Future Business Leaders of America (FBLA) Business Law Practice Exam

What implies a contract is voidable when made by a minor?

1. The minor must fulfill the terms

2. The agreement is between two adults

3. The minor has reached their majority

4. The minor is not legally bound to the agreement

The correct answer is: The minor is not legally bound to the agreement

A contract is typically considered voidable when made by a minor because minors lack the capacity to enter into binding agreements. This means that they are not legally bound to uphold the terms of a contract in the same way that adults are. Consequently, a minor has the right to affirm or void the contract upon reaching the age of majority or at any time prior. When a minor engages in a contract, they have the option to disaffirm the agreement, which allows them to escape their obligations without penalty. This legal principle exists to protect minors from being taken advantage of by adults in a contractual context since they may not fully understand the implications of their agreements. Therefore, the correct understanding lies in recognizing that a minor is not legally bound to the agreement they entered into. The other options do not align with the concept of a voidable contract for minors. The idea that the minor must fulfill the terms contradicts the notion of voidability, as it would imply that they are obligated to the contract. Similarly, when the agreement is between two adults or if the minor has reached their majority, these scenarios do not highlight the voidable nature of the minor's contract; rather, they either establish a fully enforceable contract or remove the minor’s status as a minor.