do so to the extent that the contract is beneficial to him. On the latter view, it is not clear whether the pupil is also liable on the contract: there is authority supporting the imposition of liability, at all events to the extent that the minor receives a benefit from the contract.

Minors are children between the age of pupillarity and majority. They have a somewhat greater contractual capacity than have pupils.

Where a minor has a curator (usually a father), contracts entered into by the minor with the curator's consent will bind him subject to challenge (within minority or the quadriennium utile) on the ground of lesion. Where a minor who has a curator enters into a contract without the curator's consent, that contract will be void unless either (a) it relates to employment or to a trade or business carried on by the minor; (b) the minor represented that he was of full age, and the other party reasonably believed him; (c) the minor on reaching full age homologates (i.e. confirms) the contract made during minority (unless the confirmation was made under duress or misrepresentation or in error of his legal rights).

Where a minor does not have a curator, he has the same² capacity to contract as if he were of full age, but with the

right to challenge a particular contract on the ground of lesion (within minority or the quadriennium utile).

The same is true of a minor who has been forisfamiliated (i.e. who has set out on an independent career with the consent of his or her father or who has married).

What constitutes lesion such as will enable a pupil or minor to avoid a contract depends on the particular circumstances of the case. Clear examples of lesion arise where the pupil or minor has given something away gratuitously or has disposed of it for a serious undervalue.

Generally, where the pupil or minor has entered into a contract with the consent of his or her tutor or curator, as the case may be, a greater degree of lesion will have to be established than in a case where he has done so alone.

United States of America

The law relating to minors' contracts in the United States of America³ bears many resemblances to Irish law. In a number of States, however, statutes have altered the position significantly. The age of majority in the overwhelming majority of states is 18; in Alabama, Nebraska and Wyoming it is 19, and in Mississippi it is still 21.

The position in the majority of States is that, in general,

contracts by minors are voidable by them during minority or within a reasonable time of reaching full age.⁴ Statutes in a number of States (including California, Iowa, Kansas and Utah) specifically provide that failure to disaffirm within a reasonable time after reaching majority will constitute implied affirmation on the contract. Other States (including Maine and Oklahoma) require that ratification must be in writing. In some States, where the contract relates to real property it is void ab initio. If a minor misrepresents his age in making the contract, the minor may be estopped from asserting his minority or may be held liable for tortious injury to the third party.⁵ In some States (including Indiana, Iowa, Kansas, Michigan and Washington),⁶ statutory provisions prohibit disaffirmance by the minor in such a case. Where there has been no misrepresentation as to age, in most States the minor on disaffirmance may recover his or her own consideration even though the minor has consumed or otherwise disposed of the goods passing to him under the contract.⁷ In other States, however, the minor is obliged to account for depreciation for the use of the item. Where the minor still has in his possession the property which passed to him or her under the contract, the minor must return it to the other party. Contracts for necessaries bind the minor. In certain States (including Iowa, Kansas, New York, Utah and Washington) a minor may not disaffirm any of his reasonable contracts made while engaged in business.

Contracts for legal services, at all events in respect of

litigation or the protection of the minor's personal liberty or reputation, will generally bind the minor.⁸

Where a minor repudiates or disaffirms a contract for services, he will normally be able to recover on a claim based on quantum meruit.⁹

Emancipation of a minor generally does not confer on him the contractual capacity of an adult, although it may be taken into consideration as a factor of practical importance in determining whether a transaction entered into by him was one for necessaries. In some States, however – including California, Connnecticut, Florida and Tennessee – emancipation has the effect of enabling minors to enter into binding contracts.¹⁰ Former servicemen under the age of majority are also given contractual capacity in certain instances.¹¹

The Uniform Securities Ownership and Minors Act (adopted in the majority of States) prevents a minor who has caused any dealings in his securities from disaffirming or avoiding the transaction unless there was prior notice of the minority. Under the Uniform Commercial Code, s. 3–207 (also adopted in most States) a minor who transfers a negotiable instrument may not disaffirm against a holder in due course. Moreover, in many States statutes permit students under the age of majority to make binding contracts for education loans (cf. the Uniform Minor Student Capacity to Borrow Act).

In general, a surety will be liable on his undertaking in the event of the minor's default.¹² Where, however, the minor disaffirms the contract or where the minor has received nothing under it, the surety will not be bound. The authorities are divided on the question whether the surety will be released from his obligation by the minor's offer to return the consideration, where the other party refuses to accept the offer.

Apart from cases of fraudulent misrepresentation as to age, a minor will not generally be liable in tort where the tort arose out of or was connected with a contract, insofar as enforcing his liability for the tort would, either directly or indirectly, amount to enforcing his liablity under the contract.

The law in Louisiana relating to minors' contracts¹³ contains the main elements of the Civil Law approach, requiring generally that the minor's tutor approve of the contract and including provisions regarding lesion, familiar in Civil Law jurisdictions.

In California,¹⁴ contracts by minors for artistic or creative services and professional sports, if approved by the Court, on application to it by either party, may not thereafter be disaffirmed by the minors. Similar legislation has been enacted in New York.¹⁵ Statutes have been enacted in several states enabling minors to enter into binding contracts of life insurance.¹⁶

Canada¹⁷

In Canada, 18 is the age of majority in all provinces save British Columbia, New Brunswick, Newfoundland and Nova Scotia, where it is 19. The law in Quebec is based on the French civil law system. In the other provinces, the common law rules prevail, subject to statutory changes, some similar to, or identical with those affecting the law in this country. In Alberta, a minor is liable on a contract for life insurance; in Manitoba, a minor over 16 living away from home may be liable on a contract to perform work or services unless the Director of Public Welfare declares it void on the ground of injustice.

Proposals for general reform of the law relating to minors' contracts have been made in Alberta and British Columbia, and the subject has also been considered by the Ontario Law Reform Commission. No legislative changes have yet emerged, however. The work of the law reform agencies in these provinces will be considered in detail later in this chapter and in our own consideration of the policy issues relating to reform of the law.

Australia¹⁸

The age of majority in all of the Australian states is 18. The law relating to minors' contracts is substantially the same as in this country. In New South Wales, however, a radically new approach was introduced by the Minors (Property and Contracts) Act 1970. The Act is considered in detail later in this chapter.

Minors' Contracts in Civil Law Systems

Although there are certain differences between the legal provisions of the various jurisdictions within the civil law system, a number of similarities may be discerned. Most of these jurisdictions permit guardians, curators or tutors of minors to enter into certain contracts on their behalf. Other common provisions relate to emancipation and capacity to enter employment and business contracts.

