Lize de la Harpe – Senior Legal Advisor at Sanlam
Introduction
In this article we will take a closer look at the “contractual capacity” of minors and what the legal restrictions are to contracting with/on behalf of a minor.
Contractual capacity
For a contract to be considered valid and binding in South Africa, there are certain requirements which must be met, one of which is that the contracting parties must have contractual capacity. Contractual capacity refers to the legal capacity of an individual to enter into valid agreements.
Not all persons have full contractual capacity– some have no contractual capacity whilst others have limited contractual capacity:
- Persons without any contractual capacity include minors under the age of 7 years old and people of unsound mind. No agreement they enter into will be valid. Either the parent/guardian or the curator must enter into the contract on their behalf.
- Persons with limited contractual capacity include minors between the age of 7 and 18 years. Such persons can contract themselves, but need the assistance/consent of another, e.g.: a parent/guardian. Similarly, people married in community of property also need the consent of the other spouse for certain transactions.
Contracting with a minor
A “minor” is any person under the age of 18 years old. It is a general principle of South African contract law that a minor has limited contractual capacity meaning that they need the assistance/consent of a parent/guardian to contract, subject to certain exceptions.
There are two broad exceptions to the above principle:
- Certain statutory exceptions (where legislation prescribes another age, for example the Wills Act which states that a minor who has attained the age of 16 years may execute a will);
- A minor may also enter into a contract without the assistance/consent of a parent or guardian if the contract imposes rights, but no obligations. Examples would be to accept a nomination as a beneficiary or to accept a donation.
In both of the above instances a minor may enter into a binding contract without the assistance of his or her parent/guardian.
What happens if the minor contracts without the necessary assistance?
Where a minor has entered into an agreement without his/her guardian’s consent and that agreement imposes duties upon him /her, the minor won’t be liable in contract. Put differently, the contract cannot be enforced against the minor. If sued on the contract, the minor can raise his /her lack of contractual capacity as a defence. The contract however binds the other party.
The guardian as representative of the minor (or the minor himself/herself when he/she turns 18 years old) may however at a later stage ratify such contract – ratification will validate the contract with retrospective effect.
Age of majority in South Africa
The Children’s Act 38 of 2005 reduced the age of majority from 21 years to 18 years. Therefore, as of 1 July 2007 a minor becomes a major on reaching the age of 18.
Majority status can also be acquired when a minor gets married or becomes emancipated. An emancipated minor is a child who has been given consent by a parent or guardian to contract independently.
Conclusion
As a last mention, just remember that a contract may be set aside under the restitutio in integrum if it is shown that it was prejudicial to the minor at the time it was concluded. “Restitutio in integrum” is Latin for the remedy whereby a party claims to be restored to the same position as they occupied before the contract was entered into.
As such, even where a minor enters into a contract with the necessary assistance – if it is found that the contract is prejudicial to the interests of the minor – he or she may elect to rescind from it. It is however necessary to show that the prejudice suffered was serious or substantial.
ENDS
