Contracting with Minors

A contract with a minor generally is valid until the minor decides otherwise. Unfortunately for companies that contract with the child, the power to void the contract only works one way. Put another way, contracts with minors are “voidable” at the discretion of the minor, and it is solely within the power of the minor “to avoid the contract.” See, e.g., Holmes v. Rice, 45 Mich. 142, 142 (1881); see also Woodman ex rel. Woodman v. Kera LLC, 486 Mich. 228, 236 (2010).

Circumstances of the Contract Sometimes Cause Courts To Enforce It

Although the default rule is that contracts with minors are voidable, certain states have passed statutes providing that minors may not void contracts for necessities to support the minor's family when certain other conditions are met. See, e.g., Cal. Fam. Code ' 6712 (West); Iowa Code Ann. '599.2 (West). Some courts have prohibited a minor from voiding a contract if the minor misrepresented that the minor was at least the age of majority. See, e.g., Manasquan Sav. & Loan Ass'n v. Mayer, 98 N.J. Super. 163, 164 (App. Div. 1967); see also Iowa Code Ann. '599.3 (West).

Judicial Approval

Some states, like New York and California, have statutes that give parties the option to have approved, by a judge, contracts with a minor for artistic or creative services or for the minor's participation in sports, resulting in a contract enforceable as though signed by an adult. See Cal. Fam. Code ” 6750 ' 6753 (West); N.Y. Art. & Cult. Aff. Law '35.03 (McKinney).

Where available, this mechanism might have its limitations: 1) in order to obtain court approval, the contract must meet certain criteria (e.g., maximum hour requirements, fairness to the child in the eyes of the court); and 2) having every contract, depending on the volume of contracts in question, approved by a judge can make this option more tedious than is practical. Judicial approval also might mean additional costs, including attorneys' fees and court filing fees.

Parental Guarantee: Potentially Bolstering a Contract with a Minor

Parents typically do not have the power to bind a child to a contract; so having a parent or guardian sign on behalf of the child typically does not lead to an enforceable contract. See, e.g., Woodman, 486 Mich. at 244.

One mitigating tactic, though, is to have the parent or guardian guarantee that the minor will comply with the terms of the agreement. See, e.g., Utilities Eng'g Inst. v. Kofod, 58 N.Y.S.2d 743, 744 (N.Y. Mun. Ct. 1945). Under this approach, the parent/guardian becomes a party to an agreement in his or her own capacity and may be sued in the event that the child fails to meet specified terms, resulting in a breach on the part of the parent.

However, this approach is not ironclad, as a New York court has refused to enforce such a parental guarantee, explaining that it “effectively puts substantial pressure on the parents to urge their daughter to comply with an agreement she entered into as a minor” and “effectively avoid[s] the State's public policy of protecting minors.” Metro. Model Agency USA, Inc. v. Rayder, 643 N.Y.S.2d 923, 926 (Sup. Ct. 1996).

Perhaps the safest course is to follow the advice of W.C. Fields: “Never work with children or animals.” Yet despite the risks of a voidable agreement, many parties need to conduct transactions with minors. Reducing to writing an agreement with a child and a parent regarding the parties' rights and responsibilities might encourage the parties to behave as promised, wanting to fulfill their promises and to maintain a reputation accordingly ' regardless of whether the document creates a legally enforceable contract. Nevertheless, contracting parties should enter such agreements with open eyes and recognize the risks of the child walking away from the agreement at any point without the other party having legal recourse.

Michael L. Bloom is a Clinical Assistant Professor at the University of Michigan Law School, where he is the founding director of the Transactional Lab & Clinic. Tim Cross, Mark McLoughlin and Elizabeth Beitler are third-year students at the law school, and members of the Clinic. This article also appeared in Corporate Counsel, an ALM affiliate of this newsletter. This article is for informational purposes and is not intended to constitute legal advice or to be relied upon. The views expressed in this article are those of the authors only and not those of any organizations, including those affiliated with any of the authors.

One of the fundamental principles of U.S. contract law is that a party must have the capacity to enter into a contract in order to be bound. Minors, as a general rule, lack this capacity. As a result, any contract made with a minor might not be enforceable. Yet in certain circumstances, contracts with minors are commonplace. For instance, in the entertainment industry, child actors frequently are asked to sign a variety of contracts. The following identifies some risks, some mitigating solutions and the limitations of those solutions when contracting with a minor.

