Minor Child - Right to Contract

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Date Retrieved:	2024-04-27
CLNP Page ID:	2279
Page Categories:	Contract Law, Leases, & Sub-Letting (LTB), Contract Law
Citation:	Minor Child - Right to Contract, CLNP 2279, <https://rvt.link/8p>, retrieved on 2024-04-27
Editor:	Rstojni
Last Updated:	2023/09/22

Toronto Marlboro Major Junior A Hockey Club et al. v. Tonelli et al., 1979 CanLII 1969 (ON CA)

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Lying at the centre of this action is the question whether or not the agreement made between the 17-year-old John Tonelli and the Toronto Marlboros is enforceable.

Generally, the law will not allow an infant to bind himself in contract. Most of the contracts entered into by an infant are either voidable at the option of the infant or void. There is, however, an exceptional and narrow range of infant's contracts the law will enforce.

In Doyle v. White City Stadium Ltd., [1935] 1 K.B. 110, Slesser, L.J., stated at p. 131:

The origin so far as we know of the definition of the class of contract binding upon infants on which Serjeant Sullivan relies (and nothing earlier has been suggested) is to be found in Coke upon Littleton, p. 172a, where he says: "An infant may bind himself to pay for his necessary meat, drink, apparell, necessary physicke, and such other necessaries, and likewise for his good teaching or instruction, whereby he may profit himselfe afterwards", and to that has been added in the course of years contracts of service which are to his benefit.

It is now a matter of some debate as to whether an infant's obligation to pay for necessaries supplied rests on his contractual liability or is founded in quasi contract. This problem, however, does not require resolution in this case. The plaintiffs seek to uphold the agreement between them and the defendant Tonelli as a contract of service which is to the benefit of the infant.

In a recent study published in the Canadian Bar Review, Mr. David R. Percy concludes:

... it is clear that an infant may be bound by a class of contracts generally described as contracts of service, which permit him to earn his livelihood or to be trained for some trade or profession. As indicated earlier, such contracts appear to be only a species of contracts for necessaries, the only significant difference being that they clearly bind the infant regardless of whether they are executory or executed.

As with contracts for necessaries, contracts of service bind the infant only if, on construction of the whole contract, they are beneficial in the opinion of the court. Because of the wide scope of this test, it is settled that the contract does not cease to be binding merely because some clauses are not to the infant's benefit.

(See Percy, "The Present Law of Infants' Contracts", 53 Can. Bar Rev. 1 (1975), at p. 9.)

It is clear that the burden rests on the plaintiffs to prove that the contract in this case was beneficial to the defendant Tonelli. In approaching the issue of whether or not the contract was to Tonelli's benefit, I subscribe to the words of Fry, L.J., in De Francesco v. Barnum (1890), 45 Ch.D. 430 at p. 439:

Now I approach this subject with the observation that it appears to me that the question is this, Is the contract for the benefit of the infant? Not, Is any one particular stipulation for the benefit of the infant? Because it is obvious that the contract of apprenticeship or the contract of labour must, like any other contract, contain some stipulations for the benefit of the one contracting party, and some for the benefit of the other. It is not because you can lay your hand on a particular stipulation which you may say is against the infant's benefit, that therefore the whole contract is not for the benefit of the infant. The Court must look at the whole contract, having regard to the circumstances of the case, and determine, subject to any principles of law which may be ascertained by the cases, whether the contract is or is not beneficial.

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Jans Estate v Jans, 2020 SKCA 61 (CanLII)

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[64]           The Ontario Law Commission has examined some of the problems with Ontario’s Statute of Frauds, RSO 1990: Ontario Law Reform Commission, Report on Amendment of the Law of Contract (1987) [Ontario Commission Report]. Section 7 of Ontario’s Statute of Frauds, RSO 1990, c S.19, is substantially the same as s. 5 of Lord Tenterden’s Act:

Ontario’s Statute of Frauds

Lord Tenterden’s Act

As to ratification of promise made during minority 7 No action shall be maintained to charge a person upon a promise made after full age to pay a debt contracted during minority or upon a ratification after full age of a promise or simple contract made during minority, unless the promise or ratification is made by a writing signed by the party to be charged therewith or by his or her agent duly authorized to make the promise or ratification.

