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Who can make a contract

With certain exceptions, anyone 18 years of age or over can enter into a contract.

People under 18

People under the age of 18 do not have the same full contracting power that adults do. They can still make contracts, but there are special rules.

In general, for a contract to be binding, the minor will have to affirm the contract, that is, agree to be bound by it after turning 18..

Some contracts are binding on the minor without the minor affirming them. For example:

Necessaries

A minor can make a legally binding contract forgoods or services that are usual or appropriate to their way of life (called necessaries). These will be such things as food, clothing, accommodation, medical care, school requirements or sporting goods appropriate to their age and their standard of living. A minor can also make a valid contract for services of instructional or educational benefit, which could include such things as music lessons, sports coaching, educational tutoring, etc.

Contracts which give the minor continuing legal obligations

These contracts are binding unless the minor chooses to opt out of the contract before, or reasonably soon after, they turn 18. Examples of these types of contracts are contracts of business partnership, or contracts to lease land. If the minor avoids the contract, they are only responsible for the obligations which have already arisen, not for any future ones. They cannot avoid past obligations or get back money they have paid out in respect of these. However, the minor may be able to get a court order for the return of their property, previously transferred under the contract, on fair terms.

Contracts made with the consent of a court

A minor may make a binding contract with theconsent of a court. The minor's parents can apply on the minor’s behalf, if the minor wishes to be bound; or the other party can apply, if they wants to make the contract enforceable against the minor. If the court decides to approve the contract, it will then be legally binding [Minors Contracts (Miscellaneous Provisions) Act 1979 (SA) s 6].

Guarantees

A minor's performance of a contract may beguaranteed. If the adult party to a contract wants greater security in contracting with a minor, they can ask the parents (or another adult) to guarantee the minor's performance of the contract. If the minor does not do as the contract requires, the other party has a separate right to sue the guarantors for any loss.

A person with a mental incapacity

A person with a mental incapacity will not necessarily be precluded from making or agreeing to a contract.

However, a contract involving a person with a mental incapacity will not be binding if it is set aside by a court. A court may set aside a contract in circumstances where the person with a mental incapacity was unable to understand the nature of the contract, or where the other party knew or should have realised this.

A contract where at least one party has a mental incapacity can still be binding in circumstances where:

  • The other person did not or could not have known about the person’s incapacity; or
  • Where a person has an incapacity,- if they were not affected by it at the time of making the contract; or
  • Where a contract was made at a time when the person was affected by the incapacity – the goods or services they have subsequently received a benefit from are necessaries i.e. things reasonably necessary or appropriate to their way of life at the time.
Who can make a contract  :  Last Revised: Tue Oct 9th 2018
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.