Joseph Dodson, age 16, bought a 1984 Chevrolet truck from Burns and Mary Shrader, owners of Shraders Auto Sales, for $4,900 cash. At the time, Burns Shrader, believing Dodson to be 18 or 19, did not ask Dodsons age and Dodson did not volunteer it. Dodson drove the truck for about eight months, when he learned from an auto mechanic that there was a burned valve in the engine. Dodson did not have the money for the repairs, so he continued to drive the truck without repair for another month until the engine blew up and stopped operating. He parked the car in the front yard of his parents house. He then contacted the Shraders, rescinding the purchase of the truck and requesting a full refund. The Shraders refused to accept the truck or to give Dodson a refund. Dodson then filed an action seeking to rescind the contract and recover the amount paid for the truck. Before the court could hear the case, a hit-and-run driver struck Dodsons parked truck, damaging its left front fender. At the time of the circuit court trial, the truck was worth only $500. The Shraders argued that Dodson should be responsible for paying the difference between the present value of the truck and the $4,900 purchase price. The trial court found in Dodsons favor, ordering the Shraders to refund the $4,900 purchase price upon delivery of the truck.

CHAPTER 14 ( BUS LAW I) " THE CAPACITY TO CONTRACT

Exceptions to the Minors Right to Disaffirm

Not every contract involving a minor is voidable, however. State law often creates statutory exceptions to the minors right to disaffirm. These statutes prevent minors from disaffirming such transactions as marriage, agreements to support their children, educational loans, life and medical insurance contracts, contracts for transportation by common carriers, and certain types of contracts approved by a court (such as contracts to employ a child actor).

Period of Minority

At common law, the age of majority was 21. However, the ratification in 1971 of the Twenty-Sixth Amendment to the Constitution giving 18-year-olds the right to vote stimulated a trend toward reducing the age of majority. The age of majority has been lowered by 49 states. In almost all of these states, the age of majority for contracting purposes is now 18.

Emancipation

Emancipation is the termination of a parents right to control a child and receive services and wages from him. There are no formal requirements for emancipation. It can occur by the parents express or implied consent or by the occurrence of some events such as the marriage of the child. In most states, the mere fact that a minor is emancipated does not give him capacity to contract. A person younger than the legal age of majority is generally held to lack capacity to enter a contract, even if he is married and employed full time.

Time of Disaffirmance

Contracts entered during minority that affect title to real estate cannot be disaffirmed until majority. This rule is apparently based on the special importance of real estate and on the need to protect a minor from improvidently disaffirming a transaction (such as a mortgage or conveyance) involving real estate. All other contracts entered during minority may be disaffirmed as soon as the contract is formed. The minors power to avoid her contracts does not end on the day she reaches the age of majority. It continues for a period of time after she reaches majority.

THE QUESTIONS ARE:

• What is the reason behind the traditional (original) rule?
• What is the downside of the traditional rule?
• What is the reason behind the reimbursement (newer) rule?
• What is the downside of the reimbursement rule?
• Which rule do you prefer? Why?
• Optional: If you can think of a better rule the courts should apply in these situations, tell us about it!