Confirmation of Promises made by Infants. V. And be it further enacted, That no Action shall be maintained whereby to charge any Person upon any Promise made after full Age to pay any Debt contracted during Infancy, or upon any Ratification after full Age of any Promise or Simple Contract made during Infancy, unless such Promise or Ratification shall be made by some Writing signed by the Party to be charged therewith.

[65]           The Ontario Commission Report noted that the law of contracts involving minors is complex and uncertain, but there are four theoretical categories that the contract could fall into (at 83–84):

(a)               onerous contracts that are void;

(b)               voidable contracts that are not binding unless ratified;

(c)               voidable contracts that are binding until repudiated; and

(d)               valid contracts for necessaries and beneficial services that are binding per se.

The Ontario Commission Report noted that contracts in the third category (binding until repudiated) encompass contracts concerning land, share agreements, partnership agreements and marriage settlements (at 180).

[66]           In English Statute Law, the Saskatchewan Law Reform Commission stated, “Section 5 provides that no action shall be maintained against an adult on any promise to pay made during infancy unless the promise is evidenced in writing” (emphasis added, at 153–154). In SK Frauds Report, the Law Reform Commission cited the MB Report and said that s. 5 only applies to contracts that are not beneficial, not for necessaries, not for business purposes and do not involve land (at 12–13):

Section 5 of [Lord Tenterden’s Act] requires that ratification by a person who has reached the age of majority of a contract :made while an infant must be in writing. Infants’ contracts fall into several categories. Contracts for necessaries and other :beneficial contracts are enforceable against the infant in all cases. Contracts involving land or entered for :business purposes are voidable by the infant if repudiated in a reasonable time after reaching the age of majority. All :other contracts are void unless ratified by the infant on reaching the age of majority. The Statute applies only :to the last class of contracts.

Categorization of an infant’s contract is often a difficult matter of fact. In the result, the courts have often found it :possible to avoid applying the Statute: Even purchase of a luxury by an infant can be characterized as beneficial. The :Manitoba Law Reform Commission [at 65] notes that the section has been litigated infrequently and in cases in which it would :have caused injustice to a party contracting with an infant, it has been avoided.

(Emphasis added)

[67]           There has been sparse application of s. 5 of Lord Tenterden’s Act in Saskatchewan case law. The first reported instance appears to be Molyneux and the second is Schmidt. In Molyneux, the plaintiff had brought an action against the minor defendant to recover six steers that he had purchased from the minor defendant, which were not delivered. District Court Justice MacLean found that the defendant had ratified the contract as an adult by retaining the deposit the plaintiff had paid, but since the ratification was not in writing the defence of minority under s. 5 was applicable: “Under the law, however, his plea of infancy is a good defence and the plaintiff cannot recover any damages” (at para 13). In the end, however, this was only of partial help to the minor as the trial judge ruled the deposit must be returned to the plaintiff. In my view, this was a contract for the one time sale of a small number of livestock, which could hardly be classified as containing any of the complex characteristics of contracts that generally must be repudiated to avoid enforcement.

[68]           The issue in Schmidt involved a loan that had been taken out by a father in the name of his three children, two of which were minors at the time of contract formation. Justice Zarzeczny stated that s. 5 of Lord Tenterden’s Act would have an impact on the enforceability of the contract, and the effect of the section is “that where a contract is made while a party is a minor it requires ratification to become binding upon that party and the ratification must be in writing and signed by the party” (at para 21). He concluded there was no evidence of ratification and, if anything, there was evidence of repudiation. This was a simple debt case.

[69]           The general language used in Molyneux and Schmidt appears to describe s. 5 as having application to a wider range of contracts with minors than do the various provincial Law Reform Commission reports. In both cases, the courts describe any contract that is made while one party is a minor, except for a contract for necessaries, as requiring ratification in writing. This differing application is noted by David Percy in “The Present Law of Infants’ Contracts”, (1975) 53.1 Can Bar Rev 1 [Percy]. Percy noted the following (at 13):

Traditionally the common law classed only four types of contracts as truly voidable, in the sense of binding until repudiated, :namely contracts concerning land, share contracts, partnership agreements and marriage settlements. All other infants’ contracts :for non-necessaries were not binding upon the infant unless he ratified them. At the outset it must be conceded that Canadian :courts do not make this distinction with perfect consistency and in some cases the courts appear to suggest that all infants’ :contracts for non-necessaries are binding unless they are repudiated.

(Footnotes omitted)

Thus, according to Percy’s observations, contracts that are binding until repudiation can include contracts concerning land, share contracts and partnership agreements (see pages 15–18).