(a) Emancipation

Emancipation is a common feature in most jurisdictions with civil law systems: see the Law Reform Commission's Working Paper No. 2, The Law Relating to the Age of Majority, the Age for Marriage and Some Connected Subjects, paras 240ff (1977). It exists, for example, in Belgium, France, Greece, Italy, Luxembourg, Malta, the Netherlands, Quebec and Spain. The effect of emancipation, whether by order of the Court, marriage or by parental permission, is that the minor acquires full contractual capacity or, at all events, capacity to act in ordinary business situations. A limited form of emancipation, solely to confer contractual capacity for business purposes, is also possible in some countries (e.g. Malta).

(b) Employment and Business

A minor is frequently permitted to enter into employment and business contracts, usually on attaining the age of sixteen or, if under that age, with the consent of his legal personal representatives (normally his parents). Provisions on these general lines are contained in the law of several jurisdictions, including Belgium, Cyprus, Denmark, Luxembourg, the Netherlands, Quebec, Sweden, Switzerland and Turkey. In some countries (for example, the Federal Republic of Germany) the consent of a Court is also required. In others, (Austria, Finland, Greece, Norway and Spain for example) the consent of any other person or the court is not necessary.

REFORM PROPOSALS AND LEGISLATION IN OTHER LEGAL JURISDICTIONS

Proposals for the reform of the law relating to minors' contracts have been made in a number of jurisdictions and legislation has been enacted in New Zealand and New South Wales. The subject has also been analysed, without any specific recommendations being made, by the Ontario Law Reform Commission. A brief description of these developments is provided below, dealing first with England, then Scotland, followed by New Zealand, New South Wales, Ontario, Alberta and finally British Columbia.

ENGLAND

The Latey Committee Report

In 1967 the Latey Committee, in its Report on the Age of Majority,¹⁹ considered the law relating to minors' contracts. The Committee approached the subject on the basis that it should make general recommendations only, since it was

The following are the principal recommendations made by the Committee:

A minority of the Committee agreed with the recommendation that the age for attaining full capacity should be reduced to eighteen years,³³ but considered that, where a minor could show that a contract to which he or she was a party was harsh or oppressive, the minor should be entitled to have it set aside and to further relief to such extent as the Court might consider just and equitable³⁴ (except in the case of completed contracts for the disposition of interests in land).³⁵

The English Law Commission's Working Paper No. 81, Minors' Contracts

In 1982 the English Law Commission published a Working Paper on Minors' Contracts.³⁶ The Working Paper analysed the

issue in great detail and made an important contribution to the public debate on law reform on the subject. Many of the Commission's recommendations in its Working Paper and subsequent Report will be considered in detail later in this Report; on this account, the summary of the recommendations in the present chapter will be brief.

In the Working Paper the Commission proposed two alternative approaches. The first would be to reform the present law in specific respects. The second, more radical, approach would be that all contracts should be fully binding on minors aged 16 and over, and not binding at all on those aged below 16.

As regards the first alternative, the Commission proposed that the basic principle of the law of minors' contracts should be “qualified enforceability”: a minor's contract should ordinarily be uneforceable against him or her though enforceable by the minor.³⁷ The Commission recommended³⁸ the repeal of the Infants Relief Act 1874. It considered³⁹ that property should be capable of passing under any contract made with a minor, notwithstanding the fact that the contract is unenforceable against him. The Commission recommended⁴⁰ that, in any action brought by a minor to enforce a contract, the adult party should be entitled to raise any defence to the action which would be available to him if the minor had been an adult. The adult party should also be able to plead a set-off or counterclaim up to the value of the minor's claim, but not beyond.

Where a minor was in breach of a contract and was in possession of property which had passed to him under the contract, the Commission recommended⁴¹ that the adult party should be entitled to the return in specie of that property, but not to any other remedy. If the minor wished to retain the property he should pay for it. If the minor was unable to retain the property, he should pay for it unless the

minor could prove that he did not dispose of it in order to defeat the claims of the supplier. The adult should not be entitled to recover the proceeds of sale of any such property which the minor had sold, or property acquired by the minor wholly or partly in exchange for the property.

In ordinary contracts of sale, the remedy proposed by the Commission where a minor was in breach of contract should be exercisable by the adult only by order of the court.⁴² In this context, the Commission recommended that the court should have power to order restitution, or to order payment of the purchase price, in either case subject to such variations as it thought fit.⁴³ In hire purchase and credit sale transactions, the Commission recommended⁴⁴ that existing statutory provisions under the (English) Hire Purchase Act 1965 and (English) Consumer Credit Act 1974 should apply.

As an exception to the proposed general rule of unenforeceability, the Commission recommended⁴⁵ that where, under any contract, the minor's performance was postponed to that of the adult, the act of issuing a writ should make the minor himself liable on the contract. In such a case, where the adult had performed his part, he should be able to enforce the contract against the minor if, when the time came for the minor's performance the minor failed to abide by his obligations.

The Commission recommended⁴⁶ that a minor should, in an appropriate case, be entitled to enforce a contract by a decree of specific performance against the adult, if the minor had performed his part of the bargain or if the contract was in any event binding on the minor, but then on condition that the minor should perform his part when the relevant time came. Similarly in cases where the minor's performance was postponed to that of the adult and

the minor sued to enforce performance by the adult, the minor should be liable to have a decree of specific performance made against him.

The Commission recommended⁴⁷ that the category of “necessaries” should be abolished, and replaced by “necessities” these “necessities” should be limited to items essential to maintain a minimum standard of living. In deciding what are, and what are not, “necessities”, the Court should have regard to the status, social position, means or state of supply of the minor in question.⁴⁸ Failing the abolition of necessaries, the Commission considered⁴⁹ that the concept should be amended in order to render it more appropriate to modern trading conditions.

The Commission recommended⁵⁰ that contracts of employment should continue to be excepted from the general rule and should be binding on a minor, provided that, taken as a whole, the contract was for the minor's benefit. The Court should have power to sever from the contract any term which was not for the minor's benefit and could reasonably be severed from the rest of the contract without unduly prejudicing the employer, and to enforce the contract without that term. Contracts for the provision of personal services by a minor should be treated in the same way as employment contracts, and should be binding on the minor subject to the same provisos and restrictions as employment contracts.⁵¹ The Commission recommended⁵² that trading contracts should continue to be governed by the general rule and should be unenforceable against a minor.

