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68 Chapter 2Making a contract

the person giving the guarantee and must contain all the material terms of the contract

of guarantee.

Minors

A person who is capable of making contracts is said to have capacity to make contracts.

Adults have full contractual capacity, but special rules apply to minors (persons who are

under the age of 18). Contracts made by minors might be either valid, voidable or void,

depending upon the type of contract made.

Written contracts

Section 3 of the Sale of Goods Act 1979 provides that minors must pay a reasonable

price for necessary goods sold and delivered to them. They must also pay a reasonable

price for necessary services supplied. Therefore, contracts to supply minors with either

necessary goods or necessary services are valid contracts. Goods are regarded as necessary

if they are suitable to a person’s position in life and are actually required by him. This

obviously varies from person to person. It is worth noticing that the amount which minors

must pay is a reasonable price, which might not always be the same as the price agreed in

the contract.

A minor can also validly make a contract of employment, as long as the contract is

beneficial overall to the minor.

Oral contracts

Contracts which impose a continuing liability on a minor are voidable by the minor. This

means that the contracts are valid, except that the minor has the option to avoid the contract

(call the contract off ). (The way in which a voidable contract can be avoided is considered

in Chapter 4.) A minor who is to avoid these types of voidable contracts must do so either

before reaching the age of 18 or within a reasonable time of having reached the age of 18.

The main types of contracts voidable by a minor are contracts of partnership, contracts to

buy shares and contracts to take a lease of property.

Void contracts

Minors are not bound by contracts to buy unnecessary goods or services. A minor who

makes such a contract may be entitled to regain any money paid under the contract, but

only if the minor has not received any benefit under the contract. Nor are minors bound by

contracts to borrow money. For this reason it would be most unusual for a bank or other

commercial lender to lend money to a minor unless repayment of the loan was guaranteed

by an adult. Agreements by the minor to repay the loan will be of no effect if they were

made before the minor had reached the age of 18. Agreements to repay which were made

after the minor had reached the age of 18 will compel the minor to repay the loan. If a minor

acquires property under an unenforceable contract, s. 3(1) of the Minors’ Contracts Act 1987

allows a court to order the minor to give the property back to the supplier. This remedy is

available at the court’s discretion and would not be applied if the minor had paid for the

property.