[70]           In relation to land contracts, in Foley v Canada Permanent Loan & Saving Co. (1884), 4 OR 38 (WL) (Div Ct) [Foley], Ferguson J., writing in concurring reasons, observed that “when a conveyance passing an estate has been executed by an infant, he must, in order to repudiate it, do some distinct act in avoidance of it at or soon after he attains 21, or he will be bound by his acquiescence” (at para 22). In the same decision, also in concurring reasons, Proudfoot J. succinctly stated that “the deed of an infant is not void, but voidable, on his attaining his majority, if it prove to be injurious to his interest” (at para 14). In Foley, the plaintiff did not act for a period of two to three years after attaining the age of majority. The Court held that he did not repudiate the contract and was bound to the mortgage. This accords with Percy’s observations (at 20):

In the event that a repudiation is made after majority, the courts require it to be made promptly in order to be effective, at :least where the former infant is fully aware of his situation and simply fails to do anything to avoid the contract. In addition :it appears that an infant’s right to repudiate may be lost if he affirms the contract after reaching his majority, even if the :reasonable time period has not elapsed.

(Footnotes omitted)

[71]           In Pantazopoulous, the defendant was the owner and employer of a business that had been transferred to him by his father when he had been a minor. The action against him arose when he had attained the age of majority, but he claimed that he could not be considered an employer because he was a minor when he acquired the business. The trial judge disagreed and held that “all contracts relating to the business fall into the class of contracts that are valid until repudiated by the minor, either during his minority or within a reasonable time after reaching majority” (at para 11) and noted there was no evidence that the defendant had intended to repudiate the contract.

Johnstone v. Hepditch Jr., 2018 NBQB 100 (CanLII)

[11] In Bayview Credit Union Ltd. v. Daigle (1983) 1983 CanLII 2923 (NB KB), 3 D.L.R. (4th) 95; 1983 CanLII 2923, Higgins J. commented on the classification of contracts involving minors at paragraph 5:

Contracts involving minors may generally be classified into four main classes as follows:

1. enforceable contracts for necessities;

2. voidable contracts which the infant must repudiate during minority or within a reasonable time thereafter;

3. voidable contracts which are not binding unless and until ratified after attaining majority; and

4. contracts which are absolutely void.

See Chitty on Contracts, 24th ed. (1977), pp. 220-1, paras. 473-4.

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[14] The Ontario Court went on to say at paragraphs 10-11:

The issue

10 I am faced with the troublesome issue of determining whether the plaintiff has any recourse against the infant defendant. There is no question that Maria Jr. obtained funds which were not hers and that she was unjustly enriched. Notwithstanding the bank’s clear entitlement to these funds, Maria Jr. alleges that her age constitutes a full defence to this claim. She further claims that she is entitled to a return of the sum of $1,200 which was seized by the bank when it realized that a refund would not be forthcoming.

The contract liability of infants

11 It has long been understood that infants do not generally have the capacity to enter into contracts. The Court of Appeal of Ontario in McBride v. Appleton, 1945 CanLII 76 (ON CA), [1946] O.R. 17, [1946] 2 D.L.R. 16, at p. 27 O.R., p. 24 D.L.R. states:

The contract of an infant is considered in law as different from the contracts of other persons. The law exercises, as it were, a guardianship of the infant, using its power in some cases to nullify completely contractual transactions with an infant, and in other cases giving the privilege to the infant of saying during his infancy, and for a reasonable time thereafter, that he will not be bound by a contract to which he is a party.

The law in this area is somewhat complex as a result of the different conflicting interests which must be weighed when assessing the liability of infants on contracts they have entered into. S.M. Waddams expresses the lawmakers’ concerns as follows in The Law of Contracts, 2nd ed. (Aurora, Ont.: Canada Law Book, 1984), at p. 495:

The protection of weaker parties is an essential part of any civilized law of contracts. It was argued in the chapter on unconscionability that freedom of contract cannot be an absolute value but that other values such as fairness, equity, and the avoidance of unjust enrichment, must be weighed in the balance. For these reasons the law of contracts has always given special protection to infants. On the other hand, some protection is needed for a party dealing with an infant, and an entire freedom to avoid contracts might in the long term rebound to the detriment of infants, for few would advance credit even for necessaries to one whose promise to pay was not binding. The complexity of the present law springs from these conflicting objectives.