The Commission proposed⁵³ that a minor should be bound by a covenant in restraint of trade if, in accordance with the

general law concerning such covenants, it was an enforceable covenant. In considering whether or not the covenant was an enforceable covenant the Court should be specifically empowered to take into account the fact that the employee was a minor. The Commission recommended⁵⁴ that loans of money to minors should be governed by the general rule of unenforceability, but considered that there was no need for particular rules further penalising contracts of loans to minors. It considered⁵⁵ that loans of money to a minor for the purchase of necessities (or necessaries, if that concept is retained) should be recoverable whether or not the money was in fact used for that purpose: in other words, the loan contract would be binding on the minor.

The Commission was of the view that there was no reason to retain any category of contracts binding on a minor until formally repudiated by the minor before, or within a reasonable time after, attaining his minority. Accordingly, it recommended⁵⁶ abolition of this category.

The Commission did not consider⁵⁷ that there should be any general power to re-open executed contracts. Where, however, a minor could prove that an adult induced him to enter into an important transaction, by taking advantage of his immaturity and lack of experience, the Court should have power to re-open the contract.

The Commission recommended⁵⁸ that an adult recently come of age should not be permitted to ratify a contract made during his minority, so as to render that contract binding on him. The Commission considered that it would be inappropriate to prohibit the making of a new contract, for fresh consideration, to do the same thing as previously contracted for during the young adult's minority, but it recommended that, in any action brought against the erstwhile minor to enforce such a contract he should be entitled to claim

relief from it on the ground that its terms are unfair.

The Commission took the view⁵⁹ that there was no need for any procedure for the judicial or other validation of contracts made by minors which might be otherwise unenforceable against them. It also rejected⁶⁰ the argument that minors should acquire full contractual capacity automatically on marriage.

The Commission considered⁶¹ that a minor should not forfeit his protection under the law of contract if he induced the making of a contract by fraud, whether by misrepresenting his age or otherwise. But it recommended⁶² that a minor who induced the making of a contract by fraud should be liable in tort for deceit, so that the adult party should be so liable even if a judgment against him would amount in effect to a full or partial indirect enforcement of the contract. In addition, the Commission recommended that the minor's fraud should be available to the adult as a defence in any action brought to enforce the contract, or as a ground for rescinding the contract. As to other torts, the Commission considered⁶³ that a minor should incur no liability in tort if such liability would amount to an indirect enforcement of the contract.

The Commission recommended⁶⁴ that a dispute arising out of a contract between two minors should be decided according to the same principles of law as apply between a minor and an adult.

Finally, the Commission proposed⁶⁵ that a guarantee by an

adult of a minor's obligation under a contract should not fail by reason of the fact that the contract is unenforceable against the minor. Neither a guarantor nor an indemnifier should be entitled to recover from the minor anything which they may have been called upon to pay under the guarantee or indemnity.

The Commission's alternative proposal, as we have mentioned,⁶⁶ was of a far more radical nature. Under it, the following rules would apply. All contracts of whatever nature would be fully binding on minors aged 16 years and over;⁶⁷ a minor below the age of 16 would have no liability under or by reason of any contract.⁶⁸

Under this proposal, the Commission also recommended⁶⁹ that a minor below the age of 16 should be able to enforce his contracts against the adult party, notwithstanding that these contracts were not enforceable against the minor. In any action brought by a minor below the age of 16 to enforce a contract, the adult party should be entitled to put forward any defence which he might make if the action had been brought against the adult by another adult, and to plead any set-off or counterclaim up to, but not exceeding, the value of the minor's claim against the adult.

The Commission recommended⁷⁰ that, where a minor below the age of 16 was in breach of a contract and had in his possession property which had passed to him under the contract the adult party should be entitled to the return of that property in specie, but not to any other remedy. The Court should have power to make any adjustment of rights as between the minor and the adult, as it might think appropriate. This remedy should not apply to the proceeds of sale of the property if the minor has sold it, or to any other property acquired by the minor wholly or partly in

exchange for that property. Nor should the remedy apply to money lent to the minor.

Finally, the Commission recommended⁷¹ that a minor below the age of 16 should not ordinarily be civilly liable in tort for fraud if the effect of such liability would be indirectly to enforce against him an unenforceable contract. But, where such a minor has induced a contract by misrepresenting himself to be 16 or over, he should be liable in tort for deceit whether or not rendering him so liable may amount to an indirect enforcement of the contract.

The English Law Commission's Report, Law of Contract: Minors' Contracts

In June 1984 the English Law Commission's Report⁷² on the subject was published. The Report contained a number of important changes in its recommendations from those put forward in the Working Paper. Most notably, as a result of consultation with interested parties, the Commission abandoned⁷³ its alternative proposal, that all minors of 16 years and over, should be liable on their contracts and that minors under the age of 16 should have no liability in contract.

The Commission reiterated⁷⁴ its view that the law governing minors' contracts should continue to be based on the principle of “qualified unenforceability” but it now favours a less wide-ranging approach to reform than one which would amount to a codification of the law. Comprehensive legislation would involve diversion of the resources necessary to prepare it from other projects of greater practical importance:

The Commission reiterated⁷⁶ its recommendation for the repeal of the Infants Relief Act 1874. The Commission dropped⁷⁷ the proviso provisionally recommended⁷⁸ in the Working Paper that, where an erstwhile minor entered a new contract reproducing the effect of an earlier, unenforceable agreement, it should be a defence to the erstwhile minor that the terms of the new contract were unfair to him. It also recommended⁷⁹ the repeal of section 5 of the Betting and Loans (Infants) Act 1892.

The Commission repeated⁸⁰ its recommendation that, where a guarantee is given in respect of an obligation of a party to a contract and the obligation is unenforceable against him (or he repudiates the contract) because he was a minor when entering the contract, the guarantee should not for that reason alone be unenforceable against the guarantor.

The Commission proposed changes in its recommendations on the position where property has passed to a minor under an unenforceable contract and the minor refuses to pay. Although the somewhat restrictive proposals in the Working Paper on this question had received general support among

those consulted, the Commission in the Report recommended⁸¹ that the Court might, if it was equitable and just to do so, require the minor to transfer to the supplier any of the property so passing or any property representing it. This recommendation would not prejudice any other remedy available to the supplier. The Commission's revised proposal contained⁸² an important limitation: where the minor having sold the property, dissipated the proceeds of sale, the Court should have no power to make any order, as, for example, to pay to the seller a sum equivalent to the purchase price or the value of the property.

The Commission's recommendations for legislation contained in its Report were designed not to apply to any contract entered into before they had been given legislative effect.⁸³

The Commission in its Report abandoned several recommendations⁸⁴ made in its Working Paper concerned with clarifications of doubtful parts and with minor improvements in the law. Having rejected a codification approach, it did not seem to the Commission that “in the absence of any need for these measures, and of any evidence that such an

enactment would resolve any practical difficulties”,⁸⁵ the case for legislation had not been made out.

