Explainer: Understanding the Contractual Capacity of Minors in Ghana

What is Capacity?

1. Capacity is power to create or enter into a legal relation under the same circumstances in which a normal person would have the power to create or enter into such a relation; specifically, the satisfaction of a legal qualification, such as legal age or soundness of mind, that determines one’s ability to sue or be sued, to enter into a binding contract.
2. It simply answers the question of whether legal consequences would flow from your act.

• Protected Persons:

1. Certain classes of persons are protected from contractual liability by virtue of public policy:

• Minors
• Mentally Incompetent Persons
• Drunken Persons

• Who is a Minor?

1. At common law a minor is a person below 21 years
2. Constitution of Ghana 1992, Article 28 – Child is a person below 18 years
3. Interpretation Act 2009 – Child is a Person below 18 years
4. Children’s Act- Child is a person below 18 years
5. Authors like Dowuona-Hammond express doubt that these statutes and provisions can be said to apply to the age for purposes of Contractual Liability. She holds the view that the common law age of 21 should apply – Effectively – a minor should be defined as someone below the age of 21 years.

• General Rules: 

1. At common law, Contracts entered into by a minor are not binding on the minor. They cannot, therefore, be enforced against the minor. Such contracts are however enforceable against the adult. Three exceptions apply to this rule, and these are:

• Contracts for Necessaries
• Beneficial Contracts of Service
• Voidable Contracts

1. Such contracts are deemed to be binding on the minor and they may be held to pay for the goods provided or services rendered thereunder.

• Contract for Necessaries: 

Necessaries is generally a term meaning certain things which a person needs to exist i.e. food, clothing, shelter, education, medical services etc.

1. However the case law & statute have given the word a very specific 2 prong meaning:

• The goods or services must be necessary according to the station in life of the minor in question. That is to say, the social standing of the minor as compared to others. 
• The goods must suit the minor’s actual requirement at the time the contract is formed. So goods in excess of requirements do not bind the 

• This is an appreciation by the law that necessaries as a term is not set in stone, and may change according to the facts and the minor involved. 

1. Section 2(3) of the Sale of Goods Act of Ghana, 1962 (Act 137):

• Necessaries are goods suitable to the condition in life of the person to whom they are delivered and
• to his actual requirements at the time of the delivery.

1. In Chappie v Cooper a contract for purchase of a coffin for a minor was held to be one for necessaries, as the minor needed to bury her husband. It was appropriate for that minor’s condition in life.
2. In Nash v Inman, a claim for the price of fancy waistcoats failed because it was discovered that the child already had an adequate supply. So the newly acquired items were not to his actual requirements. 
3. It must be noted that even where a contract is established as being one for necessaries, it may not be enforced if it is found to be prejudicial to the interests of the minor or simply harsh and onerous

• In Fawcett v Smethurst a minor who hired a car to transport luggage was held to have been in a contract for necessaries. However stipulations in the contract making the minor bound to pay for any damage to the car whether or not caused by their negligence rendered the contract unenforceable.
• Contracts for necessaries will therefore be typically binding on the minor only to the extent that the provisions therein are reasonable. The courts may therefore direct the payment of a “reasonable amount” instead of the contract amount.  

• Beneficial Contracts of Service

Minors are able to work, and would become adults one day, so would consequently need to learn and acquire skills that would benefit them.These skills would invariably come about by entry into contracts for training, instruction, apprenticeship etc. Such contracts are binding on the infant if the terms are on the whole, to the benefit of the infant.Â

1. 1. In Clements v London and North Western Railway Company a minor who worked as a porter for the defendant elected to join the Company’s insurance scheme, relinquishing his benefits under the statutory scheme. The statutory scheme covered more areas (but the compensation was lower) – the minor sought to backtrack on his arrangement but it was found that the defendant’s insurance was to the benefit of the minor, on the whole.
   2. In stark contrast is the case of Defrancesco v. Barnum, a contract to tutor a minor in the art of stage dancing was held to be unenforceable because of how harsh the terms were. Low pay, restrictions on marriage, unilateral capacity to cancel contracts etc rendered the contract on the whole, not beneficial to the minor.
   3. Doyle v White City Stadium Ltd underscores the point that the terms have to be in the interest of the minor on the whole. A minor who entered into a boxing bout assured of £3k whether he won or lost, so far as he fought fairly, lost his suit for the sum after he struck the opponent below the belt. Held that the terms were substantially to his benefit, to help him learn the trade of boxing.
   4. An exclusive contract to publish memoirs for a minor may be enforceable if it is substantially in the favour of the minor. Chaplin v. Leslie Frewin (Publishers) Ltd

• TRADING CONTRACT EXCEPTION:
  The law makes Trading Contracts non-binding and unenforceable against a minor irrespective of how beneficial it is. Minors cannot be sued for non delivery of goods or non payment of goods delivered for trading purposes.