When Will U.S. Courts Enforce Contracts With Minors?

Contracts Remain Valid Until Voided by Minor

A contract with a minor generally is valid until the minor decides otherwise. Unfortunately for companies that contract with the child, the power to void the contract only works one way. Put another way, contracts with minors are “voidable” at the discretion of the minor, and it is solely within the power of the minor “to avoid the contract.” See, e.g., Holmes v. Rice , 45 Mich. 142, 142 (1881); see also Woodman ex rel. Woodman v. Kera LLC , 486 Mich. 228, 236 (2010).

Circumstances of the Contract Sometimes Cause Courts To Enforce It

Although the default rule is that contracts with minors are voidable, certain states have passed statutes providing that minors may not void contracts for necessities to support the minor's family when certain other conditions are met. See, e.g., Cal. Fam. Code ' 6712 (West); Iowa Code Ann. '599.2 (West). Some courts have prohibited a minor from voiding a contract if the minor misrepresented that the minor was at least the age of majority. See, e.g., Manasquan Sav. & Loan Ass'n v. Mayer , 98 N.J. Super. 163, 164 (App. Div. 1967); see also Iowa Code Ann. '599.3 (West).

Judicial Approval

Some states, like New York and California, have statutes that give parties the option to have approved, by a judge, contracts with a minor for artistic or creative services or for the minor's participation in sports, resulting in a contract enforceable as though signed by an adult. See Cal. Fam. Code ” 6750 ' 6753 (West); N.Y. Art. & Cult. Aff. Law '35.03 (McKinney).

Where available, this mechanism might have its limitations: 1) in order to obtain court approval, the contract must meet certain criteria (e.g., maximum hour requirements, fairness to the child in the eyes of the court); and 2) having every contract, depending on the volume of contracts in question, approved by a judge can make this option more tedious than is practical. Judicial approval also might mean additional costs, including attorneys' fees and court filing fees.

Parental Guarantee: Potentially Bolstering a Contract with a Minor

Parents typically do not have the power to bind a child to a contract; so having a parent or guardian sign on behalf of the child typically does not lead to an enforceable contract. See, e.g., Woodman, 486 Mich. at 244.

One mitigating tactic, though, is to have the parent or guardian guarantee that the minor will comply with the terms of the agreement. See, e.g., Utilities Eng'g Inst. v. Kofod , 58 N.Y.S.2d 743, 744 (N.Y. Mun. Ct. 1945). Under this approach, the parent/guardian becomes a party to an agreement in his or her own capacity and may be sued in the event that the child fails to meet specified terms, resulting in a breach on the part of the parent.

However, this approach is not ironclad, as a New York court has refused to enforce such a parental guarantee, explaining that it “effectively puts substantial pressure on the parents to urge their daughter to comply with an agreement she entered into as a minor” and “effectively avoid[s] the State's public policy of protecting minors.” Metro. Model Agency USA, Inc. v. Rayder , 643 N.Y.S.2d 923, 926 (Sup. Ct. 1996).

Perhaps the safest course is to follow the advice of W.C. Fields: “Never work with children or animals.” Yet despite the risks of a voidable agreement, many parties need to conduct transactions with minors. Reducing to writing an agreement with a child and a parent regarding the parties' rights and responsibilities might encourage the parties to behave as promised, wanting to fulfill their promises and to maintain a reputation accordingly ' regardless of whether the document creates a legally enforceable contract. Nevertheless, contracting parties should enter such agreements with open eyes and recognize the risks of the child walking away from the agreement at any point without the other party having legal recourse.

Michael L. Bloom is a Clinical Assistant Professor at the University of Michigan Law School, where he is the founding director of the Transactional Lab & Clinic. Tim Cross, Mark McLoughlin and Elizabeth Beitler are third-year students at the law school, and members of the Clinic. This article also appeared in Corporate Counsel, an ALM affiliate of this newsletter. This article is for informational purposes and is not intended to constitute legal advice or to be relied upon. The views expressed in this article are those of the authors only and not those of any organizations, including those affiliated with any of the authors.