The Commission in its Report also abandoned⁸⁶ several proposals⁸⁷ of a substantive nature made in the Working Paper. Although these proposals could have been proceeded with independently of codification and although the Commission remained of the opinion that the arguments put forward in the Working Paper were sound, it noted that the defects in the law which these proposals were designed to remedy “do not in practice give rise to the difficulties of which they might, in theory be the sources.”⁸⁸

In the light of consultation, the Commission concluded⁸⁹ that the best course would be to leave the existing law on necessaries unaltered. The concept of “necessities”, advanced in the Working Paper, had not found favour:

The Commission expressed⁹¹ itself satisfied with its rejection, in the Working Paper, of a validation procedure

for minors' contracts. On the specific question of validation of large transactions, which would be of particular economic significance, the Commission, after considered analysis, favoured⁹² no change in its earlier recommendations.

SCOTLAND

In June 1985, the Scottish Law Commission published its Consultative Memorandum No. 65, Legal Capacity and Reponsibility of Minors and Pupils. The Consultative Memorandum is a wide-ranging document, extending beyond the question of the contractual capacity of persons under age.

The preferred, provisional, option of the Commission is that the present two-tier law on the legal capacity of pupils and minors, with its divisions at the ages of 12 or 14 and 18, should be replaced by a single tier system based on the age of 16. Above that age, a person would have full contractual capacity without any special protections beyond those afforded by the general law applying to all persons. The Commission also consider that the doctrine of foris-familiation should be abolished, and that the rule of incapacity should not be subject to any exception entitling a person under 16 to act with the consent of a parent or guardian or, except possibly in relation to the making of a will, with the consent of a court.

So far as contracts made by persons under 16 are concerned, the Commission provisionally proposes that these should generally be void save for transactions commonly entered into by a child of the transacting child's age. Where a transaction is void on the ground of minority, the Commission provisionally propose that the rights of parties to the transaction should be determined according to common law principles of unjust enrichment but that the court should be empowered to modify the obligation of the person under 16 to make restitution or recompense in a manner considered equitable in the circumstances.

The second option of the Commission, should the one-tier system based on the age of 16 not prove acceptable, is

a two-tier system, comprising age bands of 0–16 years and 16–18 years with the upper age group enjoying only limited protection. The Commission also mentions, but does not specifically endorse, even provisionally, the possibility of giving effect to other options, such as a one-tier system based on some age other than 16, or a revised two-tier system with the same age divisions for boys and girls, or even a three- or four-age band system.

NEW ZEALAND

In New Zealand, the age of majority is 20. On marrying below that age, a person acquires full contractual capacity. The law relating to minors' contracts was codified and reformed by legislation in 1969,⁹³ and has been the subject of minor revision on three occasions since then.⁹⁴

Minors are divided into two classes: those under the age of eighteen years and those who have reached that age. Contracts made by a minor who has reached the age of eighteen years, as well as contracts of service and of insurance made by a minor of any age, have effect as if the minor were of full age.⁹⁵ The Court has wide powers, however, to declare the contract unenforceable against the minor in whole or in part, making such order as to compensation or restitution of property as appears to it to be just, in cases where either the consideration for the minor's promise “was so inadequate as to be unconscionable”

or any provision in the contract imposing an obligation on a minor as “harsh or oppressive”.⁹⁶

Contracts made by minors who have not reached the age of eighteen years are unenforceable against the minor but otherwise have effect as if he were of full age.⁹⁷ The Court may, however, in its discretion, enforce such a contract against the minor either in whole or in part, making such order as to compensation or restitution of property as it thinks just, in a case where it finds that the contract was “fair and reasonable” at the time it was entered into.⁹⁸ In exercising its discretion, the Court must have regard to –

Where the Court makes an order in respect of any contract by a minor, it may grant relief by way of compensation or restitution of property not only to any party to the contract, but also to a guarantor or indemnifier of the contract¹⁰⁰ or any person claiming through, under or on behalf of that party, guarantor or indemnifier.¹⁰¹ A guarantee or indemnity is enforceable by the creditor

against the surety.¹⁰² A minor may enter a binding contract with the approval of the Magistrate's Court.¹⁰³ Although the rule of law that a minor is not liable in tort for procuring a contract by fraudulent misrepresentation as to his age is not affected by legislation,¹⁰⁴ the Court may take any such representation into account in deciding whether to exercise any of its powers with respect to compensation and restitution.¹⁰⁵

NEW SOUTH WALES

In 1970, following the publication by the Law Reform Commission of New South Wales in 1969 of its Report on Infancy in Relation to Contracts and Property,¹⁰⁶ the Parliament of New South Wales enacted the Minors (Property and Contracts) Act 1970.¹⁰⁷ The Act is a complex and comprehensive codification of the law relating to the civil capacity of minors. It assimilates the concept of contract into the larger concept of the “civil act”, defined so as to include all types of contracts and other dispositions of property other than those of a testamentary nature.¹⁰⁸

Very briefly, the Act provides that a contract is binding¹⁰⁹ on a minor if it is for his benefit, unless at the time he made it he lacked, by reason of his youth, the understanding necessary for participating in it.¹¹⁰. Otherwise the contract will not bind the minor unless he affirms it after majority¹¹¹ or does not repudiate it before he reaches the age of nineteen years.¹¹² The Court may, however, affirm a contract¹¹³ whereupon it will bind the minor, or approve of a particular contract,¹¹⁴ or grant him capacity to enter into a particular contract, certain types of contract, or all contracts.¹¹⁵ Before taking such a step, the Court must consider that to do so would be for the benefit of the minor.

A disposition of property to a minor is binding unless consideration is manifestly excessive¹¹⁶ and a disposition by a minor is binding unless the consideration is manifestly inadequate.¹¹⁷ If an independent solicitor or the Public Trustee certifies that a minor makes a disposition of property, understanding its effect and doing so “freely and voluntarily”, the consideration not being manifestly inadequate, the disposition will bind the minor.¹¹⁸

A minor may appoint an agent by power of attorney or otherwise.¹¹⁹ A guarantor of an obligation of a minor is bound by the guarantee to the extent to which he would be bound if the minor were not a minor.¹²⁰ A minor is liable for a tort whether or not it is connected with a contract or the cause of action for the tort is in substance a cause of action in contract.¹²¹

The Act has provoked differing responses from those commenting on it. Professor Harland, in his treatise on the Act, stated that he considered it represented “an imaginative and workable approach towards the problems arising in respect of contracts and other civil acts entered into by minors”,¹²² although he criticised¹²³ a few aspects of the Act.

