A question about a case study for business law...What does the law state reguarding this particular matter?
Case study 1
Helen, age 17, wanted to buy a motorcycle. She did not have the money to pay cash but persuaded the dealer to sell a cycle to her on credit. The dealer did so partly because Helen said that she was 22 and showed the dealer an identification card that falsely stated her age as 22. Helen drove the motorcycle away. A few days later, she damaged it and then returned it to the dealer and stated that she voided the contract because she was a minor. The dealer said that she could not do so because (a) she had misrepresented her age and (b) the motorcycle was damaged. Can she void the contract?
Answers:
In general, the contracts of infants (historically defined to be persons less than eighteen years of age) are voidable at their option. In most cases the infant need not do any affirmative act in order to derive the benefit of the rule of voidability.
An infant may avoid his obligations under an executory (Le., unperformed) contract by merely doing nothing. In order to bind himself in a contract entered during infancy, the infant must ratify the contract upon reaching majority. Ratification is any act that indicates that the infant intends to be bound by his promise.
Such ratification can be expressed, orally or in writing, or implied. Ratification by implication occurs where the infant after reaching majority performs the contract (or begins performance), e.g., an infant obligated to repay a loan makes an installment payment after reaching majority.
Where the contract has been performed or partially performed by the infant, he must take some affirmative action in order to avoid obligation under the contract.
The affirmative action is referred to as disaffirmance. The result will be to have the contract rescinded, and as in any case of rescission, each party must return any consideration received from the other party.
Therefore, when an infant disaffirms a contract he must
return whatever consideration he has received or he will not be able to demand the consideration that he transferred to the adult party.
An interesting question arises when the infant cannot return what he has received in consideration because he has squandered it. The majority of states would hold that the infant is still entitled to the return of the consideration with which he parted.
THEREFORE, based on the exact situation presented, the minor has a choice:
1. Uphold the contract and her performance thereunder, or;
2. be charged with felony fraud.
the transaction is void a minor cannot enter into a business agreement.
depends on the state, but generally YES, she can void the contract by virtue of being a minor, since the burden is on the adult to verify the age of the other party.
Now, the damage - the business owner can recover the cost of repairs,and maybe throw in statutory damages b/c the motorcycle was procured by fraud (maybe there are damages available under a "conversion" statute or a "theft by deception" statute).
Sometimes the statutory damages are TRIPLE the damage, plus attorney's fees and other costs to the damaged business owner.
Hmmm . . . at first blush, I don't know!
My guess, without looking it up, is that she might be prevented from seeking some affirmative recovery because the seller reasonably relied on her saying (and proving) she was of age. But the court might say that the contract is indeed void, no matter how fraudulently she behaved.
The cyclist might be facing criminal and/or civil charges - theft by deception, or some juvenile level crime - although again I don't know.
Sorry - my official answer is "I'm not sure."
interesting question, though!
Standard law exam question:
Issue #1: Is Helen a minor? (What is the age of majority, has she been emancipated?)
If she is a minor, the contract is voidable. A minor cannot enter a contract. ("Your honor, she looked 21." is not a defense to statutory rape.)
Some recent cases have required the return of the purchase price minus the decrease in value of the merchandise. (Here payment is on credit.)
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