Adults who enter into contracts with minors may be wondering if it's legal to do so.
In general, minors don't have the legal capacity to enter into a contract unless a court approves the contract or a state's statute allows it.
So when are contracts between minors and adults enforceable in court?
To have a valid contract, all parties signing the contract must have the legal capacity to do so. This means that the person signing must have sufficient understanding that he's entering into a contract and the terms he's agreeing to.
For most contracts, the general rule is that while it's not illegal to enter into a contract with a minor, the contract is voidable at the discretion of the minor. Voidable contracts are usually valid contracts and are binding unless the child cancels it.
On the other hand, if the minor turns 18 and doesn't cancel the contract within a reasonable period of time, the contract could become binding and enforceable.
Enforceable Contracts With Minors
While most contracts with a minor are voidable, several states have statues that allow minors to sign and be bound by a contract with an adult. These contracts usually involve insurance policies or employment agreements.
- In Texas, a minor who is over the age of 14 and who doesn't have a guardian for her estate can contract and acquire a life insurance policy that'll be legally binding.
- In New York, minors can lawfully sign a contract to perform services as an actor, dancer, musician or vocalist, which can then be approved by a court. If such approval is granted, then the minor can't later get out of contract by arguing that it was signed when she was underage.
- Similarly, California law enforces employment contracts signed by a minor if the child is providing artistic or creative services. Like New York, the contract must be approved by a court in order to be binding on the child. However, California requires that the employer agree to set aside 15 percent of the minor's gross earnings in a trust before the court will approve the contract.
So while it may not be illegal to enter into a contract with a minor, it may not be wise to unless it's authorized by law. For more guidance on this issue, consult an experienced contracts lawyer near you.
- Contracts of Minors (National Paralegal College)
- Does Fracking Settlement's Gag Order Apply to Kids? (FindLaw's Legally Weird)
- Unenforceable Contract? 5 Common Errors (FindLaw's Law and Daily Life)
- Need Help Getting a Contract Reviewed? (FindLaw's Law and Daily Life)