The Institute of Law Research and Reform of Alberta in its Report, entitled Minors' Contracts,¹²⁴ in 1975, said of the New South Wales legislation that it:

The Law Reform Commission of British Columbia, in its Working Paper on Minors' Contracts¹²⁶ in 1976, stated that it agreed with this analysis of the New South Wales legislation. It continued:

VICTORIA

The Chief Justice's Law Reform Committee of Victoria published a short Report on Infancy in Relation to Contracts and Property in 1970. Having recommended that the age of majority be reduced from 21 to 18, the Committee discussed the Latey Report and the New South Wales Law Reform Commission's proposals for reform.

The Committee preferred the New South Wales approach, “drastic and novel though no doubt it is”.¹²⁸ The only criticism it made of this approach was that it might “enable an infant to run into debt in acquiring luxury

commodities”.¹²⁹ The Committee considered¹³⁰ that this could be rectified by amending section 21(2) of the draft Bill contained in the New South Wales Law Reform Commission's Report so that it would apply only where the consideration had been fully paid by the minor.

SOUTH AUSTRALIA

The subject of the contractual capacity of minors was examined by the Law Reform Committee of South Australia in a report¹³¹ published in 1977. The Committee was unanimously of the view¹³² that the general principle should be that contracts should not be enforceable against minors, and that the laws should continue to protect minors against exploitation by others and their own immaturity. It unanimously rejected the proposal that there should be different age groups with different rules applying to them, on the basis that this “would simply produce further and undesirable complexity in the law”.¹³³ It equally rejected the proposal that full contractual capacity should be given to married minors, since this “might work as an incentive to hasty and early marriage”.¹³⁴ Finally, the Committee unanimously rejected the New Zealand principle that a court may declare a contract previously entered into to be binding, on the basis that “it renders the status of all contracts uncertain at the time of their making”.¹³⁵

At this point in the Report the Committee's recommendations ceased to be unanimous. A majority of the Committee considered that there should be no change in the general approach to the law. The majority was:

The majority also noted that the English Law Commission had encountered “grave difficulties”¹³⁷ in proceeding to practical methods of implementing the Latey proposals.

The minority of the Committee, on the other hand, would have preferred to recommend the adoption of a scheme based on the proposals of the Latey Committee. The combination of the reduction in the age of majority and the fact that it was “doubtful whether the existence of categories as ill devised as those of necessaries and beneficial contracts of service does in fact encourage adults to enter into contracts within them with infants”¹³⁸ led the minority to believe that they had become “a useless complexity in the law”.¹³⁹

Returning to a position of unanimity, the Committee recommended the abolition of the distinction between contracts that may be affirmed on attaining majority and contracts that are binding unless repudiated within a reasonable time after the attainment of majority.

The Committee could “see no good reason”¹⁴⁰ for the retention of the distinction, and proposed¹⁴¹ that all

contracts other than those for necessaries or of service should require subsequent ratification in writing.

On the question of guarantees, the Committee recommended¹⁴² that the fact that the principal contracting party was a minor should not of itself protect an adult guarantor; the Committee considered it “unsatisfactory that the conjoint effect of the technicalities of the common law of infancy and of guarantee renders the undertaking of the adult guarantor nugatory”.¹⁴³

The Committee also recommended¹⁴⁴ the establishment of machinery (similar to that in New South Wales and New Zealand) by which a minor might enter into binding contracts and dispositions with the prior sanction of the Court. The Committee commented:

The final recommendation of the Committee was inspired by their distaste for the rule denying the restoration of property transferred to a minor who may have obtained only “trivial benefits from a very partial performance of the contract by the adult party”¹⁴⁶ when the minor avoids the contract. The majority of the Committee recommended that a discretion be granted to the Court to enable it to order restitution of some or all of the property provided by the infant when a contract is properly avoided.

ONTARIO

The Ontario Law Reform Commission considered the law

relating to minors' contracts in its Report on the Age of Majority and Related Matters,¹⁴⁷ published in 1969. The Report made no recommendations as to changes in the law, confining itself to a criticial analysis of the proposals of the Latey Committee in its Report¹⁴⁸ and to a general discussion of social and legal policy on the subject. The Report stated that

The Commission, having set out¹⁵¹ in detail the recommendations of the Latey Committee regarding minors' contracts, proceeded to discuss a “number of problems”¹⁵² arising out of these proposals.

The first question was whether the proposals went too far in attempting to be fair to an adult dealing with a minor since, in the Commission's view, the introduction of a

discretionary judicial restitutionary system would cause “the whole emphasis on protection [to] shift.”¹⁵³

The Report stated:

The Commission considered that it would be “an entirely different matter”¹⁵⁵ to require a minor to account for a benefit he retained, but not in cases where he had disposed of the article in question and had spent the proceeds or where it had been destroyed. Whilst appearing to view this distinction with some favour, the Commission admitted that it would involve “other problems”:¹⁵⁶ it stated:

The second problem regarding the Latey Committee's proposals was that of the wide discretion involved in its recommendations.

In the Commission's view,

The third problem concerning the Latey Committee Report that the Commission perceived was in regard to the Committee's opposition to allowing a minor to resile from a fully executed contract.

The Commission stated:

As a general comment on the Latey Committee's Report, the Commission admitted to being

The Commission stated that its “primary concern”¹⁶¹ had been to consider what would be suitable law for persons aged seventeen or less. It commented that,

The Commission expressed its general philosophy on the subject as follows:

The final comment of substance on the subject made by the Commission was as follows:

The Commission stated that it would continue to keep the law relating to minors' contracts under review, adding that its final recommendations would best be made

ALBERTA

The Institute of Law Research and Reform of Alberta published a Report entitled Minors' Contracts¹⁶⁷ in 1975. After a review of the law in Alberta¹⁶⁸ and of reforms elsewhere,¹⁶⁹ the Report made a number of recommendations for change, since its authors considered that the present law was “unsatisfactory”,¹⁷⁰“often uncertain”,¹⁷¹ and “sometimes harsh”¹⁷², the Court not having power to relieve against its harshness.

