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Horse & Law 22 - Contracting with a minor - what is your legal position?

05 October 2018

Social media has fast become a popular way for people and businesses to spread awareness of the goods and services they have to offer. With the younger generation dominating the social media world it’s becoming more common for people to engage in business with minors (persons under the age of 18). It’s not uncommon to see minors who have Facebook or Instagram accounts, or their own website, offering agisting services, advertising horses for sale, or seeking sponsorship.

Contracting with minors can be risky and it pays to take all practical steps to protect yourself and ensure any contract entered into with the minor is enforceable. If you suspect you are dealing with a minor, we highly recommend that you clarify their age. Where they confirm that they are under 18 we encourage you to insist that their parent or legal guardian is included in all correspondence and negotiations, and the final contract is signed by the parent or legal guardian on the minor’s behalf. Including the minor’s parent or legal guardian throughout the process will also reduce the risk of an argument that there was an imbalance of bargaining power.  An exception to this is employment contracts where the legal age for a person to be contractually bound is 16 years old.

If you don’t realise until it’s too late, and a dispute arises, the enforceability of a contract will need to be decided in accordance with subpart 6 of the Contract and Commercial Law Act 2017. Under these provisions, a contract can be enforced by a minor if a Court or Disputes Tribunal considers that the contract is ‘fair and reasonable’ given the surrounding circumstances at the time the contract was entered into. Alternatively, if the Court or Disputes Tribunal does not consider the contract to be fair and reasonable at the time of entry, it may cancel the contract, allow the minor to cancel the contract, or issue an order for compensation or restitution of property. This could result in the transaction being unwound with the repayment of money or the return of property to the minor.

If you are intending to transact with a minor, or are concerned about the enforceability of a contract or other issues with a minor please don’t hesitate to contact us for advice.

 

Jess Collett is a Solicitor in the Equine Team at Norris Ward McKinnon. You can contact Jess at jess.collett@nwm.co.nz