Here’s looking at you, kid. What to know before dealing with minors.

To enter into any valid contract, all parties must have the legal ability to do so. Minors (in most jurisdictions, people under the age of 18) generally lack the mental capacity required to enter into binding agreements under law. Basically, minors are considered to have insufficient understanding of the legal terms, obligations and consequences that contracts may impose upon them.

Because of this “lack of capacity,” minor contracts are voidable, by the minor only and at their discretion. Meaning, the contract is binding unless the minor chooses to cancel (or disaffirm) it. Minors can typically disaffirm contracts in their entirety at any time while under the age of 18 and for a reasonable period of time after the child comes of age.

Some Minor Contracts are Enforceable.

Despite the general rule, many courts enforce minor agreements if they concern “necessities.” Necessities may include things like food, clothing and shelter. Some states also have statutory exceptions, where minors’ rights to cancel agreements are limited, including those in connection with insurance, educational loans and healthcare.

Additionally, if the minor does not cancel a contract prior to turning 18 (or a reasonable time thereafter), the contract can no longer be disaffirmed based on the fact that the person was under 18 when the agreement was executed.

Entertainment Contracts in New York

New York law provides for judicial approval of minor contracts regarding personal services for performing artists (like actors and musicians) and athletes. Once an agreement has been approved by the court, the child may no longer disaffirm on the basis that he or she lacked contractual capacity at the time of signing.

The New York Supreme Court takes many factors into consideration before approving minor contracts. The court may even refuse to approve agreements until parents (or minors) agree to set aside a portion of the child’s earnings for future use. However, after court approval, a judge may modify the agreement, or even revoke approval, if the child’s obligations under the contract become damaging.