The Report recommended¹⁷³ that, as a general principle, a contract made by a minor should not be enforceable against other parties as if he had reached full age. Where a contract was unenforceable for this reason, the Report recommended¹⁷⁴ that an action for relief might be brought either by the minor or, after he had repudiated the contract, by an adult party. In such an action the Court might grant to any party “such relief by way of compensation or restitution of property or both as is just”.¹⁷⁵

On the question whether there should be a special category of contracts enforceable against minors, the Institute could not agree. The majority considered that there should be such a category, expressing its philosophy on the matter as follows:

On this basis, the majority recommended that the following provision be introduced into the law:

The minority would have preferred not to include this provision. Stating that their position was similar to that of the Latey Committee and that they accepted its reasoning, the minority were of the view that:

They considered that paragraph (1) of the majority's proposed provision “would increase uncertainty and complexity without commensurate advantage”¹⁷⁹ and that paragraph (2) “would add to the complication of the law while giving little relief to the minor”.¹⁸⁰

The Report unanimously recommended¹⁸¹ that the proposed legislation should apply to executed as well as to executory contracts, the Institute being of the view that

On the question of affirmation and repudiation of the contract, the Report recommended¹⁸³ that a minor should be able to affirm a contract after reaching full age or repudiate it within a year thereafter.

With two members of the Institute dissenting, the Report also recommended¹⁸⁴ that the adult party should be able to ascertain his position by giving written notice to the minor after majority requiring him to affirm or repudiate the contract within thirty days. If the minor did not repudiate it within that period, the contract should become

enforceable against him. If he did repudiate, the adult party should be entitled to apply to the Court for discretionary relief by way of compensation or restitution.

The Report recommended¹⁸⁵ that the proposed legislation should apply whether or not the adult party was aware that the minor had not reached the age of majority. The Report argued that

Furthermore, it argued,¹⁸⁷ the adult party would have the protection of the Court even if the contract was unenforceable, whilst if an improvident contract were to be treated as enforceable the results to the minor might be serious.

With two members dissenting, the Institute recommended¹⁸⁸ that the proposed legislation should apply even to a case where the minor lied about his age.

On the question of the minor's liability in tort, the Report recommended¹⁸⁹ that an adult should have no recourse against a minor in tort where the minor had lied about his age. Apart from this limited case, however, the Report recommended¹⁹⁰ that it should not be a defence to an action in tort against a minor that the tort was connected with a contract or that the cause of action for the tort was in substance a cause of action in contract (save to the extent that the contract would provide a defence for the minor if

he had been of full age. The Report condemned the distinction in existing law between tort actions which are in substance actions on a contract and those which are not as being “artificial and uncertain”,¹⁹¹ the Institute considering that

The Report recommended¹⁹³ that the Court should be empowered to approve a contract on behalf of a minor on application to it by either party to the contract. The Court should not do so “unless satisfied that approval is for the benefit of the minor ....”¹⁹⁴

The Report also recommended that the Court should be empowered to grant a minor capacity “to enter into contracts or any description of contracts”¹⁹⁵ when satisfied that to do so would be for the benefit of the minor.

On the question of the position of disposition of property by a minor under a contract that was unenforceable against him, the Report considered that

The Report accordingly recommended¹⁹⁷ the inclusion of the following provision in the proposed legislation:

The authors of the Report saw no reason why an adult-guarantor should receive the protection which the law gives to minors and accordingly recommended¹⁹⁸ that the guarantor of an obligation of a minor should be bound by his guarantee to the same extent that he would be bound if the minor were an adult. The Report also recommended¹⁹⁹ that the guarantor should be permitted to seek an indemnity from the minor only to the same extent as any other person dealing with the minor would. The Report stated:

In a number of miscellaneous recommendations concluding its Report, the Institute proposed that a minor should be capable of appointing an agent by power of attorney or otherwise²⁰¹ and that certain statutory provisions already in existence permitting contracts to be made by minors in certain cases²⁰² should be retained.²⁰³

No reform of the law relating to minors' contracts has yet taken place in Alberta.

BRITISH COLUMBIA

In 1976, the Law Reform Commission of British Columbia published a Report on Minor's Contracts.²⁰⁴ The Commission noted in the Introduction to the Report that

The main recommendations of the British Columbia Report may be summarised as follows:

There has not yet been any legislation in British Columbia in response to the Commission's recommendations.

CHAPTER 4: PROPOSALS FOR REFORM OF THE LAW RELATING TO MINORS' CONTRACTS

Options for Reform

The present law relating to minors' contracts, as we have seen, is in a number of respects confused and contradictory, yet experience suggests that, with all its difficulties, it works reasonably satisfactorily. A case for reform has not been made by sections of the general public – adults or minors – who claim that they have suffered from the operation of the present law; nor has there been any significant resort to the courts in recent years by parties seeking to have aspects of the law clarified or developed. The essential argument in favour of reform is based on the inherent lack of order, conceptual clarity or consistency of policy in the present law.

The range of possible general approaches that we might recommend may most easily be considered under the following headings:

Option 1: Leaving the Present Law Unchanged

It can be argued that the best course would be to leave the present law unchanged. With all its theoretical weaknesses and inconsistencies the present law appears to give rise to no substantial difficulties in its practical operation.

Commercial practices have been built up over the years, resulting in a practical compromise between the various interests of minors and adults. A change in the law would inevitably result in at least a period of uncertainty as to the scope and application of the new rules; there can be no guarantee that, in their practical operation, new rules, whatever they might be, would work out as satisfactorily as the present law, with all its conceptual imperfections.¹

It can also be argued that to concentrate on the imperfections and uncertainties of specific aspects of the present law would involve an out-of-focus perspective of present law. The present law seeks, albeit somewhat imperfectly,² to establish a balance between the competing policies of protecting minors against exploitation as well as ensuring that the legitimate interests of adults are not prejudiced. That it succeeds in its central aims is evidenced by the complete absence of public discussion of the subject, let alone public pressure for reform.

Finally, it may be argued that, in view of the recent reduction in the age of majority, brought about by the Age of Majority Act 1985, the practical size of the problem has been very significantly reduced.

We appreciate the force of the argument in favour of leaving the present law unchanged, which, we admit, serves as a necessary test against which any proposals for reform must be judged. Only if the proposed changes are likely to result in improvements in practice, as well as in theory, should they be contemplated seriously. But we consider that we should examine all the options for reform in detail rather than decide, at the threshold, that the task is not worth the effort.³

We consider that it would be unwise to conclude from the relative paucity of litigation on minors' contracts that the law is therefore satisfactory.⁴ As Michael Kindred has observed:

Option 2: Unqualified Contractual Enforceability

The second option would be for the proposed legislation to dispense with any specific principles relating to contracts made by minors. The English Law Commission gave short shrift to this argument:

We think that this is too swift a dismissal. In favour of

this approach it can be argued that such a change would be likely to be far less radical in its practical effects than might at first appear.⁷ The courts would be required to apply the wide range of general principles of contract law that protect the weak and mentally incapacitated against the strong and the oppressive. For example, the principles relating to duress, undue influence, estoppel, mistake (including non est factum), and misrepresentation could all afford relief to minors in certain circumstances.

