Exactly what is a reasonable time is not clear, and will be a decision of
the court given the particular circumstances. It was argued in Edwards v
Carter that the effect of the agreement did not have an impact on the minor
until he inherited the father’s estate. This does seem a reasonable claim, but
what if the inheritance had not been received until ten years later? A further
argument could be raised over the level of legal knowledge of the minor. If
the presumption is that such an agreement is binding, the only protection
for the minor depends on his knowledge of the legal right to repudiate.
The effect of repudiating a voidable contract is that the minor’s obligations
end, but he is not entitled to recover money already paid, unless there is a
complete lack of consideration. In Steinberg v Scala (1923) a minor
repudiated a contract for shares. All obligations between the minor and the
company ended at this point, but she could not recover the original cost of the
shares. The position regarding money due up to the time of repudiation is less
clear, and even academic authorities differ on the issue. It is possible that the
minor may be liable for debts incurred up to the time of repudiation.
The Minors’ Contracts Act 1987
All of these common law measures seem to leave the minor in a very
protected and somewhat privileged position. Indeed, until recent years, the
law was regarded as being particularly harsh in some circumstances on an
adult who contracted with a minor, especially given that there is a great
difference in the experiences of various young people. In a case where a
minor had knowingly taken advantage of an adult, using the law of
contractual capacity to his benefit, there appeared to be injustice arising out
of a law which aimed to protect. However, with the passing of the Minors’
Contracts Act 1987 this imbalance has been somewhat remedied. The Act
does not remove the protection given to a minor, but improves the position
of the adult dealing with him.
The two main provisions are:
- where a minor enters into a contract for a loan, guaranteed by an adult,
the guarantee is enforceable against the adult (s.2) - where a minor unjustly acquires goods under an unenforceable contract,
the court may order restitution (handing back) of the goods, or of ‘other
property’ representing the goods (s.3).
Loans
The common law position is unchanged, in that a straightforward
repayment of a loan under a contract with a minor is unenforceable. Before
1987 a guarantee was also unenforceable, but now, where an adult
guarantor agrees to repay the loan if the minor defaults, this is now
enforceable against the guarantor.
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