1. In Cowern v Nield a Minor who failed to deliver consignment of hay under a trading contract could not be held liable.
2. In Mercantile Union Guarantee Corp. Ltd v. Ball, a minor who was given a lorry on hire purchase and failed to keep up with the payments was held not liable. The contract was a trading contract, unenforceable against the minor.

• The rationale is that the minor is risking capital which may be his undoing.

• Voidable Contracts:

In this context, they are contracts under which a minor acquires an interest in something of a permanent nature with recurrent obligations. The law by default, holds the minor strictly liable for defaults under such contracts unless he takes steps to avoid / repudiate. Examples include contract for leases, shares, immovable property etc.

1. The minor remains bound by such a contract unless he takes steps to repudiate it during his minority or a reasonable time after attaining majority. Upon repudiation:

• Past obligations against said minor remain enforceable, but future obligations do not
• Money or property paid is irrecoverable by minor unless there was no consideration.

1. Leases: Where a minor acquires interest in property attracting the obligation of rent payments, such contracts are binding on the minor until he avoids them. Section 38(2) of the Land Act 1036 imposes a presumption of full age and capacity on any parties to a conveyance – so minors will be bound by such contracts until they avoid it.
2. Shares: Where a minor contracts to buy shares that contract is enforceable as he has acquired obligations that attract interest. E.g. A minor may be sued for failing to settle amounts payable on shares after a valid call.

• Liability of Minors in Loan Contracts

1. At Common Law: Money lent to a minor is irrecoverable.
2. At Equity: If a portion of the money lent was used to buy necessaries, then only that portion may be recoverable.
3. Students Loans Scheme Law, 1992 (P.N.D.C. Law 276) knowing the dire implications of this, coined a provision deeming any loan beneficiary as being of full age and capacity.

• Liability of Minors in Torts

1. Minors are liable for their torts.
2. However where the tort arises from a contract that is not binding on the minor, the minor is NOT LIABLE. This is to prevent claimants from enforcing (in a roundabout way) otherwise unenforceable contracts. Eg. Torts committed within the context of trading contracts or contracts for necessaries which are harsh are not enforceable.
3. Fawcett v. Smethurst where a child committed a tort destroying a car because he drove beyond the limit. The tort was unenforceable because the contract in itself was too harsh.
4. Obviously, the tort must have been committed in the course of doing an action contemplated by the contract. In Fawcett, the car hire was the contract. So acting outside the scope of the contract may leave the minor vulnerable.

• Ballet v.Mingay where a minor handed over items he hired to another without lawful authority, it was held to be outside of scope and an action for detinue was grounded.

• Fraudulent Misrepresentation of Age By Minor:

Where a minor tricks an adult into a contract that is not ordinarily binding on them, the minor cannot be sued to refund the money.

• An action in tort for deceit will fail since it is linked with the contract
• An action in fraudulent misrepresentation will also not succeed since it is linked with the contract.

1.  In Leslie Ltd v Shiell moneylenders who were induced to lend £400 to a minor after he misrepresented his age failed to retrieve the amount. Loans to minor were held to be generally irrecoverable unless used for necessaries.
2. The intervention of the Equitable Restitution Doctrine: If the property taken by the minor is traceable, identifiable and still in the minor’s possession restoration is possible.

• However if the goods are sold or money is spent, the minor cannot be compelled to replace or repay. In Leslie v Shiell the minor had spent the money. If he had the exact notes in his possession restoration would have been possible.

 

• Minor’s Rights – Enforcing against Adult

1. A minor, however, has no capacity to institute an action directly or by himself. He can only sue by his next friend who has to act by a lawyer. Similarly, a minor can defend an action only through a guardian ad litem.
2. Generally, a minor cannot obtain an order of specific performance against an adult party because the remedy is normally not available against the minor.
3. Where there is a lack of mutuality the remedy will not be granted against one party. Thus specific performance will generally not be granted against a party who has entered into a contract with a minor since the remedy does not lie against a minor.
4. However, where the minor has fully performed his obligations under the contract, such that there is nothing that the other party could possibly ask a court to specifically decree, the remedy could be available to the minor party
5. Lartey v Bannerman: Where the minor has performed his side then Specific Performance may be granted.