We are confident that, if legislation were enacted repealing the present specific statutory protections for minors, the courts would strive successfully to fashion and extend principles that would be fair to both minors and adults. But we see two major objections to this approach, which make us reject it as a possible solution.

First, it may be argued that, if the courts can fashion sound and sensible rules in relation to minors' contracts, then presumably the legislature is also competent to do this task. If the legislature were to do no more than abolish the existing specific rules relating to minors' contracts, leaving it to the courts to develop new rules, the legislature could be criticised for having failed to resolve a matter well within its competence. Of course there are areas of the law that may best be developed through the judicial process with little or no legislative intervention and control; but we do not think that minors' contracts constitute such an area.

The second major objection is that it could take a considerable time before the courts would develop a coherent set of principles in relation to minors' contracts.⁸ Until

then, the law would be uncertain and the legal position of minors in some respects more vulnerable than today. In the absence of the present specific (primarily statutory) exemptions of minors from liability, it could (and presumably, by some adults, would) be argued that a minor was no longer exempt from liability. If the issue were eventually litigated, the Court might well hold that the minor was exempt from liability but the individual circumstances of many minors could encourage them to settle the case to their detriment rather than risk speculative litigation.⁹

We should also discuss briefly a separate argument in favour of abolishing all existing specific protections for the minor against contractual liability. This argument reflects a radically different approach from the argument that the courts may be relied on to protect the minor, which we have just considered. This argument is based on a principle of equality between contracts and torts: it contends that, if the law makes minors capable of being held liable for their torts,¹⁰ it is not inherently unreasonable that minors should also be liable for their contracts.¹¹ The English Law Commission disposed of this argument as follows:

We are somewhat less than confident that this analysis fully disposes of the issue: there is, after all, a wide variety of circumstances in which a tort may be committed in the context of “a two-sided relationship”¹³ moreover, if protection on account of immaturity is a sound policy in relation to minors' contracts, it could be argued that the same policy should also apply in relation to minors' torts. Nevertheless, like the English Law Commission, we take the view that the law of contract raises somewhat different issues of policy from that of tort. Accordingly we do not consider that minors should be rendered fully liable for contracts, as this argument would propose.

Option 3: Unqualified Unenforceability of Contracts, Both By and Against a Minor

Under this option contracts made by a minor would be totally unenforceable by either the minor or the other party. This approach would unquestionably protect minors but it would do so at the expense of introducing what would appear to us to be manifestly inappropriate disincentives to adults to contract with minors in circumstances where this would be for the benefit of the minors in question.¹⁴ Moreover, it could result in cases of hardship and injustice for parties contracting with minors.¹⁵ we do not consider that this approach is satisfactory and will not discuss it further.

Option 4: Unqualified Unenforceability of Contracts Against, but not By, a Minor

Under this option, minors would be entitled to enforce contracts they make but the other party or parties to these contracts would not be entitled to enforce them against the minors. Although this option is marginally more attractive than Option 3, it still suffers from the major objections¹⁶ affecting that option, namely, the important disincentives to making contracts with minors that are for the benefit of the minors concerned and the risk of hardship and injustice for parties contracting with minors in some cases. Accordingly we do not consider that this option would be a good basis for the proposed legislation.

Option 5: Qualified Enforceability of Contracts

An approach that has been favoured in some other jurisdictions may for convenience be described as that of qualified enforceability. This approach may take one of two forms. Under the first form, certain categories of contract are presumed to be enforceable, subject to certain exceptions; under the second form, certain categories of contract are presumed to be unenforceable, subject to certain exceptions.

An example of the first form is contained in the New South Wales legislation of 1970.¹⁷ Under this Act a contract is presumptively binding on a minor if it is for his benefit unless at the time he made it he lacked, by reason of youth, the necessary understanding of its consequences.¹⁸ A disposition of property to the minor is presumptively binding on him unless the consideration was manifestly excessive, and a disposition of property by the minor is presumptively binding on him unless the consideration was manifestly inadequate.¹⁹

Where a minor participates in a civil act and a bona fide purchaser for value who is not party to the act acquires a property interest as a result of the act, the act is presumptively binding on the minor, provided the third party was without notice of the minority.²⁰

A minor, or a court, may repudiate a civil act that is not for the minor's benefit before he reaches the age of majority.²¹ The act of repudiation does not have effect against other parties where the civil act is presumptively binding on the minor.²² Where the civil act is not presumptively binding, a court, on application to it by any interested party, may either affirm or repudiate the civil act.²³ Where there has been a repudiation, the court is empowered to adjust rights between the parties, but where the civil act is presumptively binding in favour of any person, the court may not make any order adversely affecting his rights except with his consent.²⁴

This approach has not met with widespread support. The Alberta Institute of Law Research and Reform noted that the 1970 legislation:

The Law Reform Commission of British Columbia agreed with these comments. They added:

Under the second form of the qualified enforceability approach, to which we have referred,²⁷ certain categories of contract are presumed to be unenforceable, subject to certain exceptions. The Alberta Institute of Law Research and Reform, by a majority, favoured this form of approach. Having recommended²⁸ that contracts in general should not be enforceable against a minor, the majority proposed the introduction of the following legislative provision:

The majority considered that this proposal was fair to both the adult and the minor. So far as the adult was concerned:

The majority considered the proposal to be fair to minors because, in their view it was:

The approach favoured by the majority was rejected by the minority of the Alberta Institute on the basis that paragraph (1) “would increase uncertainty and complexity without commensurate advantage”,³² and that paragraph (2) “would add to the complication of the law while giving little relief to the minor.”³³

The Law Reform Commission of British Columbia agreed with the minority of the Alberta Institute. They said:

We must now look briefly at the solution adopted by the New Zealand legislation, since it combines elements of the qualified enforceability approach with those of the restitutionary approach, which we will discuss in greater detail below.³⁵

Under New Zealand law a contract made by a minor of eighteen or over, or a contract of service³⁶ or for life insurance made by a minor of any age, will have effect as if the minor were of full age.³⁷ Where, however, the court is of the opinion that the consideration for the minor's promise to act is unconscionable or that a provision of the contract imposes an obligation on the minor which is, at the time, harsh or oppressive, it has a wide discretion to cancel the contract or declare it unenforceable in whole or in part.³⁸

