Contracts with Minors can Lead to Major Problems

I recently was consulted concerning contracts with minors. In the first case, a teenager wanted to start a business. In the second, a father wanted his child to become a member of his limited liability company (LLC).

Here is an overview of California law concerning contracts with minors.

A minor is an individual who is under 18 years of age. An adult is an individual who is 18 years of age or older. Family Code Sections 6500-6501

Subject to certain exceptions (some of which are far-reaching, such as those precluding contracts related to real property or personal property not in the minor’s immediate possession or control), minors may enter into agreements. Family Code Sections 6700-6701

However, the minor generally may disaffirm (reject) the agreement before reaching majority, or during a reasonable time thereafter. Family Code Sections 6710-6713

There are extensive provisions to protect minors who enter into contracts for employment in the arts, entertainment, or professional sports. Family Code Sections 6750-6753

However, a minor is treated as an adult with respect to contracts if the minor has been emancipated as a result of entering into a valid marriage, being on active duty with the armed forces of the United States, or receiving a court declaration of emancipation. Family Code Section 7002; Family Code Section 7050(e)

Conclusion: The principal risk for adults who enter into contracts with minors (who are not emancipated) is that the minor may be able to walk away with impunity, whereas the adult will not have that freedom.

Related posts:

• May a Minor Form a Corporation?
• May a Minor Form an LLC?

Photo credit: Vivek Chugh via stock.xchng

Dana H. Shultz, Attorney at Law  +1 510 547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.