Revise Capacity (minors only) for Cambridge 9084 (3.1.5)

The fundamental principle of capacity in contract law is that a valid contract requires both parties to have the legal ability to enter into it. For minors, defined in the UK by the Family Law Reform Act 1969 as individuals under the age of 18, the law provides special protection. The general rule is that contracts are not binding on a minor. This rule is not designed to allow minors to take unfair advantage of adults, but rather to shield them from their own lack of judgment and from potential exploitation. Consequently, a contract made with a minor is generally unenforceable against them. However, the contract remains binding on the adult party, who cannot use the other party's minority as a reason to escape their own obligations.

The first major exception to the general rule concerns contracts for 'necessaries'. These contracts are considered valid and are binding on the minor. The Sale of Goods Act 1979, s.3(3) defines necessaries as 'goods suitable to the condition in life of the minor... and to his actual requirements at the time of the sale and delivery'. This creates a two-part test. First, the goods or services must be objectively suitable for someone of the minor's social standing. For example, in Chapple v Cooper, the funeral expenses for a minor widow's husband were deemed necessaries. Second, they must be subjectively necessary for that specific minor at that specific time. The case of Nash v Inman perfectly illustrates this: while fancy waistcoats might be suitable for an undergraduate's station in life, they were not necessary for this particular student who was already adequately supplied with clothes. If a contract is for necessaries, the minor is only obliged to pay a 'reasonable price', not necessarily the contract price.

The second category of valid contracts are beneficial contracts of service. These relate to a minor's employment, apprenticeship, training, or education. For such a contract to be binding, the agreement as a whole must be for the minor's benefit. The court will weigh the beneficial terms (such as wages and training) against any onerous or prejudicial terms. If the contract, viewed in its entirety, is advantageous to the minor, it will be enforced. In Clements v London and North Western Railway Co, a contract that relinquished an employee's right to a personal injury claim in favour of a compulsory insurance scheme was held to be beneficial. In contrast, in Doyle v White City Stadium Ltd, a minor professional boxer's contract, which included rules that could lead to his disqualification, was held to be beneficial overall as it enabled him to pursue his profession. Conversely, in De Francesco v Barnum, a stage-dancing apprenticeship with highly restrictive and exploitative terms was deemed not beneficial and therefore unenforceable.

Contracts of a continuing nature entered into by a minor are classified as voidable. These include agreements like leases, the purchase of shares, or partnership agreements, which involve recurring future obligations. Such contracts are binding on the minor unless they actively repudiate (reject) the contract, either during their minority or within a reasonable time of reaching the age of 18. Repudiation voids the contract from that point onwards, relieving the minor of future liabilities, but they generally cannot recover money already paid unless there has been a total failure of consideration (Steinberg v Scala (Leeds) Ltd). All other contracts, such as those for luxury goods or loans, are simply unenforceable against the minor. The Minors' Contracts Act 1987 does, however, allow a court to order a minor to return property acquired under an unenforceable contract if it is 'just and equitable' to do so (s.3). This remedy is discretionary and aims to prevent the minor from being unjustly enriched at the adult's expense. For example, if a minor bought a non-necessary item like a games console on credit and refused to pay, the court could order the minor to return the console to the seller.