Some aspects of these provisions have been criticised. It has been suggested, on the one hand, that the grounds on

which a court may upset a contract are too narrow.³⁹ For example, it is not clear whether a contract with a harsh or oppressive exemption clause would be included, since an exemption clause does not impose an obligation on the minor.⁴⁰

On the other hand it has been pointed out that the court's power to order compensation or restitution extends to making orders for the transfer of property and there would appear to be nothing to prevent the title of an innocent party being upset.⁴¹

We have already indicated⁴² that in New Zealand a contract made by a minor under eighteen, other than for life insurance or a contract of service, is unenforceable against a minor.⁴³ In all other respects the contract has full effect as if the minor were an adult.⁴⁴ Where, however, a court, on application to it, finds that the contract was

fair and reasonable when it was entered into, it may enforce it or declare it to be binding in whole or part.⁴⁵ If the court finds that the contract was not fair and reasonable, it may cancel the contract, make an order entitling the minor on conditions to cancel the contract or, at its discretion, make no order.⁴⁶

In exercising its discretion the court may take into account the circumstances surrounding the making of the contract, the subject matter and nature of the contract, the nature and value of the property, the age and means of the minor, the question whether the contract was procured by a fraudulent misrepresentation by the minor, and all other relevent circumstances.⁴⁷

The court may also grant an order for compensation or restitution, and in contrast to cases where it is dealing with a contract that is prima facie binding, such orders do not depend on any order being made as to the enforcement of the contract.⁴⁸

The Law Reform Commission of Western Australia observes that:

Our Conclusions

We support the policy goal of the principle of qualified enforceability, which seeks to impose contractual responsibility on minors to the extent that it would be fair to do so, but no further. We share with some other law reform agencies and commentators, however, the apprehension that in its practical operation the principle of qualified enforceability involves such uncertainties as to render nugatory much of its theoretical attraction. We have considerable sympathy with the Law Reform Commission of British Columbia who came, reluctantly, to the conclusion, after analysis of earlier schemes of qualified enforceability in other jurisdictions, that:

In our view, a general principle of qualified enforceability would not improve the law to such a degree that we should recommend its introduction. A party contracting with a minor could have no certainty as to whether the contract would be fully enforceable, or whether restitution would be ordered. It is true, of course, that nothing is certain in this world and that even contracts between adults have a degree of uncertainty – they may be void, voidable or unenforceable on account of mistake, misrepresentation or illegality, for example – yet no one would suggest on this account that the general principle of enforceability of contracts should be set aside. In the case of minors'

contracts, however, a principle of qualified enforceability would involve a greater degree of uncertainty. It is reasonable to predict that, after a period of time in operation, with the establishment of a body of judicial precedents, the qualified enforceability principle would acquire some elements of predictability; but it would be unwise to place too much reliance on this development. We have seen how, more than a century since the enactment of the Infants Relief Act 1874, many questions concerning its central provisions have not yet been resolved by the courts.

Although we do not recommend the introduction of a general principle of qualified enforceability, this does not mean that we also reject the possibility that, as a qualification to a general principle of unenforceability, certain specific categories of contract may be enforceable in at least some circumstances. We will be examining this possibility below.⁵¹

Option 6: Reduction of the Age for Contractual Capacity

We must now consider the argument that the age for contractual capacity should be reduced. As we have noted already,⁵² the Age of Majority Act 1985, which came into operation on 1 March 1985 provides, in section 2(1) that the age of majority is reduced from twenty-one years to eighteen years or the age of marriage, whichever is the lower. Contractual capacity is reduced accordingly. We do not wish to reopen consideration of the question whether the age of majority, and of contractual capacity should have been reduced from twenty-one or whether a person should attain full age on marrying. It may be argued however, that the minimum age for contractual capacity should be reduced still further – to fourteen, fifteen, sixteen or seventeen years, perhaps, or to an unspecified age, contingent on the particular circumstances and degree of maturity of the particular minor. We must give this argument serious consideration. The English Law Commission, in its Working

Paper on Minors' Contracts, published in 1982, proposed⁵³ that the age of full contractual capacity be reduced to sixteen. They made this proposal as an alternative to their proposals to reform the law within the existing age framework.

The English Law Commission argued in favour of the proposal as follows:

The English Law Commission favoured the age of sixteen as the time at which full contractual capacity should arise because “society, as a practical matter, already recognises

to some extent”⁵⁵ this age as the dividing line for several important matters: in England at sixteen, compulsory schooling ends; a minor may enter the labour market; the parental obligation to maintain the minor comes to an end; the minor becomes eligible to claim social security benefits; he or she may marry (with parental consent) and may legally consent to sexual relations; he or she may independently acquire a domicile of choice.

While there are other dividing lines both above and below the age of sixteen, the English Law Commission considered that distinctions based on the age of sixteen correspond to “an important social reality”,⁵⁶ namely that at that age a minor

In its Report⁵⁸ on the subject, published in June 1984, the English Law Commission abandoned their provisional proposal that the age of contractual capacity should be reduced to sixteen years. They did so in the light of the mixed reception it had been given by those whom they had consulted. They concluded:

We have quoted in some detail from the English Law Commission's argument on this matter so as to indicate the full force of the proposal to reduce the age of contractual capacity to sixteen years. Having closely examined the proposal, however, we are not convinced by it. Of course there are some minors of sixteen – and, indeed, of fifteen or younger – who have a high degree of maturity and sophistication. But we do not consider that it can be said with complete confidence that minors of sixteen and seventeen, as a group, have sufficient maturity and experience to justify the removal of an important legal protection, especially when the removal of that protection would confer no substantial benefit in practice on either the minor or the party with whom he or she is contracting. We do not consider that the reduction of the age of contractual capacity to sixteen would lead to widespread injustice, since the general principles of contract law could be called in aid in many cases of inequitable conduct,⁶⁰ but we simply are not convinced that such a change would generally improve the law for either party to a contract in which a minor participates.

Option 7: The Restitutionary Approach

Under the restitutionary approach, a contract made by a minor would be enforceable by him against the adult party but would be unenforceable by the adult against the minor.

The adult in such a case would not necessarily be deprived of all rights of recovery against the minor: the adult would be entitled to apply to the court for compensation from the minor based on restitutionary rather than contractual principles. It will be recalled that in England the Latey Committee in 1967 proposed:

The Latey Committee also recommended⁶² that where a minor had transferred money or property to an adult he should be entitled to repudiate the contract and recover the money or property, but that, in such circumstances, the minor should be liable to account to the adult for any benefit he had received under the contract up to the time of repudiation.

On the same general lines, the Law Reform Commission of British Columbia recommended in 1976 that legislation be enacted along the following lines: