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Monday, January 26, 2004

Avoiding Enforcement of a Contract Because of Minority Age

1. Minor/Infant—under age 18 now, used to be under 21 at common law

Restatement (2nd) of Contracts §14 Infants
Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before person’s 18th birthday.

a. Majority rule—allows infant to disavow contract (make it voidable) and return only what is left of consideration. Example, you give minor $100,000. They disavow contract and have only $5 left. All the seller gets back is the $5.
b. Minority rule (modern trend)—minor can still make contract voidable, but minority rule can give the seller more rights.
i. Benefit rule: minor gets full refund, but seller keeps value of benefit of minor’s use. Example: minor buys car, parks it, and it gets hit by another driver. Minor buyer got virtually no benefit, so he gets most of refund.
ii. Depreciation rule (use/depreciation/damage): minor gets full refund, minus value of use/depreciation/damage. Same example as above, but seller can deduct from refund the cost of the damage to the car.

Dodson v. Schrader Tenn. Sup. Ct. 1992—16-year-old buys truck. It “blows up.” Boy wants to rescind contract and get full refund. Court rules seller must refund, but may keep amount equal to truck’s depreciation.

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